SAP User Group calls for 'clarity' on licensing over Internet of Things and digitalisation

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Philip Adams, the chairman of the SAP UK & Ireland User Group, has called on the software giant to simplify its licensing structures so that customers are not stung by price shocks as they implement Internet of Things (IoT), digitalisation and other connected projects, which will all hook into companies' enterprise resource planning (ERP) systems.

Adams was speaking at the SAP Connect User Conference 2016 in Birmingham today in one of the keynote speeches.

Adams wants to see SAP tackle the issue of "indirect usage" in its licensing, a long-standing grievance of customers and one that is becoming a bigger issue.

"We live in a highly connected world... the Internet of Things, digitalisation and automation. These are happening across all economies and industries," said Adams.

As a result, he added: "SAP systems are becoming increasingly exposed to new and different usage. People within organisations are designing new applications and new business processes without realising the potential impact that has on our use of SAP and the corresponding impact that might have on our licensing positions. I think we need clarity in this area."

Organisations need more insight into the type of scenarios under which "indirect licensing" costs might be incurred, and how they can either be avoided or mitigated.

"I don't think it's an easy fix," he admitted. "But I'm committed to working with SAP and other regional groups to provide that clarity to members."

Adams's call for clarity on indirect licensing costs comes after a number of years in which SAP (and other major ERP vendors) have come in for criticism over licensing opacity and costs.

SAP UK & Ireland managing director Cormac Watters, meanwhile, says the company has attempted "to simplify how we position licensing contracts" in recent years in response to customer complaints.

While SAP is keen to push customers to its new, cloud-based S/4Hana system, customers have largely been keen to stay put - many concerned that a shift to the new system might incur new licensing costs.

SAP's cause won't have been helped with claims made last year by specialist ERP security software company ERPScan that SAP Hana, the database that S/4Hana is based on, was riddled with security flaws, including encryption and SQL injection vulnerabilities.

Source: V3

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