SAP on AWS
Overview of SAP Document-Based Licensing
by Michael Pearson
Document-based licensing is here to stay. Every SAP customer should understand what it is and how it applies to them.
After SAP started going after customers for indirect access it became apparent that there really wasn’t an effective way to license it. The judge in the infamous Diageo case sided with SAP, but even though the ruling stated that Diageo had to buy licenses for indirect access; there really wasn’t a suitable license option available for them to purchase.
SAP needed to close this gap if it was to ever have any hope of offering customers a viable solution for indirect access.
Hence the introduction of document-based licensing, a.k.a. SAP Digital Access.
SAP has made it clear that document-based licensing is how customers will license their applications in future, and it's here to stay.
What is Document-Based Licensing?
Simply put, you purchase licenses for a number of documents instead of a number of users, as has traditionally been the license model in the past.
SAP measures the number of documents created in the application based on nine document types:
- Sales Order Document Line Items
- Invoice Document Line Items
- Purchase Order Document Line Items
- Service & Maintenance Document
- Manufacturing Document
- Quality Management Document
- Time Management Document
- Material Document Line Item
- Financial Document Line Item
Each document has a weighting factor or multiplier; which is either 0.2 for Material or Financial Document Line Items, or 1.0 for everything else.
How Do You Purchase Document-Based Licenses?
Document-based licenses can be purchased direct from SAP or through your VAR. It is called "SAP Digital Access" and is licensed in blocks of 1,000 documents. So if you wished to purchase licenses for 200,000 documents, you would purchase 200 blocks of SAP Digital Access.
We don't publish SAP pricing, but for illustration purposes let's say a block of 1,000 documents costs $1,000 (it doesn't, so please don't quote us on this!). To purchase 200,000 documents would cost $200,000 (based on our fictional cost) - prior to any discounts. The more blocks you buy the cheaper it gets, with quantity discounts for more than 1,000 units (i.e. 1,000,000 documents).
Do You Need Document-Based Licensing?
If you're like most customers you have purchased named-user licenses (NUL’s) from SAP or your VAR. These do not necessarily go away, and you can keep these if you wish.
There are three scenarios for named-user and document-based licensing:
1) Named-user licenses only. Under this scenario every user has a license. This could be internal employees using SAP through an SAP interface, internal employees accessing SAP indirectly through another application (such as SalesForce), or even people external to your organization. This it the traditional model.
2) Named-user licenses for internal users, and Digital Access (document-based) licenses for indirect access.
3) Digital Access licenses only for all direct and indirect access.
Under #2 you would purchase a number of licenses of Digital Access corresponding to the number of documents created in your system through indirect access, and in scenario #3 you would purchase licenses corresponding to the total number of documents created in your system.
How To Tell How Many Documents You Need?
Currently there is no way to tell exactly how many “documents” are being created in your system (note: we use the term “documents” according to SAP’s definition above). You could try to figure it out yourself, but you can’t be sure that you would come up with the same number as SAP. What sounds like a simple concept is actually not. This is because you are only supposed to count the original creation of a document line item, and none of the follow-on documents created downstream in the process that stem from the original. How SAP plans to do this accurately with all the possible scenarios is anyone’s guess.
SAP is apparently working on a tool that will allow customers to measure the number of documents, and therefore how many Digital Access licenses you would need. The tool will supposedly also be able to tell how many documents were created internally by named-users, and how many documents were created by indirect access.
At some point this will become available to customers – it was promised in Q1 but we’re yet to see it. We figure that SAP didn’t really understand how complex this is when they came up with this concept; and now they are realizing how complex this is. We actually don’t believe it’s possible, so SAP is going to have to approximate it.
In the meantime, the best you can do is guestimate the number of documents being created in your system and try to license appropriately. This “gut feel” approach may not sit well with many CIO’s and CFO’s looking for certainty around their licensing and maintenance costs. Unfortunately that’s all there is right now.
Can You Just Ignore All This?
We’ve looked at the SAP licensing for many companies. Nearly all had a licensing gap caused by indirect access. Yet most customers we spoke with had no idea.
Some customers had the foresight (or luck?) to license engines such as “Sales Order Processing” – which SAP has quietly removed from price lists. Those who did solved what could have been a multi-million dollar licensing gap for a few thousand dollars. If you are one of those – good for you. If not, it’s probably too late as we believe that SAP is no longer allowing sales of these licenses. Our sources at SAP said that they felt that this was letting customers off the hook “too cheaply”.
From our research, the most common causes of license non-compliance were EDI, internal company portal application, external customer or vendor portal, and real-time interfaces to other systems. A very common one we found was companies running SalesForce.com for CRM and interfacing with SAP.
Most customers weren’t aware that doing EDI with customers would require additional licensing (and most were none to pleased to find out). See my Blog: EDI May Put Customers Offside with SAP Licensing.
If you do not have any interfaces to other applications that create the nine documents listed above, then it’s possible that none of this applies to you, and you can simply ignore it. However, we strongly advise speaking to your VAR or a licensing expert to figure out if this in fact the case. Even a file upload into SAP could be considered a licensable event, so beware.
So for now, it appears as though SAP has come up with what they believe will solve the issue of how to license for indirect access.
Maybe, or maybe not. There are still unanswered questions, and the success or failure of this will be largely dependent on the details of the execution.
See our next Blog “The Problem With SAP Digital Access Licensing” for details about some of the problems we foresee.
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.