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Internet-of-Things licensing needs attention, says UK&I SAP User Group

Derek du Preez Profile picture for user ddpreez November 22, 2016
UK & Ireland User Group chairman, Philip Adams, has called on SAP for greater clarity around how the Internet-of-Things will impact licensing.

It’s been a rather positive couple of days at the annual UK & Ireland SAP User Group (UKISUG) conference in Birmingham this week. Although the results of the annual survey indicated that SAP has some way to go in educating customers about the benefits of its next generation S/4 HANA platform - the amount of uptake is in line with what SAP expected.

This is particularly true given that S/4 HANA is currently less than two years old.

However, of the questions raised at the conference, one of the only ones that didn’t receive an entirely satisfactory answer was in relation to the impact of the Internet-of-Things on licensing.

As one can imagine, the Internet-of-Things has the potential to create an unprecedented amount of data - and consequently use cases - for companies. And more to the point, these use cases and data streams may well be unpredictable. That’s very different to the scenario that software vendors have licensed for in days gone by.

In fact, licensing has proven tricky for companies that have mapped and planned for their ‘predictable’ software use. Audits are an age-old tactic for catching companies out, where often companies weren’t even aware that they were misusing their licensing agreements.

The SAP UK & Ireland User Group isn’t currently satisfied with how SAP is managing licensing as it relates to the Internet-of-Things. And it doesn’t want SAP to get this wrong. And to be fair to SAP, it agrees that it needs to work this through further.

If this isn’t addressed now, a lot of companies embarking on Internet-of-Things projects in the coming years could find that they are faced with a larger than anticipated bill down the line.

UKISUG Chairman Philip Adams took to the stage this week for his keynote presentation and said:

I think we really do need clarity in this area. We need to understand and clearly define, what does indirect usage mean in our organisations? Understand the type of scenario where we would fall into that area, and how we could either avoid or mitigate it.

I don’t think it’s an easy fix, but I’m committed to working with SAP to make sure that we can provide that clarity. We all see the benefits of the connected economy, but we all need to understand the implications this might have on our licensing positions.

A priority

I got the chance to sit down with Adams at the event to follow up on this point. Adams is actually stepping down from his position in April after four years in the job (and will be replaced by current Vice Chair, Paul Cooper) - however, he said that both him and Cooper see the Internet-of-Things licensing as a priority for the next twelve months.

What Adams and Cooper are keen to see are a set of principles that are developed that could be applied to the varying Internet-of-Things use cases, mitigating the element of surprise as these projects develop.

Adams said:

It’s not the first time [we have raised this with SAP]. We’ve tackled it at an international level. There’s still work to be done. What we are working on at the minute is defining principles because there are infinite use cases here, and they will constantly grow and expand. So if we could define core principles that could be applied to any scenario, and if that message is clear between SAP and the customer base, then there shouldn’t be arguments and discussions in the future.

What we want is predictability. When we are going into an investment decision to buy something that we didn’t know what it was going to cost, we don’t want a surprise six months down the line that there is a license implication that we weren’t aware of. So hopefully if these core principles were defined, it will provide the clarity that we need. Get it in early, explain it.

Adams added that it’s important for these principles and for this defined understanding to be communicating beyond the reach of a select few within SAP. He said:

Some guy in SAP has probably figured it out, but the account executives need to know. Because they’re the ones that talk to the customers. It shouldn’t just be a sales conversation, it’s an understanding of how it’s been applied to the business. The account executives need to understand the business they’re selling to, not just selling licenses.

The SAP view

During a sit down with Hala Zeine, SAP’s SVP of portfolio and commercialization strategy, she said that the company was working hard to understand how it could make the Internet-of-Things licensing simpler for itself and for customers. Her main message being that she wanted licensing around IoT to be "predictable". However, Zeine added that she couldn't reveal too much detail, as this would "give away pricing that is not published".

However, I also got the chance to interview SAP’s UK & Ireland MD, Cormac Watters, who provided a bit more detail and gave some insight into the company’s intent in this area.

Cormac Waters
Cormac Waters

Watters said that SAP definitely has “plans to address it”, but also (quite rightly) highlighted that it’s a complicated problem to solve. He said:

[We can’t give] one, de-facto answer because lots of our customers have got different contracts in place. And we will want to encourage you to put as many use cases as you can, or as many types of use, on to our licenses. And there are different types of use that we have to find currently and are available.

The first thing to do is to make sure that everybody gets the different types of use - so you’ve got your normal professional type of user, then you’ve got other types of user. They need to be fully explored. And then it’s a question of case by case. It is different.

You could create a portal, which is none of our UI. Which is connecting with IoT but also connecting back to the heart of SAP. How is that use defined? Because you’re not using any of our user interface. As well, you might have our Fiori based screens accessing and connecting to IoT - is that a different use case? It’s a very interesting place right now.

He went on to say:

The answer I always give is that we’ve engaged with tonnes of customers to discuss the potential of what we could do and make sure there is clarity and a little bit of direction. It shouldn’t be prohibitive. But Phillip [Adams] was right to bring it up, because you have to be aware of it nowadays. You really could [spiral out of control], you could unintentionally end up being under licensed. And that then becomes ‘that wasn’t my intention’. Having the proactive conversations is always good.

Help with membership

Separate from the licensing issue, chairman Adams was also keen to highlight the User Group’s desire to get SAP to drive more customers to the membership. He said that this is particularly important given that SAP’s user base has changed so much in recent years, following the acquisition of a number of cloud companies.

He said:

At a local level it’s about working with them to drive our membership growth where possible. They’ve got a lot more customers than we have members. Where can we work together? Where can we incentivise their sales teams to encourage new sign ups to join the user group if they haven’t done so?

They’ve got a lot of new customers now because of all the acquisitions they’ve made. But we’re still very much a BusinessSuite membership. We are talking to the SuccessFactors guys, and we need to do that with all the other products too. They could all be members too.

Paul Cooper, current vice chair and soon-to-be chairman, agreed with Adams and said that it was critical for the User Group to reflect the broad SAP customer base. He said:

The relevance piece is really important for me, with the proliferation of the SAP product set. But also, if we attract new members, that they don’t just come in and drop straight out. You’ll have noticed that we have pushed very hard in our sessions that it’s a user group, which means that we need you to actually contribute. And that is really hard.

My take

Not much more to add beyond the point that SAP needs to be transparent in how it carries out its licensing for Internet-of-Things projects. I think it gets that, and is working out how to best manage the diversity of use cases in this area.

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