In the 12 months forward we might want to see extra progress from SAP on oblique licensing, together with extra communication about C/4 Hana, says SAP UK & Ireland User Group (UKISUG) chair Paul Cooper.
Indirect licensing – a time period effectively recognised by SAP clients, which implies use instances involving non-SAP software program however the place SAP may have a case to demand licence income linked with the usage of its software program together with that of others, Salesforce’s for instance – stays a thorny situation for customers. Nevertheless, SAP clients do discover the provider changing into extra clear, and are advancing their very own progress to adopting SAP’s full enterprise useful resource planning (ERP) S/4 Hana suite, although principally on-premise, not within the cloud.
Cooper briefed Computer Weekly on the UK and Ireland SAP User Group convention in November 2018. What follows is an edited model of that interview.
How a lot of a difficulty on your members is the tip of lifetime of ERP Central Component 6 (ECC6)? At Computer Weekly, we’ve got observed elevated concern expressed out there in respect of customers shifting off ECC6 and on to S/4 Hana, by the tip of assist cut-off in 2025.
Well, there may be a while to go until 2025, and SAP has moved clients off older variations [of ERP systems] earlier than. But this one is barely totally different in that in actuality SAP is pitching a unique product. And there are totally different routes to doing the improve; some issues aren’t there, and do you go along with [the cloud-based] SuccessFactors for HR or payroll, as an illustration?
It appears SAP is utilizing it [the end of life of ECC6] as a mechanism to attempt to get individuals to start out serious about [the transition to S/4 Hana] earlier by saying there won’t be sufficient individuals round on the Accentures and Deloittes, and so you might keep away from that rush on the finish by shifting earlier. But when merchandise have come to the tip of life up to now, you will have been capable of go to SAP and negotiate a worth for the prolonged upkeep, and it’s not stated that that received’t be out there this time. There is usually a large price ticket on that, in fact.
Luca Mucic, chief monetary officer at SAP, stated, in the newest analyst name on SAP’s numbers, it’s anticipating “roughly half” of the put in ECC6 SAP buyer base to be on S/4 by 2020.
It must develop fairly a bit to hit that! Our survey reveals 12% of our members utilizing S/4 Hana, which compares effectively with 5% in 2017. But SAP would want a giant step up in two years to get to, say, 40%.
I used to be in a world press session with Mark Hurd at Oracle Open World, in October. He stated SAP’s “end of lifing” of ECC6 was an excellent alternative for Oracle as a result of a whole lot of CIOs shall be shall be options, with that looming. And that any shift to the cloud will make switching simpler. Are you getting a lot of a way of that amongst your members?
I don’t assume it’s simply Oracle. At least one organisation we all know of has gone to Microsoft Dynamics very lately. Whenever you do come to a degree like this, it does give you a chance to mirror. And that occurs extra continuously in massive corporations that do mergers and demergers.
But, with the cloud, if you’re speaking about your [enterprise] spine – so not smaller cloud purposes like Concur – a giant swap remains to be not a straightforward factor so that you can do. There’s the change administration, retraining individuals, redesigning all of the processes, and so forth.
Also, for Oracle the issue with S/4 is it’d see defections from its database, so individuals shifting in the other way
Granted, however there will not be that many individuals working S/4 within the cloud. My understanding, from a senior SAP govt, is that public cloud S/4 Hana contracts, globally, are within the very low triple-digit vary, with implementations being fewer nonetheless, nudging 100. Which is arguably good from a standing begin in early 2017, when that facet of the S/4 enterprise received going, however it’s nonetheless low, round 1% of S/4 Hana clients [of 9,500] total. And your individual survey indicated development in S/4 Hana adoption, however nonetheless modest development, and with individuals pondering of creating the shift over fairly a long run.
Well, it’s not an insignificant undertaking, and you could effectively have a lot of different issues occurring in your online business – the affect of Brexit for one. Unless you’ve received a giant purpose to do S/4 by way of a change journey your online business is on, otherwise you’re being disrupted, you’re going to go for low-hanging fruit, short-term initiatives.
Indirect licensing has been a giant concern for the consumer group, and certainly for the SUGEN community of consumer teams and for the German consumer group. SAP launched a brand new “modernised” mannequin primarily based on consumption, in 2018, which is alleged to cowl oblique licensing in a rational method. How is that taking place along with your members?
Yes, it launched the brand new mannequin primarily based on consumption. But there are questions over the way it will work. It has not launched the instruments but to have the ability to measure use beneath the phrases of the brand new mannequin. We’ve seen a take a look at, mocked up model of the way it may work, however it’s fairly tough. Let’s take a gross sales order for instance. You know you might be charged for the creation of a gross sales order, however in the event you then cancel that gross sales order you’re not presupposed to get charged, and that ought to get reversed out of the software, however it’s not there but. So I can see why it’s taking time, however you’ll assume in the event you have been going to launch a brand new mannequin you’ll have these issues out there fairly shortly after the launch so that individuals can perceive what the implications are.
In 2017, you informed me SAP customers have been reluctant to do new or revolutionary issues due to the dearth of transparency relating to oblique licensing. Uptake of Leonardo [the term used to cover SAP’s machine learning and blockchain offerings, especially in internet of things scenarios] appeared weak because of this. Customers have been scared they might get landed with an surprising invoice for licensing.
One of the issues I talked about within the 2017 keynote was the necessity for SAP to enhance training concerning the new merchandise, but additionally to have the ability to have a dialog about licensing when it launched stated new merchandise. Yes, I believe there’s nonetheless most likely a hangover for it right here, with the oblique stuff that’s gone on, notably within the UK with the Diageo case. I do know from speaking to one in all our members that they’ve been by an oblique situation with SAP and so they’re now beneath strain from their board to not do any extra SAP initiatives.
However, the brand new EMEA north president, Brian Duffy – who’s Irish, however has come over from the US – has informed us if we’ve got received members who’re involved, he’ll assist make the problem go away. He is without doubt one of the individuals who labored on the Diageo state of affairs after it blew up.
But, you realize, if there are companies which might be capable of make a dwelling from advising clients about licensing, it’s clearly not that simple.
The large strategic initiative from an SAP perspective has been the launch of C/4 Hana, the customer-focused sister suite to S/4 Hana. But that appears little identified amongst your members.
We’d prefer to begin to see the use instances to get a greater understanding of what SAP have bolted under the banner of C/4 – there are a variety of discrete merchandise under that. That’s all the time been a type of challenges for customers. In the previous, when SAP answer speaks to SAP answer it’s not been straightforward and easy.
I’m wondering if there could also be potential for oblique licensing to return up within the C/4 context?
It is a type of attention-grabbing areas as a result of it’s the place you’ll contact out to extra options that you’d do from a basic ERP occasion.
We have to know extra. It’s a type of areas that we’ll take a look at when planning what occasions we placed on within the subsequent 12 or 18 months. SAP must be evangelising it [C/4] greater than we’ve seen to this point.