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SAP debuts consumption-based pricing model for SAP Cloud

SAP Cloud Platform is now available as a consumption-based model, an alternative to the subscription model. SAP also updated the SCP SDK for iOS and released two new apps.

SAP software users can now consume SAP Cloud Platform services by buying credits and using them as they see fi...

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The new consumption-based model for SAP Cloud Platform (SCP) is an alternative to the traditional subscription-based model, where you pay a monthly or annual subscription fee to use an SAP application, according to Dan Lahl, the company's vice president of product marketing.

The consumption-based pricing model was announced at Mobile World Congress, held in Barcelona, Spain, Feb. 28 to March 1.

Under the consumption-based pricing model, customers can buy cloud credits for up to 36 months. They can use the credits to buy any available SAP Cloud Platform service during that time, Lahl said.

"You get just one SKU that you can use for any Cloud Platform service," Lahl said. "We hook it up to a tracking, metering and billing machine under the covers. You get a report every month, and it tells you the services that you used, the cloud credits that you started with and your balance."

Rather than having to pick a certain number of services at a certain rate for a certain time, the consumption-based model lets you start projects quickly and gives you more agility and flexibility in how you use the services, Lahl said.

"If you compare it to a retail model and you subscribe to a grocery service, if you know what you're going to order every month from your retailer, you might get a discount on an autoship," Lahl said. "On the consumption model, it's like going to the retailer and buying a $100 gift card for $90, and you can buy anything in the store."

Prospective users can test, price and estimate using the SAP Cloud Platform services on its website, according to the company.

Making it easier to build on SCP

The consumption-based model could be an important step in making it more attractive to build applications on SCP, according to Mobile World Congress attendee Holger Mueller, vice president and principal analyst at Constellation Research.

"It could make it easier for CxOs to build on a PaaS [platform-as-a-service] platform, as they want to have budget flexibility and allocation flexibility," Mueller said. "If you have 'Budget X,' you can use it for a time frame across all kinds of services that may be important, especially in an early or exploratory phase where CxOs and their teams do not know what they want to do and where to go. So, managing to a budget is a great way to start."

However, SAP will need to improve the visibility of the consumption model and show where the consumption is taking place, Mueller said.

"Then, the big question is, when a customer spends more, what happens next, and when do they have to pay for it?" he said. "The rest of the industry is more like, 'You use it, you pay.' And people are often surprised how much they pay. But, overall, the industry has gotten better at giving its customers transparency and turning [unused] services off."

Consumption-based pricing may solve indirect access issues

The real future of cloud usage is to pay as you go for what you use, but consumption-based is a big step forward, according to Jon Reed, co-founder of Diginomica.

"Consumption-based pricing is the future of enterprise software, particularly if it comes with licensing freedoms. For example, you can easily extend access to 200 more casual users and just pay for consumption," Reed said. "I'm not sure of the licensing freedoms SAP is offering here, but my assumption is consumption-based pricing gives more flexibility on how many users as it comes down to overall consumption. To a large extent, it can also solve indirect access and audit headaches that SAP has struggled with, because if you do this right, you don't have to worry about if there are too many users accessing the system. You pay for the data used."

New updates for SCP SDK for iOS

SAP also unveiled updates to the SAP Cloud Platform SDK for iOS at Mobile World Congress.

The SCP SDK for iOS, a software development kit that integrates SAP Cloud Platform services with the Apple iOS mobile platform, now includes new controls and more integration with the Xcode integrated development environment, according to SAP. The SDK also now supports SAP Leonardo services, including image recognition from a mobile app.

Developers can also access APIs from SAP API Business Hub and use SAP Translation Hub to translate apps. SAP S/4HANA, SAP Cloud Platform Big Data Services and the SAP HANA business data platform offer new analytical controls to enable real-time data analytics and visualizations within mobile apps.

SAP also introduced two new iOS mobile apps: SAP Insurance Sales Assistant and SAP Asset Manager. Insurance Sales Assistant lets insurance agents manage sales activities like insurance quotes and customer invoices, while Asset Manager allows field workers to manage information about large assets like turbines or manufacturing machines, according to Lahl. Asset Manager combines S/4HANA and SAP Cloud Platform as an internet-of-things platform to manage work orders, notifications, condition monitoring, material consumption, time management and failure analysis, for example, all on the mobile iOS device.

"We're taking very complex applications and enabling them for mobile devices," Lahl said. "For example, in SAP Asset Manager, you may be able to get into the bill of materials inside of a machine to get that blown out and show exactly what parts you need to order. It also provides the capabilities to do 3D rendering, so you can see the parts you need to get for a broken machine or one that's beginning to show wear."

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How would your company use a consumption-based model for SAP Cloud Platform development?
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Soo let me get this right, we are all still dealing with SAP on 3rd party license usage and were to blindly trust they are billing properly with consumption?
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Marcus-

Thanks for the comment, I think you raise an interesting question of trust in this consumption-based pricing model. Being as the model is essentially brand new, i think it may take some time to resolve some of the questions on how enthusiastically it will be adopted.

Indirect access is certainly an issue that may come into the picture. SearchSAP has covered indirect access fairly extensively recently, please let us know what you think:

https://searchsap.techtarget.com/feature/Avoiding-SAP-indirect-access-woes-requires-good-faith

https://searchsap.techtarget.com/feature/SAP-indirect-access-issue-needs-clarity-for-users-experts-say

https://www.computerweekly.com/news/450430382/SAP-Indirect-access-Prepare-for-the-impact-on-third-party-applications

https://searchsap.techtarget.com/feature/Snow-Softwares-Paulini-on-nuances-of-SAP-indirect-access

thanks,

Jim
SearchSAP
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