SAP Licensing Molds to Digital Business


At ISG’s recent Future Workplace Summit, I discussed how greater transparency in licensing agreements would foster more transformative collaboration, faster growth and better long-term outcomes for all parties. This is why I am pleased to see this week’s announcement from SAP that it is revising its “Indirect Access” licensing policies. From experience with enterprises in the field, we have known that SAP’s prior policy was a significant source of friction and concern – and a deterrent to many potential customers.

In what it is describing as its new “sales, audit and pricing model for its Digital Access licensing policies,” SAP will specifically distinguish between “Direct/Human Access” and “Indirect/Digital Access,” which will include access by third parties (including customers and suppliers), Internet-of-Things (IoT) applications and robots that will be licensed on a per-transaction basis.

The new licensing model will apply to what SAP describes as “the digital core – SAP S/4HANA and SAP S/4HANA Cloud – as well as the SAP ERP application.” Existing clients will have the option to remain under their current licenses or migrate to the new model. SAP also is separating its audit function from its sales organization, which when combined seemed a bit unseemly.

This is all big news and will no doubt influence other licensing practices in the industry. The fact is that legacy licensing models simply were not designed for the digital era. And, while evolving licensing to better match today’s business paradigm could be a breath of fresh air to the industry, existing clients will need to sort out what this means to them and what their best option will be going forward.

Enterprises need to analyze any robotic process automation (RPA), third-party connectivity and IoT plans that touch their SAP environment, as well as the projected transaction counts (and definitions) for each of these areas over time. So, while transparency is clearly a positive goal, change involves significant (and different) financial risks, as buyers can significantly over-pay if they select the wrong option. Therefore, it will be important for each organization that uses SAP to embark on a careful strategy review – including discovery, scenario modeling, financial analysis and risk/reward decisioning – before determining its licensing path.

ISG helps enterprises with their digital transformation, including software licensing and RPA strategy and implementation. Contact us to learn more.


About the author

Bill Huber

Bill Huber

Signature traits: Big picture systems thinker and sourcing expert.  Transformation and cost optimization-focused.  Pragmatic and experienced.

Bill works with the world’s leading companies to identify, implement, and accelerate improved capabilities and better ways of working, and to align and optimize the network of strategic suppliers and partners.  These efforts have driven hundreds of millions in savings for his clients. 

Recent projects include helping major manufacturers and healthcare companies to implement broad cost optimization strategies, assisting utilities and medical device companies with their SAP strategies, assisting a leading fashion brand with its IT transformation, eCommerce, and SAP implementation, and working with a global cruise line on negotiation of its reservation and loyalty platform. Prior projects include:

  • Leading several global ITO and BPO projects for the leading cereal and snack food company
  • Infrastructure outsourcing for a leading regional US Bank
  • Implementation of an IT capabilities facility for a low-cost carrier

Prior to his current position, Bill lead ISG’s software advisory practice, lead ISG’s healthcare vertical, co-led ISG’s BPO practice and was a director in ISG’s strategy practice.