Winning the SAP Audit Battle: $36.2M Risk Averted

The Challenge

With a significant estate of 200+ SAP Systems across a global and decentralized organization, this managed to avoid an audit from SAP for several years until it was finally time to engage. SAP raised compliance concerns for 19 software products but did not provide financial value, leaving the client uncertain about the potential financial risk. The client was already part of a broader managed service with Anglepoint so we were able to quickly analyze a risk overview from SAP’s 19 products and estimated $38M + in incompliance —a startling figure that posed a serious financial threat.

There were knowledge gaps that needed to be filled within the organization after multiple changes in resourcing internally, and non-contractual “understandings” with SAP that were not in writing. This posed a challenge because the written contractual terms were not understood by the organization, and it was unknown whether SAP would adhere to the verbal understandings, or the letter of the contract.

The Solution

Over 12 months, Anglepoint worked very closely with the Client’s ERP and Global Vendor Management team to challenge SAP’s audit findings. The Anglepoint team meticulously reviewed SAP’s licensing rules, usage metrics, and the technical data collected by SAP. Anglepoint identified multiple issues with SAP’s measurement and evaluations, particularly around the licensing of the same functionality under different licensing models.

Anglepoint’s continuous communication with the organization and SAP highlighted these inaccuracies, emphasizing SAP’s incorrect evaluation of compliance. This intense period of negotiation and technical review laid the groundwork for reducing the risk.

Results

Significant Wins

The audit went on for many months. It was stressful, tense and uncomfortable at times. Despite being a strategic partner of SAP, the relationship was under pressure. Anglepoint and the client remained in partnership and regularly communicated, including daily calls, to ensure full alignment. It was crucial to invest time in the detailed analysis of consumption data, historical entitlement records and SAP licensing regulations in order to be prepared to negotiate effectively with SAP.

Achievements

• $36.2M in Cost Avoidance: Through detailed analysis and persistent negotiations, Anglepoint helped this organization avoid $36M+ in audit settlement fees.
• SAP License Harmonization: SAP acknowledged the need for better clarity around license models, agreeing to harmonize licensing metrics and models across multiple engines.
• Two-Year Audit Freeze: The successful audit resolution also included an agreement that the organization would not be audited by SAP for the next two years, providing much-needed stability.
• Improved Compliance Management: The organization gained a deeper understanding of its SAP licensing landscape, setting the stage for better compliance management moving forward and closing the knowledge gaps left by the change in resources.

Lessons Learned

• Contract vs. Usage Understanding: The organization’s interpretation of its licensing models often differed from SAP’s contractual terms. This misalignment created the initial compliance gaps.
• Document Agreements: This case highlighted the importance of documenting all licensing agreements with SAP. Verbal agreements can led to misunderstandings and discrepancies during any audit.
• Complex Licensing Metrics: SAP’s use of multiple licensing models for the same functionality created confusion and compliance risks. Alignment with SAP on guidelines is needed to prevent similar issues.

Conclusion

A strong partnership between the Client and Anglepoint was instrumental in navigating this highly complex SAP audit. There were many considerations, including SAP selling the same software under multiple license metrics, verbal understandings that were not solidified in writing, and knowledge gaps due to resource changes. Ultimately, Anglepoint and the Client successfully disproved SAP’s claims of an initial $38M risk, to settle for just $1.8M.

Continuous Service Delivery

Now that the audit has been completed, Anglepoint and the Client are focused on further optimizations and preparations for potentially migrating to S/4HANA.

Anglepoint is eager to help organizations drive ITAM success through successful tool implementation, migration and ongoing managed services to maximize the value of your ITAM tool across all publishers. Regardless of an organization’s complexity, the Anglepoint team is equipped with expertise and knowledge to facilitate seamless integrations proving measurable results for your ITAM program.