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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 for Indirect Access in future, and it's here to stay.
What is Indirect Access?
Indirect Access could include any interaction between your SAP system and another system. The definition of Indirect Access is quite broad, and the interpretation can get complex, but simply put, if you have any interfaces between your SAP ECC or S/4HANA and another system, whether it be internal or external, you are quite possibly using Indirect Access.
What is Document-Based Licensing?
Document-based licensing is where you purchase licenses for a number of documents per year 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 per year. So if you wished to purchase licenses for 200,000 documents per year, 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?
Most customers have purchased named-user licenses (NUL’s) from SAP or their VAR. These do not go away, and you will still need to have a named-user license for every user on your system.
In theory you could purchase named-user licenses for every user interacting with your SAP system via Indirect Access, however, for most companies this would be costly and impractical. In some cases, for example with EDI, there is simply no way to tell how many end users are involved on the other side of the transaction outside of SAP, so the only way to license this is through document-based licensing.
Most SAP customers will need to purchase Digital Access licenses to be in compliance with their SAP licensing agreements. And SAP is certainly pushing this with their recently-announced Digital Access Adoption Program.
How To Tell How Many Documents You Need?
Currently SAP is offerring two alternatives to measure the number of documents being created through Indirect Access.
1. Estimation Tool
Accurately named, the Indirect Access Estimation Tool provides an estimation (at best) of the number of documents in your system that may have been created by Indirect Access, and therefore the number of Digital Access licenses you may need to acquire.
You put in a date range and the SAP usernames that are used in your interfaces, and you will receive report listing the number of documents created by document type.
There are some serious issues with this approach, not the least of which is the tool does not take into account the double-counting of documents which are created as a result of an Indirect Access document created (and counted) upstream in the process. According to SAP's rules, only the originating document counts, and no subsequent documents should be counted.
2. SAP Passport
The concept behind SAP Passport is that every non-GUI process in your SAP system is assigned a "token". This token will be tracked and recorded on all transactions, and be recorded in the database on all document changes or creations. It will allow SAP to monitor, track and report on all incidences of Indirect Access. At least in theory. We haven't seen this yet, nor are we aware of any customers actually running it.
The SAP Passport would have to be installed on your SAP ECC or S/4HANA system through a series of patches and updates, and considering the wide-ranging impact of doing so, including adding fields to your database, we don't foresee SAP customers lining up to install this anytime soon.
However, installing SAP Passport is, again in theory, the only way to accurately track, measure and license the actual number of documents needed to be licensed for Indirect Access.
Presumably at some point in the future, SAP will make the SAP Passport a standard requirement of all systems above a certain version, perhaps S/4HANA 1909 or 2009. Until then 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 of their exposure.
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 would require additional licensing (and most were none too pleased to find out). Link to article : 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.
Based on our experience, our customers want to be compliant with licensing. They're looking for guidance and assistance in becoming compliant but obviously aren't looking to fork over a huge amount of money for continuing to do what they do already today.
In a best case scenario SAP will proactively engage with customers in a direct conversation around becoming compliant with a fair and empathetic solution that doesn't result in the customer felling ripped off.
In a worst-case scenario, over-zealous SAP sales reps will use Indirect Access as a weapon against customers in attempts to boost their sales numbers or meet quotas.
The success or failure of adoption of Digital Access will all depend on the execution.
Ed Note: This article as originally published contained some erroneous and outdated information. It has since been updated and, to the best of our knowledge, is accurate and factually correct as of June 28, 2019. Our apologies for any confusion.
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.