SOFTWARE LICENSING

Keep It Simple, SAP

By Jacqueline Lee, Contributing Writer

SAP (News - Alert) wants to group its products into bundles that will simplify customer pricing. However, the company’s tangled licensing policies have made simplification much harder than expected.

The results of a survey released in October showed that 95 percent of respondents found SAP’s policies too complex. To address the problem, the company started by creating an internal document to corral its licensing policies and to explain them to SAP sales staff.

The document, according to an article in InfoWorld, totals 131 pages. As an example, for SAP’s Business Suite, the document names 15 different types of users.

“It might be that SAP lawyers are being paid by the word,” suggested Frank Scavo, president of Strativa, an IT consulting firm.

Scavo also complained that the wording is too complex for customers to understand. “I challenge any SAP prospect to read these definitions and explain what they mean.”

SAP spokesman James Dever pointed out that the company had released a 25-page document designed for its customers and said that the 131-page behemoth was intended as a sort of licensing bible for the company’s sales force.

SAP rival Oracle (News - Alert) already bundles its services and publishes its price list. Unfortunately, because products are presented as customized bundles, customers have a difficult time deciphering what discounts, if any, they receive from Oracle.

SAP, on the other hand, is known to zealously guard its price list but has a better relationship for managing the sales cycle and the sales relationship. While customers may receive a more personalized solution thanks to SAP’s bottomless well of applications, pricing becomes more complex when licensing has too many facets.

“What ends up happening is a customer goes to a sales rep or a partner and asks for a quote, and they'll get a different answer from every person,” explained Amy Konary, an analyst for IDC.

Some analysts express hope that SAP’s growing SaaS (News - Alert) business may have a simplifying effect on the licensing issues. However, the consensus seems clear: Don’t expect miracles anytime soon.