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Rolling out more significant changes to its licensing policies, SAP will now allow customers to terminate on-premise licenses to buy new on-premise software, and give them the option to terminate some licenses without a new purchase and recalculate their maintenance payments.
The new policies, which join terms announced last month that allow customers to terminate on-premise licenses and adopt cloud software, are significant steps from SAP to simplify its customers’ landscapes, as well as push its customers toward its newer software, such as that based on the HANA and mobile platforms.
“Why would we nail down a customer on an old version or an old engine just for the sake of saying you need to have it all?” says Jens Bernotat, VP of strategy and business development, maintenance go-to-market at SAP. “We think with this approach we have found a very good step forward.”
Like SAP’s cloud licensing terms announced a few weeks ago, the new on-premise licensing policies are dependent on the contract situation and have some fine print. But virtually nothing—even shelfware—is off-limits.
Under the new policies, partial termination of licenses and reduction of maintenance is even possible, a situation in which SAP would recalculate the maintenance base for all remaining licenses according to the “product family” in which the reduction is requested, Bernotat says. SAP divides products into three families: Business Suite; Database, Technology and Analytics (including SAP BusinessObjects and Sybase); and Mobile software. A new maintenance basis would be calculated according to the list price at purchase time and standard volume discounts for the remaining licenses, grouped by product family.
This isn’t to say that customers could cut their maintenance payments in half, and really, such a situation wouldn’t be feasible as most customers are not in a situation to drop half of their licenses. Plus, original discounts may prove to be a better deal than the new calculation.
“The economic attractiveness cannot be predicted generally, as contract terms and licensing patterns as well as discount levels vary,” Bernotat wrote in an email clarification. “Some customers may benefit, others may not.”
In the case of on-premise license terminations and no new purchases, no recalculation of maintenance basis would ever lead to an overall higher payment than before—SAP would cap this, Bernotat says.
For the on-premise to on-premise terms, it must be an “even exchange,” so to speak, with the costs of maintenance on the terminated licenses equal to or less than the payments on the new purchases. Business One licenses are not applicable either.
The world’s two largest user groups, ASUG and DSAG, worked together with SAP in helping to forge these new licensing policies.
“We’re pleased with the progress that has been made, and think the changes SAP’s making to its licensing policy are good news for customers,” says Don Whittington, a member of the ASUG Board of Directors who serves on the core Leadership Team of SAP User Group Executive Network (SUGEN) group. “SAP really stands alone amongst enterprise vendors making such big changes to its licensing terms.”
With all of the changes to licensing policy rolled out in the last month, can customers expect more?
“I would say, let’s give customers and our field the opportunity to digest this service, because it does not make sense to bring too many new things in the short term,” Bernotat says. “Let’s see how far we can help customers leverage this. But the discussion never stops.”