SAP saps client goodwill

Taking license. Source: DPA

At first glance, Diageo, the maker of Smirnoff and Johnny Walker, might not have much in common with a small German agricultural cooperative based in the Rhine. But both are hopping mad about their software bills.

Both are SAP customers and both are now subject to extra licensing fees being levied for using other software. They and many others are fuming at having to pay to access their data. Critics sputtered that this shows the company’s “clear preference for squeezing every penny over good customer relations.”

For example a medium-sized German business whose chief information officer prefers to remain unnamed. Bills arrived for services that had long since been used. After a lengthy back and forth, there seemed to be no way out of paying an extra €200,000 ($233,000). For a company with annual turnover of €2 billion, that hurt and left little aside for fresh IT investment, the CIO told WirtschaftsWoche, a sister publication to Handelsblatt.

The new fees are for what SAP calls indirect access to its services. Many companies use SAP products to run their business operations, and a large international firm might have thousands of third-party logistics companies. Often for these customers, SAP isn’t the sole software provider: The company might also use IT services from rivals Salesforce or Oracle. But now whenever SAP customers use competing software in order to access data in their own systems originally stored in an SAP database, they must hold a license for “indirect use.”

Claims for unlicensed indirect access usage by SAP run to the millions and tens of millions. Now, Diageo faces a hefty €54 million bill and its rival InBev, the Belgian American brewery group, has set aside €564 million for possible SAP claims.

Andreas Oczko, deputy chair of an SAP user group, responded with anger. “How is it possible that I have to pay to access data which I created with SAP software just because I’m accessing the data from a different application?” he asked at an industry event.

Fear of new fees is forcing some clients to draw closer to SAP. The unnamed CIO in North Rhine-Westphalia fears “any non-SAP solution will be even more expensive for us because of the cost of indirect use.”

“How is it possible that I have to pay to access data which I created with SAP software just because I’m accessing the data from a different application?”

Andreas Oczko, deputy chair of an SAP user group

Now critics argue SAP’s practice counters cartel regulations and are taking up legal pursuit. Corevist, a US-based company that provides e-commerce solutions for SAP customers, is looking into whether the software provider is breaking US antitrust laws.

Corevist boss Sam Bayer has commissioned help from antitrust expert Barak Richman, a professor of law at Duke University in Durham, North Carolina. In a report seen by WirtschaftsWoche, he said SAP’s behavior could “constitute an illegal refusal to trade with other third-party providers.”

SAP refused to comment when approached by WirtschaftsWoche for a response to Corevist’s allegations and Mr. Richman’s opinion.

German lawyers also say SAP’s current provisions are likely to violate European copyright law. Michael Karger specializes in IT law and is advising the German SAP user group. The basic idea of EU software copyright law is interoperability, Mr. Karger pointed out. “Everyone has the right to produce software — but this software must be open through interfaces to third-party users in order to enable innovation,” he said.

SAP has promised a solution by the end of the year, according to board member Michael Kleinemeier. It can’t come soon enough for the business world, it seems.

Michael Kroker writes about companies and markets at WirtschaftsWoche, a sister publication to Handelsblatt. To contact the author: michael.kroker@wiwo.de

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