SAP’s managing director for the UK, Tim Noble, took to the stage at the annual User Group conference in Manchester this week and bravely told customers that despite constrained budgets and difficult economic conditions, SAP will not allow users to park maintenance costs on unused software licences.
Phillip Adams, who will become the User Group’s new chairman in March of next year, challenged Noble by highlighting that two years ago when Noble attended the conference, he had implied that SAP would introduce more choice and flexibility into its licensing model.
A recent survey found that some 95 percent of SAP customers still find its licensing ‘too complicated’, which suggests that there has been little improvement.
Noble responded by telling users that SAP is ‘inherently complicated’.
“It’s a little disappointing when I get the results that so many people still think it’s complicated. We have tried very hard to improve the simplicity, but the first thing to remember is that everything that SAP does is inherently quite complicated,” said Noble.
He went on to say that despite the survey results, SAP had ‘reduced the number of price points and areas of complexity by at least 20 percent’. However, he did not clarify exactly what this meant.
He added: “Whilst your members might not be happy, our pricing model is 20 percent simpler than it used to be two years ago.
“I’m sure all your users would like me to say [that they would be allowed to park their maintenance] but the fact is that they can’t.”
However, in a follow up interview with Computerworld UK, we asked Noble directly if any SAP customers currently park maintenance costs on their licences.
He said: “For that you are going to have to talk to somebody else. I don’t think I’m allowed to divulge that information.”
Noble did say, however, that if customers do want to park their unused licences they should talk to their account or commercial teams, because they might be able to come to an arrangement that allows users to defer costs of unused licences to new software licences.
Noble said: “If you are looking to buy future licences, or do something different with SAP, or expand your estate…common sense says that you as the customer and SAP should take into consideration what you have got and how you could work with us on a commercial arrangement.
“But if asked directly, do we park licences? That answer is no.”
It is also worth noting that principal analyst and CEO of Constellation Research, Ray Wang (@rwang0), tweeted yesterday that he had come across attendees at the conference that had in fact parked their software licenses.
He tweeted: "MyPOV: in our licensing workshop on Monday, over 15% had already parked #SAP licences #ukisug12"
Current chairman Alan Bowling told Computerworld UK that Noble is likely to find it difficult to comment in detail on licensing, as he is a ‘local mouthpiece in a global organisation’.
However, he also said that he is unsure if anything will change too much in this area over the next twelve months, due to the constraints SAP faces in declaring its revenue.
“Fundamentally this is a difficult one for SAP because of the way it declares its revenue. It’s not an instant fix,” said Bowling.
“It is declaring maintenance revenues all the time, so the financial institutions expect them to generate certain income from a certain source. If SAP was to suddenly say that users could park licences, that’s a bit of a challenge.”
Bowling said that Noble’s implication that unused maintenance costs could be diverted to new business with SAP isn’t surprising, given this challenge around revenue declaration.
“What they are trying to do is mitigate the revenue impact. It’s a start,” he said.
Bowling said he was pleased to gain assurance from Noble that existing functionality for on-premise SAP products is still being protected and invested in. However, he was unsure as to how far this is being taken.
“He clearly said that our existing functionality is protected and that there is continuing development of that functionality for on premise solutions. I hear that, and I hope that is what is delivered,” said Bowling.
“But if you were to roam around SAP today, it would be really interesting to ask the question, where are you spending the development money? Is it on premise? Or is it cloud, in-memory and mobile?”
He added: “Don’t forget your existing customers SAP, they are what got you where you are today. Don’t forget them, it’s a huge amount of revenue.”
In other news, Bowling also used the annual conference to highlight a number of other challenges for SAP customers, such as planning for mobility and migrating to the cloud.