US based global business, CPG (Consumer Packaged Goods), £70bn revenue, 140,000 employees, 100,000 SAP Users, SAP Audit, Contracts, Licence Optimisation, Licence Value and Support Fees, Negotiation Strategy following Azurious Best Practice
Challenge
As a 20+ year customer of SAP having never been subject to an SAP Audit the client was not clear what to expect or do when an Audit was requested. How to optimise their Licence Estate, what the real Licence entitlement was, with a history of many acquisitions, and over 200 contract documents. Where to start, what resources to assign, what scale of project to expect, what the risk and outcomes might be were just some of the early questions they raised. They had also not maintained accurate and up-to-date records of deployment associated with the contract (in some areas, none at all) and had not classified users (constituting a breech of Contract!). The business had a new strategy to divest or discontinue brands and consolidate it’s business and also IT operations. In parallel they were planning to embark on a programme of transitioning certain functions and services to “Cloud Services” from On-Premise and required advice regarding contract T’s & C’s, On-Premise Licence to Cloud Subscription services leading to a hybrid operating model. How to recover any or some of their on-premise to be discontinued licence value and manage the Support fee transition.
Solution
We carried out an SAP Audit simulation in parallel with detailed contract analysis to compare Entitlement with Usage. It showed a big gap of potential high risk non-compliant use of over $300m. We then created a project plan with the client which included detailed analysis of all Named Users and accurate classification in all systems. We carried out a process of SAP engine validation, rules and metrics measurement and optimisation leading to a fully revised model of usage. We re ran the Audit simulation and reduced the non-compliance gap to $22m with potential savings / credits of $15m. We worked closely with the procurement team to provide insight, strategy and tactics to support the complex and extended negotiations with SAP with regard to revising terms and conditions, terminating and gaining agreement to Support Fee reductions risk management of submitted audit results. We acted to provide insight and understanding around future requirements and the SAP licence / cloud services impact on contractual, operational and financial areas. This was carried out over a 15 month period.
Results
Whilst the work we did saved the client $10’s m and significantly reduced their annual support fee by circa $15m, they said that the education, knowledge sharing, process enabling and broader advisory services around such areas as security revisions for risk and fraud mitigation, SAP negotiation strategy and tactics were more valuable for the long term.