The “SAP vs Diageo” case at ITAMOrg ITAM Conference 2017

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by | April 18, 2017

Here’s why this case should be on top of everybody’s mind.

The court ruled in favour of SAPs claim, resulting in extra payments of up to GBP 55 million, on the grounds that Diageo’s indirect use of SAP system wasn’t part of the licence agreement.

The Diageo case is unusual in the sense that it was taken to court. Few companies are pleased to go to court for decision on the interpretation of the licensing agreement. Disagreements are generally negotiated between the parties under confidentiality.

However, the actual point of disagreement, the case of indirect access to SAP systems and data that resides on those, is not new. In fact, this is one of the key areas where vendors find that companies struggle to apply with the licensing terms. Thereby, a case like this should raise attention by organizations, public and private, about the urgency to get in control with respect to their consumption of software and their entitlements.

ITAMOrg, an international membership organisation within IT Asset Management, will have its annual conference in June in Copenhagen, and this year with a strong focus on SAM in SAP environments.

“SAP vs Diageo” in brief
A little background: Diageo licensed mySAP ERP and a number of other products incl. a software engine, SAP Process Integration, which distributes messages between mySAP ERP and other systems. Diageo had in 2011/2012 introduced two new software solution using a Salesforce platform which manages the operations of Diageo sales and service representatives and another system that allows Diageo customers to manage their business account and, among other things, allow them to place orders directly. The use of those applications triggers exchange of data generated by mySAP ERP.

SAP claimed that the use of these two systems constitutes an indirect use of mySAP ERP which requires “Named user licenses” of the “Professional User” type – the most expensive category of Named User licenses under Diageo’s license agreement.  You can find more details on the case and the court ruling here:

Moving on: A look at the wider perspectives
Indirect access is not a SAP specific scenario. Indirect usage and multiplexing are the taxonomy used on this for Oracle and Microsoft respectively and other vendors also look into such architectures during audits.
Every day organizations find themselves challenged by software vendors auditing them and claiming further payments. Auditing has become a compelling business for the vendors and there are no signs that it will decrease in the years to come.

The main reason why this practice continues to go on relies on several facts. Firstly, managing your licensing consumption vs. entitlements can be difficult and challenging in a day to day increasingly complex IT environment. It is challenging to the point that only a minority of organizations have real SAM programs running and have their SAM processes under control. A controlled SAM environment benefit the organizations by continuously measuring their licensing position and risk towards entitlements in their software contracts.

Secondly, the licensing terms are also changing as technology evolves, so to a certain point it is a real moving target for license managers to deal with consumption on one hand and the changing license terms on the other.

And finally, the problem only seems to increase in the years to come. In a recent study by IDG it is forecasted that technology purchases from lines of business (LoB) will grow faster than purchases funded by the IT Organization, also known as Shadow IT. The study can be found here:

Get control of your SAP processes and licensing: Meet the experts
Getting into control and managing the risk with regards to software is an increasing issue and it represents a real challenge to organizations. These challenges and how to address them is on top of the agenda at ITAM Conference 2017 in Copenhagen on June 21-22.

The conference will address SAP licensing issues from several perspectives, with speakers from large international organizations like Zurich insurance, Switzerland and Home retail group plc, UK.
As a Key Note session, Professor Henrik Udsen, University of Copenhagen will address the Diageo case from a legal point of view. And last but certainly not least SAP will be present on a session on transparent licensing with Eben van Heerden, Head of licensing, SAP EMEA.


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