The impact of digital revolution on software licensing – Or is that the other way around?

I happened to come across the below post which, after reading got me thinking about few things which I thought would be a good idea to write a quick post about and get everyone else’s thoughts too.

http://diginomica.com/2017/02/20/sap-v-diageo-important-ruling-customers-indirect-access-issues/

The article was effectively about a court battle between SAP (an enterprise SW vendor, that in their own admission is “The market leader in enterprise application software”) & Diageo (the drinks manufacturing giant) where SAP was suing Diageo to secure additional licensing revenue for indirect use of the data produced by SAP system software. If you didn’t read the full abstract via the above link, what that essentially meant was that when the data SAP generates (for the legal, fee paying customers that is Diageo) is accessed by a 3rd party, presumably for proving Diageo with a service, that SAP needs to be paid additional licensing revenue for that indirect usage which is the responsibility of Diageo.

In this case, this ability for SAP to claim additional licensing revenue from Diageo was in its contract which was why it was ruled in SAP’s favour by the judge (according to the article). While admitting that I am NOT a legal eagle, this brings the question to my mind that, if this in fact is the final verdict on this case (which I’m sure would be challenged in appeals court…etc.), is this approach fair, especially in a world faced with a massive digital revolution where everything, starting from a small electronic device, to a large multi-node machine, to a piece of software are all connected through digital technologies  to relay data from one to another with the intention of processing and re-processing data as it’s being parsed through each piece of software (disparate consumption)?

In my line of work (IT), almost all IT systems are interconnected and that interconnection is typically there for one system to consume the data produced by another system and the number of hops involved in this inter-connection chain can go up from a couple of systems to few dozen on how digital each customer’s environment is. In a pre “Digital Enterprise” world, typically all these connection hops (i.e. IT Systems) belong to one department, one business unit, or worst case, one organisation and therefore typically licensed to be used by that department / Business unit / Organisation (which covers all the users of that department / business unit / organisation).

But the digital revolution currently sweeping across all forms of industries will increase such inter-connectivity of Software systems to go beyond one organisation as multiple organisations will collaborate through data sharing, often real time across various platforms in order to create a truly digital enterprise. Some of these type of digital integration is already common place, especially amongst finance sector customers…etc. Such digital connectivity of software platforms across organisations will now likely be relevant to many other organisations which previously would have thought that they are mutually exclusive when it comes to their business operations.  So I guess my questions is if the software that underpins those key digital connectivities happened to have such attitude to licensing like SAP did in the instance above, what would be the implications on true digital connectivity, across multiple software platforms? Are we fully aware of the exact small print of each and every software we ever use within our business to fully understand how each one of them define its permitted usage, who’s classed as its users are and where we can connect it to other systems vs where we cannot? How do we know precisely that we are not violating such draconian licensing laws during this multi-platform, API driven, digital inter-connectivity?

What do you think? Just curious on getting people’s views as I’m sure there’s no right or wrong answer. Do you think such draconian licensing rules are wrong or would you argue given a dwindling market for Independent Software Vendors (courtesy of public cloud), they should be allowed to benefit from not just direct but also indirect (2nd and 3rd level) interaction with data initially produced by their software systems? If you would, do you then have the sufficient licensing expertise in house to ensure that you are not violating software licensing agreements that you often sign up to without reading them? If you don’t have in house knowledge, do you have a trusted partner who can advise on such licensing matters in an increasing complex, digitally inter-connected world including Cloud platforms (PaaS, SaaS) and help you achieve a true digitally connected enterprise without paying over the odds for software licenses?

Keen to see what others think!

Cheers

Chan

#DigitalEnterprise #Connected #IoT #DigitalRevolution #Licensing

Chan

Lead Solutions Architect & Hybrid Cloud Practice Lead

Leave a Reply

Your email address will not be published. Required fields are marked *