SAP User Groups Push for Transparency Amid Cloud Migration Licensing Confusion

SAP User Groups Push for Transparency Amid Cloud Migration Licensing Confusion

The shift from on-premise SAP systems to cloud-based solutions like SAP S/4HANA and RISE with SAP has left many enterprises grappling with unclear licensing terms, unexpected costs, and a lack of transparency. SAP user groups—including ASUG (Americas’ SAP Users’ Group), DSAG (German-speaking SAP User Group), and UKISUG (UK & Ireland SAP User Group)—have escalated their demands for greater clarity, fearing that ambiguous licensing models could derail digital transformation efforts.

This blog post explores the core issues driving this push for transparency, the challenges businesses face, and actionable steps organizations can take to navigate SAP’s cloud licensing landscape effectively.

The Rising Frustration: Why SAP User Groups Are Demanding Change

SAP’s cloud migration strategy has been a double-edged sword: while it promises innovation and scalability, the lack of clear licensing guidelines has led to frustration among enterprise customers. User groups, representing thousands of businesses, are now publicly pressuring SAP to address these concerns before trust erodes further.

Ambiguous Licensing Models in RISE with SAP

RISE with SAP, introduced in 2021 as a bundled cloud transformation offering, was marketed as a simplified, all-in-one solution. However, customers report:

  • Unclear consumption-based pricing: Many assumed RISE included unlimited access to SAP’s cloud portfolio, only to later discover hidden costs for additional services like SAP Analytics Cloud or SAP Integration Suite.
  • "All-you-can-eat" misconceptions: Some enterprises interpreted RISE as a flat-rate subscription, but SAP later clarified that certain premium features (e.g., advanced AI/ML tools) require separate licenses.
  • Lack of granularity in contracts: Users struggle to predict costs because SAP’s documentation often uses vague terms like "fair use policy" without defining thresholds.

Actionable Insight:

  • Demand a detailed breakdown of what’s included in RISE with SAP before signing.
  • Engage a third-party SAP licensing auditor to review contracts for hidden clauses.

The Indirect Access Debate Reemerges in the Cloud

Indirect access—where third-party systems interact with SAP without a named user license—has been a long-standing pain point. In the cloud, this issue has expanded due to:

  • API-driven integrations: Cloud-native applications often rely on SAP OData services, GraphQL, or REST APIs, which may trigger indirect access fees.
  • SAP’s shifting stance: While SAP claimed to have simplified indirect access rules in 2018, cloud migrations have reintroduced confusion, with some customers receiving retroactive bills for integrations they assumed were covered.
  • User groups’ response: DSAG and ASUG have formally requested SAP to publish a clear, binding policy on indirect access in cloud environments.

Actionable Insight:

  • Document all integrations (even those via middleware like MuleSoft or Boomi) and validate them with SAP before migration.
  • Negotiate indirect access clauses upfront—some user groups report success in securing flat-rate agreements for API usage.

The Lack of a Unified Cloud Licensing Standard

Unlike on-premise perpetual licenses, SAP’s cloud licensing lacks consistency across regions and industries. Key complaints include:

  • Regional discrepancies: A manufacturing firm in Germany may pay 20-30% more for the same cloud services than a U.S.-based counterpart due to localized pricing tiers.
  • Industry-specific confusion: SAP’s industry cloud solutions (e.g., SAP Retail, SAP Utilities) often have custom licensing models, making it hard to compare costs.
  • No centralized pricing database: Unlike Microsoft or Oracle, SAP does not publish a public price list, forcing customers to rely on custom quotes that vary by sales rep.

Actionable Insight:

  • Leverage user group benchmarks: ASUG and DSAG publish anonymous pricing surveys—use these to negotiate better rates.
  • Push for a "Licensing Bill of Rights"—some user groups are drafting standardized contract templates to reduce ambiguity.

The Business Impact: How Licensing Confusion Affects Cloud Migrations

Unclear licensing doesn’t just cause frustration—it delays projects, inflates budgets, and increases compliance risks. Enterprises report three major business impacts from SAP’s cloud licensing ambiguity.

Budget Overruns and Unplanned Costs

Many organizations underestimate cloud licensing expenses because:

  • Consumption-based models are hard to forecast: Unlike fixed on-premise costs, cloud usage can spike unexpectedly (e.g., during peak seasons), leading to surprise invoices.
  • Example: A global retailer migrated to SAP Commerce Cloud assuming their RISE bundle covered it, only to face a $2M+ annual bill for "premium" e-commerce features.
  • Audit risks: SAP’s License Audit Defense (LAD) team has become more aggressive in cloud audits, with some customers reporting six-figure true-up fees.

Actionable Insight:

  • Implement SAP License Management tools (e.g., SAP License Administration Workbench) to track usage in real time.
  • Set up cost alerts in SAP BTP (Business Technology Platform) to avoid overages.

Delayed Cloud Adoption Due to Legal and Financial Uncertainty

Many enterprises pause or scale back SAP cloud migrations because:

  • Legal teams struggle to approve contracts with unclear terms, leading to 6-12 month delays in project timelines.
  • Example: A pharmaceutical company halted its S/4HANA migration for 18 months after SAP demanded additional fees for data migration tools not disclosed in the initial quote.
  • Board-level pushback: CFOs are increasingly questioning SAP’s ROI due to unpredictable costs, forcing IT leaders to justify every expense.

Actionable Insight:

  • Create a "SAP Cloud Licensing Task Force" with legal, finance, and IT stakeholders to pre-emptively address risks.
  • Use SAP’s "Cloud Migration Assessment" tool to identify potential licensing gaps before contract signing.

Compliance Risks and Audit Nightmares

SAP’s cloud audits are becoming more frequent and stringent, with some customers reporting:

  • Retroactive billing for "unlicensed" usage: Even minor misconfigurations (e.g., test environments left running) can trigger penalties.
  • Example: A logistics firm was billed €500K for "excessive" API calls to SAP Transportation Management, despite no prior warning.
  • Lack of appeal process: Unlike Microsoft or Oracle, SAP’s audit disputes often lack a clear escalation path, leaving customers with little recourse.

Actionable Insight:

  • Conduct a pre-audit self-assessment using SAP’s License Compliance Dashboard.
  • Negotiate audit clauses in contracts—some user groups have secured 90-day notice periods before audits.

How SAP User Groups Are Fighting Back

Frustrated by SAP’s lack of transparency, user groups have united to apply pressure through public statements, legal threats, and collaborative negotiations. Their strategies offer a blueprint for individual enterprises to push for fairer terms.

Public Advocacy and Media Pressure

User groups are taking their concerns public to force SAP’s hand:

  • DSAG’s 2023 Open Letter: Demanded clearer RISE with SAP pricing and a binding indirect access policy, signed by 500+ member companies.
  • ASUG’s "Licensing Transparency Initiative": Published a whitepaper outlining 10 key demands, including standardized cloud metrics (e.g., per-user vs. per-transaction pricing).
  • UKISUG’s Survey Campaign: Collected real-world cost data from members to expose pricing inconsistencies.

Actionable Insight:

  • Join a user group (even as a non-member, some resources are public).
  • Use their templates to draft formal complaints to SAP’s executive team.

Legal and Contractual Pushback

Some user groups are exploring legal action or contract renegotiations:

  • DSAG’s Legal Task Force: Reviewing whether SAP’s cloud licensing terms violate EU consumer protection laws.
  • ASUG’s "Fair Licensing Pledge": Encourages members to collectively reject unfair clauses in contract renewals.
  • Example: A Fortune 500 manufacturer used DSAG’s benchmark data to negotiate a 15% discount on their RISE contract.

Actionable Insight:

  • Hire a specialized SAP licensing lawyer to review contracts for unfair terms.
  • Threaten to switch vendors—some enterprises report SAP offering concessions when faced with competitive bids from Oracle or Microsoft.

Collaborative Negotiation Strategies

User groups are pooling resources to strengthen their bargaining power:

  • Joint RFPs (Request for Proposals): Multiple companies submit identical RFPs to SAP, forcing consistent pricing.
  • Shared Audit Defense Funds: Some groups pool legal fees to fight unjust audit claims.
  • Example: A consortium of 20 DSAG members secured a unified discount tier for SAP BTP services.

Actionable Insight:

  • Partner with peer companies in your industry to negotiate as a bloc.
  • Leverage user group events (e.g., ASUG Annual Conference) to lobby SAP executives directly.

Step-by-Step Guide: How to Navigate SAP Cloud Licensing Like a Pro

Given the complexity, enterprises need a structured approach to avoid pitfalls. Below is a practical, step-by-step guide to managing SAP cloud licensing effectively.

Pre-Migration: Conduct a Licensing Health Check

Before signing any cloud agreement:

  • Step 1: Inventory all SAP systems (ECC, BW, CRM, etc.) and map dependencies.
  • Step 2: Use SAP’s "Cloud Readiness Check" (available in SAP Support Portal) to identify licensing gaps.
  • Step 3: Engage a third-party SAP licensing consultant (e.g., UpperEdge, Palisade Compliance) to audit your current estate.

Pro Tip:
– Demand a “Licensing Impact Assessment” from SAP—some partners (e.g., Accenture, Deloitte) offer this as part of migration services.

During Contract Negotiation: Key Clauses to Fight For

When negotiating your SAP cloud contract:

  • Clause 1: Fixed-Price Guarantees – Push for locked-in rates for at least 3 years to avoid sudden hikes.
  • Clause 2: Indirect Access Carve-Outs – Explicitly define which integrations are covered (e.g., EDI, IoT, mobile apps).
  • Clause 3: Audit Protection – Include a "no surprises" clause requiring SAP to notify you of usage risks before billing.

Pro Tip:
– Use ASUG’s “Contract Checklist” (available to members) to spot red flags.

Post-Migration: Continuous Licensing Optimization

After going live:

  • Step 1: Implement SAP License Administration Workbench to monitor usage in real time.
  • Step 2: Set up automated alerts in SAP BTP for cost thresholds.
  • Step 3: Conduct quarterly licensing reviews with SAP to adjust for changes (e.g., new hires, acquisitions).

Pro Tip:
– Assign a “Licensing Owner” in your IT team to track SAP’s policy updates (they change 2-3 times per year).

The Future: Will SAP Deliver the Transparency Users Demand?

SAP has acknowledged the concerns but has yet to implement sweeping changes. The question remains: Will user group pressure force real reform, or will businesses need to adapt to perpetual ambiguity?

SAP’s Recent Concessions (And Why They’re Not Enough)

SAP has made some gestures toward transparency:

  • RISE with SAP "Simplification" (2023): Introduced three pricing tiers (Standard, Premium, Enterprise) but still lacks granularity.
  • Indirect Access Guidance (2024): Published a new FAQ but stopped short of a binding policy.
  • User Group Engagement: SAP CEO Christian Klein has met with DSAG/ASUG leaders, but no concrete timelines for change have been set.

Reality Check:
– These steps are reactive, not proactive—SAP is responding to pressure, not leading with clarity.

What User Groups Want Next

The top three demands from SAP user groups:

  1. A Public, Standardized Price List (like Microsoft’s Azure Pricing Calculator).
  2. A Legally Binding Indirect Access Policy (with clear definitions of "fair use").
  3. Third-Party Audit Rights (allowing customers to challenge SAP’s billing with independent reviewers).

Prediction:
– If SAP fails to act by 2025, user groups may escalate to regulatory bodies (e.g., EU Competition Commission).

What Businesses Should Do Now

While waiting for SAP to improve:

  • Diversify your ERP strategy: Explore hybrid models (e.g., keeping core finance on-premise while moving analytics to cloud).
  • Build an exit plan: Some enterprises are evaluating Oracle Fusion or Microsoft Dynamics as backups.
  • Stay engaged with user groups: Their collective bargaining power is your best leverage.

Final Thought:
– Transparency won’t come unless customers demand it—silence equals acceptance.