Hunton Retail Law Resource

On April 10, 2018, SAP announced an updated pricing model to address indirect/digital access to its digital core products—SAP ERP, SAP S/4HANA and SAP S/4HANA Cloud. In addition, SAP announced that it will separate its license sales department and auditing departments. These moves are in response to intense pressure SAP has experienced from existing and potential customers that culminated last year following (1) the decision rendered in favor of the software giant against one of its customers, where £55 million in damages was alleged by SAP, and (2) its $600 million claim against the world’s largest brewer which was recently reported as having been settled.

SAP’s products incorporate the key business functions of an organization and form the backbone of many organizations’ application infrastructure. By design, SAP products must receive and send information to a business’ other applications. However, due to broadly drafted license scope provisions in its existing agreements, SAP has successfully argued that “use” of its products occurs when people or things (e.g., third-party applications, IoT devices, automated systems, RPA/bots, etc.) use SAP products without directly logging into them.

In its press release, SAP states that this new approach “makes it easier and more transparent for customers to use and pay for SAP software licenses” and “clarif[ies] the rules of engagement for licensing, usage and compliance.” SAP will offer existing customers the option to remain on the current pricing model or convert to the updated structure, and will offer resources over the coming months to help customers decide on which model is right for them. “Indirect access” is a complicated (and potentially costly) issue; therefore, careful consideration needs to be given before determining which licensing approach is appropriate for your organization.