Enterprise software giant SAP has announced that it will be increasing flexibility for customers with on-premise licenses, where businesses will now be able to replace existing on-premise licenses and maintenance with alternative on-premise solutions.
This will be welcome news for companies that are paying costly maintenance on licenses that aren’t being used and is likely that SAP is hoping more customers will begin to use its flagship in-memory platform, HANA.
However, SAP has said that the new maintenance resulting from the reallocation, at a minimum, remain the same.
This news follows the recent announcement from SAP that customers can now also reallocate elements of their on-premise licenses to the respective cloud solutions, in a bid to increase cloud adoption in its traditional customer base.
In a separate announcement released today, SAP said customers that do not want to take advantage of the flexible licensing options being put forward will be able to abandon usage rights of certain existing software licenses and request the corresponding maintenance termination – without purchasing new SAP on-premise or SAP cloud solutions.
Computerworld UK is waiting to hear back from SAP on how this option will work for customers and how existing maintenance costs will be discounted.
SAP said: “SAP cannot predict the economic attractiveness of this model, as original contract terms may vary substantially. Customers will need to work directly with their SAP account team to assess this option.”
The SAP User Group in the UK welcomed the news, but warned that companies shouldn’t be too hasty in looking to terminate licenses.
"This is yet another step in the right direction from SAP and shows that the company is listening to our calls for flexibility. Along with making it easier and more attractive for existing customers to move to cloud solutions, we've also been pushing SAP for a couple of years to enable the parking or partial termination of licenses,” said Philip Adams, chairman, UK and Ireland SAP User Group.
“Until now if a customer had one contract from SAP covering all their licenses they could not choose to turn off some of those licenses and the associated maintenance costs. With the changes SAP has made this week customers will be allowed to terminate parts of their estate and therefore potentially gain reductions in their maintenance charges. However, to be clear this is not SAP allowing them to park licenses.”
He added: “Therefore customers need to be careful and consider whether they are likely to need licenses they are not using at the moment in the future. Once licenses have been terminated they cannot be switched back on.
“Essentially, if a customer needed those licenses in the future they would need to purchase them again and at potentially lower discounts.”
However, Adams did highlight that companies that have suffered in recent years from reduced revenues may find the option appealing.
“Yet for companies that have been significantly hit by the economic downturn over the last few years and find themselves with a much smaller workforce which is unlikely to expand in the short to medium term, this policy from SAP could be very attractive, if after rediscounting the maintenance fees reduce,” said Adams.
“For other customers, the existence of a formal policy from SAP that clearly states they can reallocate existing investments to newer on premise or cloud solutions from SAP will be welcomed. The changes this week, combined with the recently announced cloud extension policy, really demonstrates the value that can be created through constructive discussions between user groups and SAP."