Take It Or Leave It?
The Bottom Line
SAP offers a good discount on Digital Access licensing.
However, you need to establish whether the SAP tool of your choice overestimates or underestimates your actual usage, and if so, how to correct the count. JNC know the pitfalls from practical experience.
Then SAP offers 2 commercial options but, without expert advice, it is near impossible to know which is your best choice. JNC have found that there are many volume cutoff points.
Also, don’t forget that your best choice could also be to do nothing and stay with the good-old user-based model.
September 2019 – What Is DAAP?
On May 6th SAP released the Digital Access Adoption Program (DAAP), an incentive scheme to switch to the latest document-based licensing model for indirect use of SAP systems. This program is only for customers who are still on the old user-based licensing model.
Within DAAP you have two commercial options. The first option is straightforward: you get a 90% discount. The second option is that you only get the standard volume discount, but you get the currently used volume for free and only pay for some headroom for future growth, which must be at least 15% of the measured current volume. With both options, you get a credit for Digital Access (DA) related shelfware (e.g. Named Users, Sales & Service Ordering, Purchase Ordering).
You may think “that sounds good, I’ll buy some tomorrow” yet the second aspect of DAAP is that you first need to determine your current document usage via one of two SAP tools. The first tool can be quickly implemented via an SAP note. However, this is a very rough estimation tool that counts documents from direct as well as indirect use, i.e. it is totally agnostic of licensing-relevance. Consequently, its results need careful examination and validation – JNC have validated a client with actual usage as low 2% of the measured volume. The second tool uses the SAP Passport and is (much more) precise, but it requires the implementation of a very recent support package which is too high a hurdle for most SAP customers if there is a short-term time constraint for completing the DA assessment. Most likely, the results of this tool will need validation too.
JNC’s Review of the Commercial Options
The 90% discount is easy to interpret and is downright good. Yes, we have seen special SAP discounts higher than 90%, but these are normally only achieved at the high end of net new investment. The other good thing is that it is available for an uncapped volume, so you probably want to include some future growth into this one-time offer. If your credits for DA-related shelfware are not fully consumed by your current indirect use, then you probably want to use the remainder of the credits for future DA growth at zero cost – note that DAAP does not cater for reducing your maintenance base by returning DA-related shelfware.
Additionally, on top of the 90% discount, the DA licensing model also has a built-in volume-tiered discount. If you are close to the entry-level of the next tier, your unit price will go down if you buy a bit more, while this unit price applies to the whole volume – you get more for less! SAP pricing is not made public, but we know that there are 7 tiers shifts in unit price with an overall percentage drop in the high 70s.
“We have evaluated that in a comparison based on minimum net investment, the optimal choice flips 7 times between DAAP option 1 and 2, with relative price jumps of up to 25% between the two.”
Calculating the second commercial option and evaluating it against the first option is a bit more complex, because besides the tiered base unit pricing, we now also have to consider the tiered standard volume discounts – these also have 7 tier shifts, starting at 0% discount for low spend and growing to the cap of 50% in 7 steps. In a comparative evaluation of the 2 options, this increases the number of unit price jumps to 13. But we’re not done – since the two offers have a different minimum purchase level (100% vs 115% of current usage), these can fall within a different base unit price tier, increasing the number of jumps ineffective unit price to 19!
For most SAP customers it is impossible to find out where the choice flips occur and hence how to get the best value for money. We have evaluated that in a comparison based on minimum net investment, due to the 19 unit price jumps, the optimal choice flips 7 times between DAAP option 1 and option 2, with relative price jumps of up to 25% around the flipping points, and across the whole ranging from option 1 being 50% better, to option 2 is 54% better, depending on the current usage.
If we take the effective net unit price as the criterion for comparison, then the optimal choice flips 5 times, again as a function of current usage. In a like-for-like comparison (buying 115% of current usage under both options), we find yet fewer flips. In a comparison where you buy ever-increasing percentages of current usage, you reach a point where there are no flips at all and option 1 always dominates.
These numbers will differ slightly between currencies, because of small differences in the price list.
In summary, the optimal commercial option very much depends on your current usage, how much growth you anticipate and the value of your DA-relevant shelfware credits. Since SAP pricing is not public and the above scenario calculations are not easy, for most SAP customers it is impossible to find out at which purchase levels the price jumps and choice flips occur and hence how to get the best value for money.
Irrespective of how good SAP’s offer is, your overall best option may yet be to ignore DAAP (for now) and remain on the user-based model, most likely when you have a high volume of documents.
Interestingly, the user-based model is also available after a migration to S/4HANA, though not advertised or encouraged by SAP.
Take away message
In my next blog on Digital Access I will talk about our experiences of the serious difficulties some SAP customers encounter while validating their current document usage level from the results of SAP’s Digital Access estimation tool.