Let Me Be (IN)Direct


by Michael Pearson

SAP Direct vs Indirect Licensing: What you need to know

At SAPPHIRE in May 2017 CEO Bill McDermott announced that SAP would be tackling the issue of indirect access licensing. This had become a hot topic due to several high-profile legal disputes between SAP and customers. On April 10, 2018 SAP announced a new pricing model based on documents instead of named users, but many customers are still unclear on the details, or whether it is something they should be considering. What exactly is document-based licensing, and how does it work?

As it is still relatively new, there are still many questions in the SAP community about how exactly the SAP document-based licensing model works, and how it could be applied to an individual customer’s specific situation.

First and foremost, this only applies to what SAP called The Digital Core, which is either ERP or S/4HANA. This licensing model cannot be applied to other SAP products such as BusinessObjects or any of the cloud-based solutions like SuccessFactors.

SAP categorizes access to The Digital Core in 3 categories.

  • Direct Human Access – This is a person directly logging on via SAPGUI or another SAP user interface with an SAP username.
  • SAP Application Access – Other SAP applications accessing the Digital Core, such as SuccessFactors, Ariba, Cloud4Customer, BW, etc.
  • Indirect/Digital Access – This is outside access by other 3rd party tools and applications. Some examples might be SalesForce, other CRMs, custom apps, 3rd party apps, non-SAP frontends.
  • With the new document-based licensing model, customers now have a choice whether they wish to license their software by named user (the traditional method), or by document volume (the new method).

    To understand the document-based licensing model, it is important to understand what SAP considers to be a document.

    There are nine defined document types that SAP uses to calculate licensing:

    • Sales Order
    • Invoice
    • Purchase Order
    • Service & Maintenance Document
    • Manufacturing Document
    • Quality Management Document
    • Time Management Document
    • Financial Document
    • Material Document
    • These nine document types represent system generated records and cover most valued (but not all) outcomes from SAP ERP.

      It is important to note that some document types are counted at the line-item level. For example, on a Sales Order if there are 10 line-items, this counts as 10 documents. But a Manufacturing Document only counts as 1 document in this calculation regardless of the item detail. This is done to account for how different businesses operate. Some may have one blanket order with 1000s of line items on it, and another business may create a single Sales Order for every line item.

      Secondly, because not all documents are created equal, or rather SAP understands that certain documents are created with much greater frequency there is some distinction in how certain document types applied towards this document calculation.

      SAP only counts the document creation, so no matter how many times a document is viewed, accessed, or modified; it still only counts as one document.

      SAP also states that only the originating document is counted, and follow-on documents are not. For example, if a sales order is entered, which is then used to create an outbound delivery, which is used to create an invoice, which is then used to post a payment and FI document; then only the originating sales order document is counted. This seems a little unclear to us as to how this calculation would work, but presumably SAP has a way of measuring this.

      Licensing is based on an annual document count, so you apply the above calculation to how many documents per year. There is also a tiered pricing structure, so the more documents per year you need, the lower the price per document.

      The interesting thing to note is that this document/year is a one-time cost, not a pay-as-you-go model. SAP Enterprise Support is, of course, charged annually, based on the original purchase cost.

      Document-based licensing would probably appeal most to a net-new SAP customer (i.e. someone purchasing SAP for the first time), rather than an existing customer. While it is possible to convert from user-based licensing to document-based licensing, it may not accomplish anything; especially if you are appropriately licensed with your correct number of users today.

      Document-based licensing would appeal most to organizations who use SAP data in external (non-SAP) applications and have either real-time or bidirectional interfaces built to these applications.

      For the time being, it seems most existing customers are content to stick with their user-based licensing contracts.

      For more information about document-based licensing, or other SAP licensing questions, please contact sales@contax.com, or call us at +1 312-475-9706.


      About the Author: Michael Pearson

      Michael is President of CONTAX and claims to be one of the few people in the western world who understands SAP licensing.