Northbridge* is a large and complex organization operating a critical SAP environment to support its domestic operations. The organization received a formal SAP audit notification, prompting significant concerns regarding its SAP licensing position. In particular, the agency was experiencing difficulties understanding its SAP software entitlements, interpreting contractual terms, and accurately measuring current usage across its SAP landscape. 

The organization sought our specialist support to prepare effectively for the audit process and to reduce the risk of adverse financial and compliance outcomes. In particular, the client wanted to understand: 

• Their potential SAP compliance risks and available remediation options. 
• The content and implications of their existing SAP contractual agreements. 
• How best to approach and negotiate a favourable outcome with SAP during the audit. 
• Recommendations to reduce license overexposure and ensure ongoing conformity going forward. 

Challenges 

• Time pressure driven by strict audit deadlines and limited internal resources 
• Complex and legacy SAP ECC contractual landscape 
• Lack of clarity around actual SAP usage versus contractual entitlements 
• Heightened reputational and public accountability risk 

Solution 

To address these challenges, ITAA implemented a comprehensive approach. While there were initial questions regarding the benefits of preparing in advance of the upcoming audit, we recommended formally engaging with SAP to request a deferral. This approach provided additional time to complete a comprehensive analysis and establish a well-supported remediation strategy prior to the audit. 

• Bill of Materials (BoM): Leveraging our long-standing relationship with the client, we refreshed the existing SAP Bill of Materials to reflect any additional purchases and changes made since our previous engagement. This ensured a complete and current view of the SAP landscape, including CAPEX & OPEX obligations, license groups, users, invoice analysis, terminations and addendums. 
• Contractual Review: We conducted a detailed review of key contractual clauses relating to SAP licensing use rights, with a specific focus on identifying temporary dual-use rights across ECC and S/4HANA named user licenses, as well as relevant audit and entitlement provisions. 
• Effective License Position (ELP): We established the client’s Effective License Position by reconciling contractual entitlements with measured system usage. This included detailed analysis of BusinessObjects LMBI data, the LAW report, and system measurement results to accurately quantify incompliance exposure. 
• Audit Reconciliation: Our independently derived usage findings were compared directly with SAP’s audit report to validate results, challenge discrepancies, and isolate genuine areas of compliance risk. 
• Targeted Remediation: During remediation analysis, we identified a significant risk exposure and were then able to identify the reasons for which this had occurred. We researched and referenced specific SAP Notes that provided grounds for informed pushback against elements of the non-compliance claim. In parallel, we assessed the future-state usage of the affected solutions to determine whether the underlying risk would persist, enabling the client to implement sustainable remediation measures rather than short-term fixes. 

This approach allowed the client to engage with SAP from a position of strength, reduce immediate audit exposure, and put in place controls to minimise future compliance risk. 

Conclusion  

After implementing the informed audit defense strategy, the client was in a strong position to address and remediate any potential non-compliance identified by SAP. The vendor’s audit report highlighted incompliance which stemmed from a single product, which alone represented a potential financial exposure of approximately €2 million, taking into account volume and expected discounts. 

Drawing on the identified risks, triggers, SAP’s feedback, and insights into the future-state SAP landscape, the client was able to present a well-supported position that led to the claim being resolved. Based on this insight, SAP accepted that the client would not be causing a compliance breach and, as a result, chose not to take any action regarding the discrepancy, including issuing an invoice. 

This outcome not only mitigated immediate financial risk but also positioned the client to confidently manage future SAP license compliance as part of their broader S/4HANA roadmap. 

Audit Defense Tips:  

• Speak to a SAP Licensing Consultant if you have any questions or doubts. 
• Don’t be afraid to request a push back in audit date / provision of self-declaration 
• Correct reallocation of users can be the difference between compliance and non-compliance 
• Check your contracts to understand your own audit rights, e.g. is it contractually agreed that said audit can take place more than once in a calendar year  
• Check to see if there has been a change in licensing metric – this may be the reason for your measured overage   
• Review SAP notes which provide greater weight when Defining or Limiting Licensable Scope, licensable activities and interpretations.  

*Protecting our clients’ confidence is of the utmost importance at ITAA. While our case studies are based on true projects, we have used fictitious names and removed or changed other identifiable details.