SHI saves customer from a $30 million SAP audit penalty

 In Case Studies, SAM/IT Asset Management, Software, Solutions

$30 million. That’s the bill that arrived for one organization after a recent SAP audit. It’s true that the organization hadn’t been keeping close tabs on its licensing, but how could it owe that much? Oh, and it only had four weeks to respond to SAP.

Ultimately, the organization called in SHI to take a look. In the end, SHI helped the customer talk SAP down from $30 million to a more manageable $800,000, slashing the bill by 97 percent.

So, how did the customer end up in that situation, and what did SHI do to convince SAP to back down? That’s a great story.

After the SAP audit: When the manufacturer comes knocking

From the start, the organization didn’t argue that it had licensing issues. In fact, it had been audited in the past by SAP. The previous fines were much less significant and had been resolved by the simple purchasing of additional licenses.

Now things were different. On a high level, SAP accused the organization of under licensing, in three forms:

  1. It had products that lacked licenses.
  2. Some products didn’t have sufficient licenses.
  3. It didn’t have appropriate licenses for its user levels.

This time, SAP wasn’t messing around. This audit came with a $30 million price tag.

SAP ERP is a vital resource in the organization’s environment, and there were no viable alternatives in the short term. As a large public company, the organization didn’t want to bear the fallout from this financial exposure.

In comes SHI

In a desperate search for a solution, the organization connected with SHI. Normally, customer onboarding takes a minimum of six weeks, but the organization only had four weeks to respond to the audit. That meant working around the clock to meet the deadline.

SHI started by looking at the customer’s internal operations, and found a lack of in-house organization and poor  license management, especially on the SAP side. Its third-party IT provider hadn’t kept up with licensing either. Both parties knew something had to be done, but unfortunately, waited until disaster struck to address the problem.

Despite the organization’s relaxed approach to license management, SHI uncovered that many of SAP’s claims weren’t valid.

Using SAP-approved software to mine through the customer’s environment, SHI identified many false alarms. For example, a license for SAP ERP was designated for an employee who had left the company. The customer didn’t remove that employee from its environment, so when SAP conducted the audit, the employee appeared to need a license.

These were the types of issues SHI was looking for.

Despite the organization’s four-week deadline, SHI wasn’t brought on until a week after the audit results were received, and we had to give the organization a week to review our findings. So SHI only had two weeks to sort through the audit results and the organization’s actual licensing needs.

SHI worked 24/7 and actually delivered the documentation 24 hours early.

How to take $29.2 million off an audit bill

In the end, SHI provided the customer with all the necessary data to counter SAP’s audit, which SAP accepted without a fuss. This cut the fine down from $30,000,000 to a mere $800,000.

The organization learned through this arduous process that it must pay closer attention to its software licensing, especially when it comes to SAP. It realized that even if there had been the luxury of more time, it still didn’t have the expertise or tools in place to handle the audit results itself.

The organization truly dodged a bullet, and was grateful to SHI for its quick response during a crisis. The organization came to the delayed realization that it must embrace IT asset management, and that SHI could help.

May this be a gentle warning to all organizations out there: Keep track of your licenses, and if you need any assistance, SHI is here to help.

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