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Legacy Licensing vs Digital Access Licensing

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In our last article, we summarized Digital Access licensing. If you haven’t read that yet, we recommend reviewing that beforehand (find it HERE) as it is the first part in a series and sets the foundation for what we’ll discuss in this article…

Now that you’re all caught up, you may be asking: “what is the difference between the Legacy licensing model and the new Digital Access licensing model?” Great question.

In this article, we will cover the biggest differences between the Legacy model and the Digital Access model, with a focus on:

– measurement
– calculating license demand and
– cost implications.

Each model has its pros and cons but by the end, you will have a good idea of how these two models compare to each other and which model will be best for your organization.

Measurement Differences
So simply put, to license Indirect Access, the Legacy model uses named users and packages as it’s remedy. The Digital Access model, on the other hand, uses documents and line items. Below we will break down each measurement style and how this affects the licensing process.

Legacy Model
Legacy licensing for Digital Access scenarios is done by:

– Licensing the named users that initiate the data transfer to or from SAP by interacting with systems or 3rd party applications connected via interfaces to SAP.
– Licensing packages for SAP engines and systems (e.g. SAP PI, SAP NetWeaver).

The license requirements for named users are based on the authorizations given by SAP. These authorizations range from SAP Developer, SAP Professional User, SAP Employee User, SAP Learning User, or individual named user license types. There are cases in which SAP allows indirect user interaction without a separate named user license. Here are a few examples:

– A data push from SAP to non-SAP systems following the static read definition set by SAP in July 2017.
– Exceptions for end consumers. For example:
– If they are still included in the current Price and Condition List for SAP Bill-To-Cash Management for energy, water, waste and recycling utilities.
– Package licenses purchased in 2009 in which the Price and Condition List states, “In all business-to-consumer scenarios, end consumers are included in the respective package use rights and do not require special use rights for defined users.”

Now, what if an IT system exchanges data with SAP without any direct user interaction, one might ask? This is where licensing packages come in. Scenarios like this, referred to as “machines creating transaction”, are typically excluded from named user license requirements, and in such cases, customers must purchase a license package only, if available. SAP Industry Solutions is a great example of a license package that could be purchased in this situation.

Digital Access Model
Since ERP data is typically represented or managed in data entry forms or views, SAP concluded that Digital Access (Indirect Access) would be better managed, measured, and sold using document metrics, or “documents”. In layman terms, documents are forms or views created within SAP. Digital Access defines these documents into (9) distinct categories, which range from sales documents, to time and material documents, and are sold in bands and tiers with their own individual pricing and volume discounts.

This all sounds easy enough, but how should customers count the documents or line items for Digital Access licensing? Well, licensees would expect that SAP would have some guidance and a few tools to help out with this process. But sadly, this is not the case, and little has been published by SAP on Digital Access since last year. Unfortunately, calculating measurements using the Digital Access model is like walking into fog with little to no visibility or direction. As not much guidance has been given to users, we are dedicating an entire blog series to Digital Access Measurements in an effort to help provide direction and clarity. So stay tuned and SUBSCRIBE to our newsletter if you would like to receive notifications when these articles are released.

Calculating License Demand

So now that we have covered how each model remedies Indirect Access, it’s important to compare how to calculate license demand using the different models.

Legacy Model
When it comes to the legacy licensing model, getting to the correct number of named user and package licenses for Indirect Access scenarios is anything but simple. Loads of data from SAP user tables, authorization objects, security logs, and interface/user data from 3rd party applications, need to be analyzed. Unfortunately, the system measurement solutions from SAP (USMM, LAW) offer minimal or no support in this regard. License management tool providers (Snow, Flexera, Aspera, etc) have recognized this problem and developed SAP specific solutions to help with data collection and analysis. For example, the FlexNet Manager for SAP Applications, Snow Optimizer for SAP, Aspera License Control for SAP and Xpandion Profile Tailor License Auditor, just to name a few.

Please take note that if you plan on sticking with the Legacy model, we highly recommend the use of such a tool to help calculate usage accurately. Not sure which tool is right for you? We’d be happy to make some recommendations based on your organization’s needs. Since we are not a reseller, and pride ourselves in being truly “tool agnostic”, we can provide you with genuinely objective and impartial information that can help you make a more educated tool selection.

Digital Access Model
We’ve got some good news! When calculating license demand using the Digital Access model, there is no interface monitoring and analyzing who is accessing SAP indirectly. You also no longer have to go through the trouble to review user data from 3rd party applications. We like that… a lot. However, we should mention that due to regulatory requirements, it is more important than ever to be transparent about the actual users that interact with SAP. In fact, many organizations have already implemented user identity or access management systems for the analysis of SAP named user license requirements. These systems are a good way to collect data and we strongly recommend their implementation.

Cost Implications
We briefly covered the cost of Digital Access in our previous article, but now we want to dive in a little deeper. The big difference here is that with the Digital Access model, customers pay for the interactions of all external users (more on that below).

Legacy Model Costs
Using the legacy model, a licensee’s primary option is to purchase Named Users to mitigate Indirect Access, costing as much as $5,000/user.

Digital Access Model Costs

Digital Access licensing does not differentiate between the indirect interactions of end consumers or business partners with SAP. This means that customers pay for the interactions of all external users, regardless of their role or relationship with the organization. This is a pretty big hit to those companies that have invested in the digitalization of their business processes to offer a better consumer experience.

Here’s a quick example of this:
Imagine that a publisher is offering chargeable e-paper downloads for its subscribers as a service add-on. It is selling approx. 1 million e-papers per year. The order process for e-paper publications is built on SAP. With its legacy license agreements, additional licenses besides the package licenses and named user licenses for its internal workforce were not required. With the new Digital Access license model, this process now requires digital access licenses and checking the price list and volume tier. Each purchase (sales document) of a single e-paper (one line item per purchase order) would cost ~$.80 USD or ~€.50 EUR. E-paper downloads come at an average price of ~$1.15 USD or ~€.99 EUR and the margin is less than 10%. Paying list price for digital access licenses, the publisher would lose money unless it raises prices for e-paper downloads by a stunning 50% or more.

So if you’re wondering which licensing model is cheapest, the answer is, “it depends”. Ultimately, it comes down to how many documents are being created versus how many users are needed. These two factors will dictate which licensing model is best for your organization.

Conclusion:
So there you have it, a comparison of the Legacy licensing and Digital Access models in a nutshell. If you have more questions, feel free to schedule a time to meet with one of our SAP experts. We would be more than happy to spend some time with you to answer your questions at no cost or commitment.