back to article Ditching your call centre for an app? Be careful not to get SAP-slapped

SAP has scored what threatens to be a pyrrhic victory in court against one of its own customers. A British court sided with the software giant in a case that threatens to drastically increase the amount of money customers must pay it. A judge ruled that SAP's named-user licensing fees must cover any and all software that …

  1. Anonymous Coward
    Anonymous Coward

    This behaviour

    more than anything else will push people towards Open Source for corporate projects.

    Sensible corporate risk management will weigh in against the possibility of being held to ransom in this way.

    1. gv

      Re: This behaviour

      Nobody ever got fired for buying IBM/Oracle/SAP/Microsoft, etc. This should be a salutary lesson, but somehow I doubt it.

      1. Anonymous Coward
        Anonymous Coward

        Re: This behaviour

        SAP and Oracle : Two pigs in a poke and more prepared to Sue their users. A really great way to stay in business for the long term.

        This ruling really sucks.

        It probably means that someone connecting via an APP to say WebSphere APP Server which might call another system that might get its data from SAP means that the APP user needs a license. That sucks big time.

        SAP == All your Data is ours and we will sue you to get it from us.

        Some of my old customers will be very unhappy boys today.

      2. Mage Silver badge
        Flame

        Re: This behaviour

        However shareholders etc, may begin to question the vast rip-off of Oracle, Adobe, Microsoft, SAP, IBM licensing.

        Maybe also Sage, Intuit and CA Associates too.

        HPE.

        Lots of rental for poor support, lack of use flexibility, incompatible upgrades, bugs, poor UX and bloat.

        1. 2much2young

          Re: This behaviour

          <i>However shareholders etc, may begin to question the vast rip-off of Oracle, Adobe, Microsoft, SAP, IBM licensing.</i>

          This is an interesting idea but I'm not sure I'll live long enough to see it.

          Across the world large orgs have implicitly admitted that they have no idea how to manage IT development. This is an amusing idea - imagine if , say, Ford confessed they weren't really sure how to manage and track money within their business ? Nevertheless that is the status quo with respect to large orgs and IT. If you're willing to accept that is the case then what would the shareholders have the management do ? The smarter management types know they're getting screwed but they look at in-house IT (or even non-ERP acquisitions) and it's like you're asking them to tight rope walk across Niagra falls.

          It's a massive condemnation of this generation of managers but, as far as I can see, paying lots to ERP merchants is actually the best option ... even if that is a very bad option indeed.

      3. Anonymous Coward
        Anonymous Coward

        Re: This behaviour

        "Nobody ever got fired for buying IBM/Oracle/SAP/Microsoft, etc. This should be a salutary lesson, but somehow I doubt it."

        Agree. You would certainly think these sorts of situations, or the last 12 times a company was reamed on an audit, would convince companies to move away from proprietary... but I doubt it. Github doesn't buy the CIO cocktails or take them to 5 star dinners at some conference. SAP does seem to be kicking their customers particularly hard though.

      4. Richard 12 Silver badge

        Re: This behaviour

        Nobody ever got fired for buying IBM/Oracle/SAP/Microsoft, etc.

        I think somebody just got fired for buying SAP.

        £54 million pounds... more than doubling their budgeted licence cost? Yep, somebody just got fired for buying SAP.

        1. Anonymous Coward
          Anonymous Coward

          Re: This behaviour

          As an end user.

          What my personal experience says, that even in 2016 uploading a fucking .csv file

          (yeah yeah excel communication or DTW they call it) in to SAP B1 9,2 is a fucking farce.

          It surreal for an end users ... even for IT guys its tricky

          " OOo but mister customer it isn't the job of a end users to upload master data. " that's there excuse,

          that's why they will lose.

          (They are still stuck in the 80/90 when connecting a fucking printer to a personal computer.

          The end-user just want to print not to configure the driver etc etc - just plug and print. )

          The likes of "IBM/Oracle/SAP/Microsoft,SAGE etc " are living in a word made by IT guys for IT nerds

          ( who get a thrill to find the correct .CSV format) not end users.

          An end user doesn't want to know how it works for him it just has to work.

          Software for him is a tool to ease there daily work not a goal on it self to learn IT.

          That's why Apple, Google, AWS and so are winning.

          Best regards from a piss-off end user. :)

          1. Anonymous Coward
            Anonymous Coward

            Re: This behaviour

            I'm surprised this has merited more than a small mention. I had this discussion at a previous site and it always seemed obvious to me that this is how the license worked.

            I can see an argument that it's not nice/right but I fail to see how it's a surprise. In my experience most other large software providers do something similar.

    2. Voland's right hand Silver badge

      Re: This behaviour

      more than anything else will push people towards Open Source for corporate projects.

      Nope. It will not.

      The mantra "this is not our core business, we need to buy it" is extremely entrenched. I have been at companies where there were specific audits to find anything that is homebrew on top of opensource and replace it with commercial regardless of the costs just because "we are not a development department, we are an IT service department".

      This is doubly hilarious when the company in question is R&D, but if the current idiocy mantra in the PHB is to "buy or outsource only", then well... it will be bought or outsourced, because the money will always be in favor of buying our outsourcing.

      This may sound counterintuitive, until you realize that the "risk cost" for a homebrew is defined in studies provided by surprise... surprise... sellers of commercial software or outsourcers... So rather unsurprisingly, the financials never look right for a homebrew until you throw those studies (and the salesman presenting them) out of the window and do them yourself.

      1. Professor Clifton Shallot

        Re: This behaviour

        "Nope. It will not. [ push people towards open source ]

        The mantra "this is not our core business, we need to buy it" is extremely entrenched.

        That doesn't mean no open source.

        Big companies want a cast iron contract around performance and support so they outsource.

        When that guarantee is threatened by the actions of closed source providers as in this case I agree that the response is not going to be "bring this in-house with open source software" but it may well be to allocate a preference to bids that are not susceptible to this sort of threat.

        The point of open source software has never been the cost, despite this getting most of the headlines, it's about control.

      2. Mage Silver badge

        Re: This behaviour

        You can buy 3rd party supported Open Source. Or out source your open source needs to an expert support company. How do you think Red Hat makes money?

        Open source doesn't need to equal DIY or in house programmers, in house support or homebrew, though sometimes that is a better idea than bought in expertise.

        1. DougS Silver badge

          The open source model doesn't work for stuff like this

          The audience for software that does what SAP does is too small, and the scope of what it does too large for it to be a viable open source project.

          Who is going to invest the hundreds of millions it would require to get to the point where you can sign up your first customers, just so you can undercut SAP's pricing and hope they don't figure out a way to respond with some targeted discounts that kill your chances of stealing their customers?

    3. ecofeco Silver badge

      Re: This behaviour

      Sensible corporate risk management will weigh in against the possibility of being held to ransom in this way.

      Wishful thinking against under the table/back channel kickbacks to said management.

    4. big_D Silver badge

      Re: This behaviour

      Not neccesarrily opensource, but it will make people look more closely at their contracts and maybe walk away from such per-named-user contracts.

      It might make room for smaller companies to establish themselves with more "sensible", Internet orientated licensing.

      At the end of the day, something as complex as an ERP system isn't going to be easy to make in an open source world. It needs dozens or hundreds of full time developers to keep it up to date and to fix bugs. It also needs to be very carefully defined and the specs adhered to, otherwise chaos will ensue.

      If there is a bug in a graphics program or a driver, it isn't too serious. You patch it and carry on. If an ERP program has a bug, it is very likely that not enough material is being ordered, too much or that different production steps are being held up, that can cost serious money. And often a simple patch isn't enough to correct a problem, the data will also need to be corrected.

      We are starting to see big open source projects come to fruition, but I don't know of any successfuly open source project on the scale of SAP HANA.

      Another point is, the supplier of the software will often need certifications, like ISO 10001, for example. I doubt any open source project would be able to pay for, let alone gain such a certification.

      I don't mean to belittle open source, I use a lot of open source software and I have helped out on some projects over the years. But at this level, I just don't see open source being an acceptable alternative, at least not at the current time.

  2. Lee D Silver badge

    Sounds like a perfect way to lose a lot of business to me.

    "Oh, by the way, you owe us £54m because someone else might be able to see their data on your system that's of no use to anyone but yourself".

    Personally, I'd pay the £54m. Then pay £46m to find my own way of doing things that didn't involve SAP one bit in any way, shape or form.

    "Dear IT guy, please remove all SAP software from the system by 31st December 2017 and replace with an equivalent that has licensing terms we can't be stung with no matter how many customers we open it up to."

    1. Anonymous Coward
      Anonymous Coward

      Yep

      I've had 2 customers fall foul of SAP's heavy handed application of licences. They just don't get it.

    2. Aristotles slow and dimwitted horse Silver badge

      Maybe...

      I'm finding it difficult to see why people are so down on SAP on this story, other than "becoz it's a licensing issue, and we hate licenses...". Hmmm, yeah... I get that to a point.

      Named and enterprise licensing (especially around PI) has always been very clear in my mind however, even back from the first rollout of XI. Maybe Diagio should have spent a little more time and money on internal software audit and operational compliance procedures to ensure they were operating within their licensing terms then, rather than from what looks like them trying to for a cheaper named license model and then conveniently forgetting to consider or model licenses correctly when they decided to add more connectors, 3rd party application integrations and / or end users.

      Whilst licensing is never a popular subject for companies wanting to operate large enterprise ERP and integration systems, they are a matter of course, and thankfully most of the larger companies I have done SAP and other ERP / ES work for take this subject very seriously indeed.

      1. Richard 12 Silver badge

        Re: Maybe...

        It sounds like Diageo bought the PI licence and believed that it allowed them to do PI.

        As it doesn't, presumably sales of PI licences will now cease.

        One also wonders if Diageo will now sue for breach of contract, on the basis of being sold a useless product. Perhaps £55 million in damages would be about right, then no money changes hands and everybody is equally unhappy.

        1. Anonymous Coward
          Anonymous Coward

          Re: Maybe...

          At the very least, does it mean that the PI charges Diageo have paid so far count towards the final licensing fee (i.e. as it is now user access you don't have to pay the messaging API charges?)

    3. Anonymous Coward
      Anonymous Coward

      Sounds like a perfect way to lose a lot of business to me.

      Not to me. As another poster notes above, corporates are willing victims. To go open source sounds risky, complex, dangerous, particularly if you're a corporate suit. There would be voices saying "don't build your own systems, you aren't clever enough, it isn't a core competence, buy software from somebody like SAP or Oracle who know what's what". And whenever some "expert" is consulted from the likes of BCG, McKinsey, PWC et al, they'll be falling over themselves to recommend a single ERP architecture from the big boys (sprinkled with the obligatory references to cloud, machine learning, best shoring, digital best practice, etc).

      SAP (and others) have their foolish customers by the short and curlies. All the customers can do is pay up. Even if they wanted to build their own, a complex ERP, or even the CRM module would at fastest be five years from inception to live operation, probably more like seven years, and very few companies have that sort of patience.

      1. Mage Silver badge

        PwC

        You want a long spoon. Ask BT Italy.

  3. Oh Homer
    Windows

    "customers must pay it"

    Or choose to no longer be customers, I suppose, which is a consequence that SAP has apparently failed to consider.

    On the other hand, with operating profits fast approaching 3 billion quid, an aspiring monopolist like Diageo doesn't exactly engender much sympathy, and clearly doesn't need it either.

  4. Richard Jones 1
    WTF?

    SAP

    Sodding Awful Software licenses?

    1. phuzz Silver badge

      Re: SAP

      Sodding Awful Program licenses.

      Come on mate, put at least a little effort in.

  5. Anonymous Coward
    Anonymous Coward

    SAP Exchange Infrastructure

    So what exactly does SAP Exchange Infrastructure (SAP XI) provide if not a way of integrating SAP with third party software?

    If you are paying by message volume for integration with third-party software, then wouldn't you expect to be adequately licenced?

    Or was Diageo doing something specifically prohibited?

    1. Dan 55 Silver badge
      Pint

      Re: SAP Exchange Infrastructure

      Diageo apparently needed to pay for named users who access via Salesforce connected to SAP PI which is something they weren't doing because they thought the SAP PI licence covered everything.

      What licensing does Salesforce use? Would most people end up paying twice? Is this monopolistic behaviour on SAP's behalf?

      £54,503,578 - it's enough to drive you to drink.

  6. Trey Pattillo

    Be careful...

    You may awaken the SCO Zombie by infringing their trademark to sue your customers business model.

  7. steamnut

    Tied in forever

    Once you have embedded SAP into your companies systems you just have to suck it up. Trying to replace SAP would cost the same at installing in the first place so users just don't do it - and SAP know that. Ditto Oracle and Microsoft. These already rich companies just want your money.....

    1. Anonymous Coward
      Anonymous Coward

      Re: Tied in forever

      "Trying to replace SAP would cost the same at installing in the first place..."

      My company spent about $20 MILLION to implement SAP.

      For the half-dozen trivial functions it's used for (time sheets, purchasing, etc.), they could have hand-coded something for about 1% of that cost.

      And the results would have been BETTER.

  8. a_yank_lurker Silver badge

    Legalized Extortion

    The convoluted nature of commercial software licenses makes this type of extortion legal. While an open source application would keep one out this racket it takes more understanding of the real financial risks than a PHB or MBA is capable of. The technical risk is about the same: a system that does not work well and is despised by the users. With open source code this can be mitigated because you can modify the code. The financial risk is bit trickier. Initially open source may be slightly more risky because company money is being directly spent on development. But the long term risk is less, no audits and full control of the project with the support costs being much more predictable (x staff at y salary per year vs the audit found you owned not just a but b, c, and d also)

    1. fnusnu

      Re: Legalized Extortion

      Open source Enterprise Resource Planning... show me the options.

      1. Richard 12 Silver badge

        All ERP is terrible

        Every single one is awful, some are worse than useless. SAP for example has been responsible for huge losses (Levi), and I don't know anybody at all who likes it.

        Yet the others are no better, ans sone are worse.

        Several large organisations use in-house ERP, however I don't think they are likely to open source it because it's a huge commercial advantage to have really good ERP.

  9. PTW
    Pirate

    Reminds me of Chelsea v Man Utd.

    One of those battles you wish both sides could lose.

    I don't even follow football, but a bit like politics, do you wand a dog poo sandwich or a cat poo sandwich. And any other SW provider that follows this model, good luck to you.

  10. This post has been deleted by its author

  11. Anonymous Coward
    Anonymous Coward

    I'll admit I'm a MS fan, but if they sued me for 54 mil i'd be riping their shit out as fast as I can. I'm sure for that price tag I could find some one to custom write all the software I needed. Open source or closed source. even I did when the law suit I would fore bid any one from using MS stuff on pain of being publicly flogged and hung from their gentials.

    I understand why some people still use oracle but I would never use SAP. It seams every time I hear about a SAP project it ends in tears.

  12. Anonymous Coward
    Anonymous Coward

    Diageo fucked up

    you have to the always think about licenses when accessing an SAP system. many customers have this kind of "cheating" ideas but you always have to ask them to think a little before they spend a couple of millions developing in the wrong direction. You're using services on the SAP system it's not a stupid database so you're executing business code on SAP. They paid for named users not technical and I bet they were using technical users to access the data (because it's typical).

    It's not that hard to move to a different system - I see companies do that all the time.

    I have a nagging feeling that Diageo bought first SAP and then another executive came who pushed for Salesforce. And Salesforce by itself was not enough and still had to get SAP data so they built a connection to it. It might be a board-level fuck-up or political.

    Truth is SAP is extendable in function and storage to unbelievable heights. That's why it can be made to fit any company. So the more you extend, the harder is to leave it because no new solution will cut it.

    About any other (obscure) solution but SAP or Peoplesoft or Siebel: if you build a custom solution and it's only known by one or two experts - you'll end up 20 years later bringing back people from retirement and not understanding the solution anymore - I've seen it too often! Not to mention that the custom solution will get staler and staler every year.

    anonymous for obvious reasons.

  13. nilfs2
    FAIL

    The best CRM/ERP are the custom made

    If you want the best CRM/ERP system, hire a developer and make your own; off the shelf CRM/ERP systems are a tard trap! An awful lot of the times they don't fit the customer company needs, that's why most projects end with an angry customer with a huge software + support bill with a half baked solution.

  14. SharkNose

    MySap, Mishap more like..n

    Seriously who buys this utter sh1te. The worst software (or at least as bad as the Oracle equivalent product suite) I have ever seen. I can only assume their web developers are using Front Page Express, seriously some of the worst and least intuitive UIs I have ever come across

    1. Aitor 1

      Re: MySap, Mishap more like..n

      SAP is non intuitive un purpose.. and the whole transaction crap.. oh my god...

  15. Anonymous Coward
    Anonymous Coward

    Why SAP isn't a SaaS company

    In SaaS contracts, the customer pays for access, but the customer always owns their data. In SAP's 1980s contracts, they actually get to charge if someone access the customers' data (generated by SAP) in some Oracle, or whatever, database. It's crazy.

  16. Anonymous Coward
    Anonymous Coward

    SAAS is the way to go. Multi-tenant options combined with always owning your data. Back-ends managed by IT, content managed by the owners.

  17. PeterM42
    Facepalm

    Good Grief....

    .....someone STILL using SAP-CRAP?!?!?

    Mind you when it has taken over your business, it can be EXPENSIVE to get rid of it,

  18. Do Not Fold Spindle Mutilate
    FAIL

    Oracle wanted to charge for a million users or more

    A decade ago Oracle told my employer that a web facing application would have to pay for every potential user. Since everyone in the city with a population of a million could use the application then everyone would need a license. The salesperson was hoping the commission would be enough to retire. We changed things and fudged things enough to hope we were not violating the licenses far enough to be sued.

  19. barry sookman

    Is the SAP decision wrongly decided?

    I did a blog post highlighting flaws in the decision. You can access it hereSAP wins major lawsuit based on indirect use and named user license terms: SAP v Diageo,http://www.barrysookman.com/2017/02/20/sap-wins-major-lawsuit-based-on-indirect-use-and-named-user-license-terms-sap-v-diageo/

  20. Wardy01

    Why buy SAP

    I once asked a client this, and was told "because it can do literally anything".

    Ok I said, great, we have an OData API and you want to send us some data, here's the url, off you go.

    The response was simply ... "erm, well SAP can do that but it would cost us $50k to get SAP to talk to us about their OData plugin, and then probably another $100k to buy it."

    My response was simply ... well SAP can't do shit then can it, it only does what you pay them for!

    Our framework, might be in house developed but running our dev team in house is a ton cheaper than their ever growing SAP licences for out dated UI's and tool chains that are frankly just broken in many places.

    I wish people would stop buying this crap and start to appreciate that they need a dev team in house!

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