SAP, Oracle Want Licenses for Third-Party App Access

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom and transportation.

If your business uses SAP or Oracle, be advised. During recent contract negotiations and audits, SAP and Oracle have begun to ask clients to purchase additional licenses for third-party application access. For example, if your business has 100 licenses that need to access information from SAP, SAP now requires you to buy 100 additional licenses.

This is a very simplified example, but the point should be clear: if unabated, this will have a major impact on how many licenses you need to purchase and support.

The grey area falls in the definition of "indirect access." In the past, SAP and Oracle's contracts have not clearly defined what constitutes indirect access. While this has been a concept in their contract for the past several years, only recently have they begun to interpret the contract in this way, and attempt to enforce it with clients.

This could be a devastating blow to IT budgets. SAP and Oracle have been highly successful at entrenching themselves deep into their clients' operations. Integration between their solutions and other applications is critical to how companies run their business.

Like many enterprise vendors, SAP and Oracle are increasing the number of audits being performed on their existing client base. Those clients should be prepared to pushback against SAP and Oracle and negotiate this language. By editing and/or eliminating clauses that deem certain application interfaces eligible for these new fees, as well as redefining "indirect access" in such a way that is both measurable and mutually agreeable, companies can begin to protect themselves against significant cost increases.

- Jeff Muscarella, EVP of IT, NPI

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