International business, £30bn revenue, 40,000 employees, operating in 5 countries, SAP Contracts - Limited – Un-limited (LUL) / UDD
Challenge
Our client had numerous SAP agreements for separate operating companies and was entering into a phase of integration and consolidation. They needed greater flexibility to deploy licences over a 3 year period and entered into a LUL agreement. Due to considerable business change including major acquisitions, SAP imposed multiple addendums and contractual changes to the LUL agreement which proved highly complex and exceptionally difficult for both parties to manage. Approaching the termination date of the LUL agreement the client was not in a position to adequately quantify their usage solely relating to the LUL agreement and subsequent amendments. In addition they were in the process of preparing for a full SAP Audit submission which had previously caused them considerable difficulty, consuming a lot of resources and yielding uncertain outcomes due to lack of expertise. This represented a high risk to the business in terms of potential non-compliant usage claims.
Solution
We first carried out a Contract Analysis exercise to correctly ascertain what was part of the LUL agreement and what was separate. We then analysed all systems in production to identify active Named Users & Engines and validated these as accurate. Through a process of detailed discussion we were able to build a reference table which accurately represented the incremental deployment under the LUL set of complex agreements and support the client in presenting this to SAP. We also advised the client that rather than fix the licence levels they would be better placed to negotiate and transition into a Value Flex agreement as their future business strategy was for more acquisitions and a roll out of a new Corporate SAP template. We supported the client by creating a compelling business case which aligned SAP Licence requirements to the next 3 years of the business plan. As part of the work we provided advice and guidance in the preparation of Audit submission data which including optimising the User Classification and correctly aligning Engine usage with contract metrics and entitlement.
Results
With our support the client was able to negotiate a 3 year Value Flex agreement with SAP which the client had not identified as an option, but which they agreed would reduce risks, costs and effort over the period. At this time therefore the actual savings and value cannot be quantified. However, the clients view is that it will save millions of pounds. The outcome from the Audit submission with our knowledge, advice and support removed significant financial risks. N.B. As a consequence of our forensic analysis of their contracts together with our knowledge we identified terms which granted “Unlimited Global use” of an important Engine Licence. At SAP’s determination the client had continued to buy many additional licences over time, none of which were legitimately required. This amounted to a net rebate of £6m.