This Type of Hybrid Environment Just Got Dangerous

UK judge rules in favor of SAP against Diageo’s PLC for using a standard cloud connection

Background
Diageo PLC is the world’s largest producer of alcoholic spirits, with brands like Smirnoff and Johnny Walker. They paid SAP about $70M for use of the mySAP Business Suite, which included licensing and maintenance fees. SAP had sued Diageo for violations of the contract, and a UK judge decided the case in SAP’s favor, awarding SAP an additional $67M, essentially doubling Diageo’s costs.

The Issue
Diageo used SAP’s native APIs to connect its systems to a Salesforce instance. Since Diageo was licensed to use the API, they assumed that such a configuration was authorized by the contract, but SAP disagreed. According to SAP, those Diageo Salesforce users should have been considered as “named users” because they had “indirect access” to data stored in SAP systems.

Lessons Learned

  1.  An API License may not cover users who connect through it. Organizations who use APIs to connect various business systems should do a thorough investigation of those APIs, and their licensing contracts, to determine if this interpretation of a “named user” and “indirect access” puts them out of compliance.
  2. Litigation may not be the best option. Involving legal teams and going to trial is a high risk / high cost decision. Negotiation can be a far better tactic, involving less risk and less cost. Technical consultants (like Miro), can often achieve settlements of pennies on the dollar, by working directly with the vendor to achieve an outcome acceptable to both parties.
  3.  Many Vendors such as Oracle, Microsoft and IBM also consider API connected users to be “named users” and may also consider similar situations to this as being out of compliance.

If you’re concerned about your state of compliance, want a review of your licenses or are being audited by a software or hardware vendor, Miro can help reduce or completely eliminate your out-of-compliance penalties, and negotiate terms and conditions that will keep you safe. Contact Miro today for a brief chat about your environment.

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