Following its decision to allow customers to replace on-premise licensing and maintenance with a cloud subscription (on the basis that the transaction “assumes an expanded investment with cloud solutions from SAP”), the enterprise giant says it will now allow customers to replace existing on-premise licenses and maintenance with alternative on-premise solutions.
Customers that do not want to use the flexible licensing options will be able to abandon usage rights of certain existing software licenses and request the corresponding maintenance termination – without purchasing new SAP on-premise or SAP cloud solutions.
The SAP UK and Ireland User Group sees all this as a step in the right direction. Chairman Phillip Adams says:
" Along with making it easier and more attractive for existing customers to move to cloud solutions, we’ve also been pushing SAP for a couple of years to enable the parking or partial termination of licenses.
"Until now if a customer had one contract from SAP covering all their licenses they could not choose to turn off some of those licenses and the associated maintenance costs. With the changes SAP has made this week customers will be allowed to terminate parts of their estate and therefore potentially gain reductions in their maintenance charges."
But he warned that this should not be interpreted as SAP allowing customers to park licences and therefore organisations need to consider whether they are likely to need licenses they are not using at the moment in the future as once licenses have been terminated they cannot be switched back on.Adams added:
"Essentially, if a customer needed those licenses in the future they would need to purchase them again and at potentially lower discounts. Yet for companies that have been significantly hit by the economic downturn over the last few years and find themselves with a much smaller workforce which is unlikely to expand in the short to medium term, this policy from SAP could be very attractive, if after rediscounting the maintenance fees reduce .
"For other customers, the existence of a formal policy from SAP that clearly states they can reallocate existing investments to newer on premise or cloud solutions from SAP will be welcomed. The changes this week, combined with the recently announced cloud extension policy, really demonstrates the value that can be created through constructive discussions between user groups and SAP.”
I'm going to leave that to Dennis Howlett who will be providing his own spin on the latest developments later.
Disclosure: At time of writing, SAP is a premium partner of diginomica.