Internal document suggests SAP's goal of simplifying licensing will be a tall order

SAP still requires 131 pages of fine print to describe software licensing rules for its products

By , IDG News Service |  Software

Some observers aren't seeing major change for the better just yet. "From our perspective, with some of the deals we've been working on, [licensing] hasn't been simplified at all," said David Blake , CEO of UpperEdge, an IT sourcing and consulting firm that deals frequently with SAP contract negotiations on behalf of customers.

But SAP is not the only offender in this regard among enterprise software vendors, according to Jeff Lazarto, principal at UpperEdge.

While UpperEdge's clients generally believe SAP rival Oracle's licensing policies are simpler and more transparent than SAP's, Lazarto cautioned against making a straight apples-to-apples comparison between the companies.

That because while Oracle has long provided public price lists for its products, in actual negotiations "what we typically see is that everything Oracle proposes is a custom bundle," Lazarto said. As a result, it can be difficult for customers to keep track of which product in the bundle is getting what level of discount off the list price. Oracle has also come under fire for a perception of licensing complexity, particularly with respect to its widely used database.

Meanwhile, although "SAP guards the price book like the Holy Grail, they price off of it," Lazarto said. "Oracle discloses the price list but doesn't necessarily price off of it."

SAP also "does better job of managing the sales cycle and the sales relationship" with customers than Oracle, Lazarto said. This culture has a "lot to do with executive leadership" at SAP, namely co-CEOs Snabe and Bill McDermott, he said.

However, Snabe's discussion of SAP moving to a bundled license approach over time could mean customers face the same challenges as Oracle shops in determining whether they're getting the best deal.

Bundles will also require customers to be more flexible and a "little more vanilla" in their tastes, said IDC analyst Amy Konary. "A lot of times what happens on the customer side is they'll be presented with a bundle but it doesn't meet their needs." That makes the customer the one potentially introducing more complexity if they decide to make changes in the deal, Konary said.

It will likely take a long time for SAP to phase in major changes to its licensing model, but doing so is important for both customers as well as the company, Konary added.

For one thing, complex license arrangements could expose customers to a higher risk of failing a license audit by SAP, she said. While a customer may have a few employees working on deals who do understand the details, "there are a lot of other people that come into contact with [software] that have the opportunity to misuse it inadvertently," he said.

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