Users in SAP's heartland call for greater license transparency

DSAG players grappling with cloud migration want more consistency with commercial models

DSAG, the SAP user group for Germany, Austria, and Switzerland, has called for greater transparency in cloud licensing to enable the migration and upgrade of on-prem systems to the cloud.

Speaking ahead of the user group's conference, chairman of the board Jens Hungershausen agreed the cloud was the infrastructure most SAP users look to modernize in their application stack, but inconsistencies in licensing were making the transition more challenging than it could be. For many companies and organizations, the journey into the "new" SAP cloud world still begins with legacy SAP ECC or the "old" Business Suite, and even with the on-prem version of the latest ERP platform, S/4HANA. DSAG wants SAP to see cloud ERP as both private and public cloud.

"For cloud transformation to succeed, you need a consistent and harmonized architecture, uniform operating models, clear migration paths, and transparent licensing and discount models that can be scaled up and down," Hungershausen said.

In April, SAP ended its RISE with SAP product package, replacing it with SAP Cloud ERP Private, with pricing based on the Full-Use-Equivalent metric (FUE).

Later, Gartner published a research note critiquing the licensing changes. It warned users that the changes modified SAP's volume-based pricing tiers, which resulted in increased list prices for some volumes. It recommended that users should look again at their bill of materials with SAP to understand the vendor's new cloud commercial terms before opting in.

Gartner said: "These changes necessitate revisiting existing budgets and business cases developed based on prior RISE with SAP package estimates. Customers must understand how the changes impact their bill of materials, potentially adding line items and increasing overall costs."

It said components included in SAP Cloud ERP Private have been heavily modified compared to those previously found in RISE with the SAP Premium package, which "may require changes to your bill of materials and potentially lead to additional line items and an increased budget compared to prior estimates."

DSAG said the use of different licensing models in SAP Cloud ERP Public and Private Edition leads to additional complexity, especially in two-tier scenarios. DSAG is calling for a standardized and open operating model that encompasses both the public and private cloud to help companies operate hybrid scenarios efficiently and minimize investment risks.

DSAG noted SAP had promised to lower transformation costs while improving agility. But for companies to actually take this path, it must become clearer why the switch to the "new" SAP world is worthwhile, the user group said.

Earlier this year, an SAP spokesperson said the licensing changes do "not mean a direct increase or decrease in cost."

"As businesses venture into the new digital era, SAP is committed to guiding and supporting every step of their journey toward integrated, cloud-powered operational excellence," they said. "The SAP Cloud ERP Private Edition package is not just a solution; it is a gateway to a future of limitless potential and unprecedented business agility." ®