Phloxx Industries are a global leader in the manufacturing industry. Their management team expressed significant concerns regarding their SAP licensing strategy, particularly the complexities and potential pitfalls associated with indirect access. The company were experiencing difficulties comprehending the licensing framework and accurately measuring its implications. In particular, Phloxx Industries wanted to understand:
- The potential compliance risks and solutions.
- Whether to transition to Digital Access immediately.
- The future implications of moving to Digital Access.
The Challenges
Along with the outcomes set out above, JNC identified several other critical challenges that Phloxx Industries faced in order to resolve their current SAP license dilemma.
- Establish the extent and impact of third-party systems interacting with SAP.
- Determine the third party systems’ data process flows.
- Assess the compliance risks and appropriate licensing models.
The Solution
To address these challenges, JNC implemented a comprehensive approach:
- Architecture Review: We started by examining Phloxx industries’ architecture diagrams to identify third-party systems interacting with SAP, forming a target list of interfaces.
- Stakeholder Engagement: Key personnel collaborated with the client to identify system owners who understood and could explain data creation processes.
- Questionnaire Deployment: We used a questionnaire to collect key details, resolving about 40% of cases without extensive client involvement.
- Workshops: For more complex cases, workshops were conducted, and the majority of situations were resolved in 15-30 minute calls. Only 10% of the cases required longer discussions.
- Dual Approach: This method ensured highly efficient information gathering without significantly disrupting the client’s operations.
Once all the necessary information was collated, JNC conducted a comprehensive assessment of the data flows in relation to SAP licensing terms to ascertain the required user licenses for each interface.
Simultaneously we generated detailed reports to quantify the number of documents necessitating licensing under the Digital Access model. This involved close collaboration with the client to validate the licensable documents.
The final stage was a comparative analysis of the available licensing models to identify the most cost-effective and strategically aligned solution. This analysis was carefully matched with Phlloxx Industries’ 3-5 year strategic plan, ensuring that the chosen licensing approach would be both effective and future-proof.
Conclusion
The analysis revealed that staying on the Indirect Access model was most cost-effective for Phloxx Industries’ current environment, as there was no compliance risk. Transitioning to Digital Access would have cost $800k, which was unnecessary at this stage. Given the company’s plan to move to S/4HANA within two years, purchasing Digital Access as part of a larger deal would achieve better terms. This engagement provided Phloxx Industries with a clear plan for future transitions, reliable license requirements, and cost projections, enhancing their negotiation position and current situation.
*Protecting our clients’ confidence is of utmost importance at JNC. While our case studies are based on true projects, we have used fictitious names and removed or changed other identifiable details
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