SAP UDD contract. What’s the catch?

Managing your SAP licensing can be complex and time consuming. This is especially the case for large enterprises and multinationals with a global footprint. There are many factors that influence software compliance. Some of these are related to employees, such as the on-boarding and off-boarding in SAP systems of new joiners and people who leave the company. Others are related to digital transformation, such as new industry specific applications and technologies. Add to that mergers, acquisitions and divestitures that frequently take place, and you will understand that managing SAP licenses can become very complicated.

To reduce complexity as well as the time required to manage licenses, some companies opt for SAP’s Unlimited During Deployment (UDD) contract. But does it really ensure compliance?

SAP Unlimited During Deployment contract

SAP’s UDD contract is a licensing contract that covers a specific set of products during a predefined period at a set price for the initial purchase as well as for the yearly maintenance fee. UDD applies to on-premises products only. Like any other SAP contract, the UDD agreement specifies a metric and a quantity for each of the included products, where the quantity reflects the then-current contractually agreed number of licenses for the different programs. Regardless of the contracted quantities though, a customer can deploy any quantity of the products covered during the contract period, without having to pay additional fees.

Understandably, the agreement will include a clause specifying if and to what extent any additional entities that are acquired during the term of the contract can make use of the UDD. Adding a new affiliate or subsidiary will most certainly mean that an addendum to the contract, including additional payment, is required.

Before the expiration of the contract, the customer is required to report its then current actual usage of the programs as included in the UDD contract. If the usage is lower or equal to the UDD contract numbers, no additional payment is required. However, if the actual usage exceeds the contracted number of licenses as per the UDD, the customer will be subject to paying an additional license and then current maintenance fee from the end date of the UDD contract.

Does UDD remove the risk of being non-compliant?

So, does UDD make it easier to stay compliant? The answer unfortunately is not a straightforward “yes” or “no”. All too often, customers take their eyes off the license compliance situation, believing they are safe, and do not face a risk of non-compliance.

Products that fall under the UDD contract can be deployed up to the maximum number of licenses as per the defined quantities without any financial consequences. It is therefore in the customer’s interest to fully utilize these products during the contract period. At the same time, it is important to not accidentally use more than the UDD quantities. In our experience, customers put less focus on products falling under the UDD in the false believe that UDD will fully cover them, not realizing that this will result in higher costs during the reset period. To ensure compliance, understand that when opting for a UDD contract or already having a UDD contract, ongoing active monitoring will still be required for all your SAP software products in use.