On the opening day of the SAP UK and Ireland user group conference in Birmingham, a survey revealed that only 2% of the supplier’s customers intend to use its much-trumpeted Leonardo artificial intelligence (AI) initiative, and 43% were unaware of its existence.
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And almost 50% were also unaware of SAP’s attempts to update its indirect licensing policy in line with how enterprise resource planning (ERP) systems are accessed now, as against in the 1980s.
These findings of a user group pre-conference survey fly in the face of SAP’s strenuous efforts in respect of Leonardo, which revolves around the internet of things (IoT), mobilises machine learning and pulls together the supplier’s digital transformation offer to its customers. It also confounds the company’s efforts to communicate how it has adapted its licensing models this year, with a shift away from user-based pricing to business outcome pricing in respect of what it calls “order to cash”, “procure to pay” and “static read access”.
The survey was conducted among 376 member organisations, but a spokesperson for the user group said the licensing data comes from a “slightly smaller sample size as we based the data on people who were directly involved with or had experience” in that area, and also in the IoT.
In his keynote address, user group chairman Paul Cooper described the figures of 2% intending to use Leonardo and 43% being unaware of it as “the Walldorf slide”. Each year, the user group’s annual pre-conference survey typically throws up a few statistics that has SAP’s headquarters staff scratching their heads, he said.
Indirect licensing has been a burning topic this year, with the SAP v Diageo case resolved in the High Court in February, in SAP’s favour. Diageo was found to be liable for licensing fees in respect of its use of mySAP ERP software on a Salesforce platform.
Separately, SAP has been attempting to update its licensing policies from the days when users were accessing its ERP software directly and simply, from the 1980s onwards.
Nevertheless, the survey found that 58% of respondents had concerns about compliance with SAP’s licensing policy as it relates to SAP software used by third-party applications and end customers.
Of possibly deeper concern to the supplier will be the 37% of respondents that plan to use cutting-edge IoT software having worries about indirect licensing, because these are those customers that might be considered beneficiaries of the Leonardo “toolbox”.
Cooper said SAP salespeople need to heed the words of empathy that have been coming from their CEO, Bill McDermott, expressed at this year’s and last year’s Sapphire customer conferences in Florida. “A lot of members are concerned about being back-charged,” he said.
The user group has been helping members with the SAP Licensing Transparency Centre, said Cooper. This enables users to post anonymous questions about usage patterns and receive generic responses.
In October 2017, the group announced anonymised access to the Licensing Transparency Centre for its members, an initiative it said was driven through SUGEN (SAP User Group Executive Network).
“The problem for most organisations is they have no idea whether they are correctly or incorrectly licensed,” said Cooper then. “Despite SAP’s assurances that it won’t ask for back maintenance payments from organisations that are under-licensed, members have understandably been reluctant to speak with their account managers.”
Cooper added that the group is “pleased with the Sapphire announcements on the shift to business metrics, but we still have concerns”.
Speaking during the same opening session, Hala Zeine, chief business development officer at SAP, said predictability, transparency, and consistency are the principles governing SAP’s efforts to update licensing. She said the “order to cash”, “procure to pay” and “static read access” scenarios that all make the shift to a business outcome metric will cover 80% of indirect access. And that the company is working on the other 20% of use cases with the user groups to further modernise the licensing for [what users call] indirect access.
Mike Slater, managing director, SAP UK and Ireland said in the same session: “We genuinely do hear you – we constantly talk about customer first at SAP.”
Slater announced some new efforts by the supplier to make itself more customer-focused in his territory. These include a new “customer success team” that is tasked with taking a long-term, non-transactional approach – a “blue ocean strategy”.