Implementing Free Software

"There’s no such thing as a free lunch"
(Milton Friedman)

Has someone made a terrible mistake?
Since the advent of SAP NetWeaver many SAP customers have been eagerly opening their mail from SAP and assuming that someone at SAP must have made a terrible mistake. Surely SAP can not have meant to send them all this free software? A couple of phone calls later and this situation is clarified, SAP did mean to send them all this software and they are free to use it in anyway they like.

So where’s the catch? Either SAP have discovered a new economic model unknown to any other software vendor, have developed a philanthropic view of the world and their customers or they have they found a way of generating revenue and hence profits from apparently free software? Have SAP managed to break one of economics guiding principals or is there indeed a cost associated with free software?

In this series of blogs I hope to discuss this and highlight where costs can and will be incurred in the implementation of free software. In this first blog we’ll focus in on whether the NetWeaver offer can be viewed as free at all and what costs an organisation will see in the technical implementation.

How free is free?
So the first question to ask when looking at a box of free NetWeaver software is “Is this really free?” and the simple answer is no. In order to receive the NetWeaver software the organisation must first have purchased the mySAP ERP or the mySAP Business Suite license, both of which carry a heavy premium over the older R/3 license. The mySAP Business Suite license, which is required in order to make use of the full range of SAP software, is also approximately 20% more costly than the mySAP ERP license.

It is true that SAP customers wanting to upgrade to one of these newer licenses from an R/3 license can get heavy discounts, currently up to 75%, against the first year’s license costs but this is a short term incentive and is not carried over to the subsequent years.

The fact that the older basic R/3 license is no longer available to new SAP customers means that any new SAP customer will be paying for the NetWeaver software even if they decide not to utilise it, this is really stretching the concept of free software.

What’s in the box?
Ok, so the enterprise has purchased the appropriate license, can the software then be viewed as free? Well, before we can answer this we need to take a look at exactly what SAP is “giving away” away and try to understand what costs, if any, there are associated with it’s technical implementation.

Delving into the NetWeaver software bundle you will find a number of discreet pieces of software that deliver a number of key functions.

People Integration
This component delivers a number of key functions; first there is the Multi Channel Access and the ability to connect enterprise systems via a range of devices including mobile, voice and Radio Frequency. Second there is a Portal infrastructure enabling the web enablement of all SAP functions and finally the ability to Collaborate via online teams and communities.

Information Integration
Within in this component there are also a number of key functions; Business Intelligence facilitating the ability to integrate and analyze data from any source. Knowledge Management facilitates the content management of structured and unstructured information and finally Master Data Management. This enables the centralised maintenance and control of master data on any connected system

Process Integration
This aspect delivers the Exchange Infrastructure, an SOA enabling tool, and the ability to model and execute cross component Business Process Models

Application Platform
Finally there is the application platform, this forms the heart of all NetWeaver components and is a platform independent, web enabled application server with two personalities; an ABAP engine (SAP’s Proprietary development language) and a certified J2EE engine.

A good example
So what costs would an enterprise expect to experience in the implementation of the SAP NetWeaver stack? Putting hardware costs to one side, let’s take a closer look at this and see if we can make sense of it.

Well the first thing to consider is that it is very rare to see all SAP NetWeaver components installed at any one enterprise, companies tend to select the components that meet the business requirements of the moment. As each component has specific costs associated with them we’ll focus in on one, SAP Exchange Infrastructure, to clarify things and reduce confusion.

SAP Exchange Infrastructure enables the SAP customer to build a Service Orientated Architecture (SOA), loosely couple applications, model business processes and integrate third party application systems with SAP. Not bad for free software, but can this software really be called free? After all any activity carries a cost and implementing software, no matter how “freely” licensed, is the same.

Just double click the install routine?
So first of all we need to consider the technical implementation costs of the software, despite what you may have been told software installation is rarely a case of “double click the setup.exe and stand back” and SAP Exchange infrastructure is no different. It is a multi layered implementation process that can tax the most experienced of SAP technical consultants and really should not be even attempted by those without specific experience in its installation.

Assistance in this area can be gotten from a number of SAP Consultancies, Diagonal Consulting being a leader in this field, and from SAP themselves but do not be surprised by the high premium associated with this; this is “top dollar” consultancy and the rates charged will reflect this.

Typical implementation cycle costs would be approximately 5 days per tier for an experienced consulting, i.e. 5 days to install a development environment another 5 to install the quality assurance system and a further 5 for Production. These figures can be doubled and even trebled for inexperienced consultants.

So straight away we can see how even the basic installation costs can really add up beyond what an organisation might expect add to this the license cost premium and we are starting to see how the purse strings are stretched.

Next Time
In the next blog I hope to discuss the costs an enterprise will see in the deployment of SAP NetWeaver and specifically how some hidden license costs can be incurred.