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Audit Defense, Thought Leadership

The Art of Preparing for an SAP Audit

By Martin Barrett | October 06, 2020

As the end of 2020 draws closer, organizations are feeling an increased pressure to reach their goals, even with the interruption to business at the start of the year. SAP is no different. The disruption this year has caused a backlog in license audits meaning SAP customers should not be surprised if — or when — they receive an audit request in the coming months.

How to avoid being caught in the audit backlog

“Build your opponent a golden bridge to retreat across.” This quote from Sun Zsu in his 6th century BC work, The Art of War, refers to the idea that you should leave a safe passage for an opponent to retreat to avoid conflict.

You’re probably thinking, what does that have to do with SAP? Why would I need to do that?

In an audit, even though it has been contractually agreed upon and you’re provided with advanced notice, the process can lead to potentially costly conflict. But, audit preparation can shift the balance of power, providing you with control to defend your position and create a ‘golden bridge’ for SAP to retreat across once your compliant position is established — leaving you safe while they move on to the next company.

The challenges of the audit process

Of course, one of the biggest hurdles to overcome is how to prepare for an audit. Audits are notoriously difficult, requiring time to gather detailed usage data and compare it against contracts, versions, etc. And there’s quite a bit of money on the line – both in terms of how much organizations may need to pay out and how much a vendor could gain. The most common challenges we hear from our customers are:

1. Expertise – As with all things not repeated regularly, the motion of going through a yearly audit requires a re-education process. Many customers state that the complexity of contracts and large IT landscapes make it an incredibly difficult task. You really need an expert understanding of what you need to achieve and how to achieve it.

2. Effort – Understanding information is required for an audit and getting that data is even more time consuming if you lack knowledge of the landscape, process and tools. In large environments, data collection and preparation can take months of manual effort. Once the data is correlated, you then need to check and recheck the accuracy of the data before submitting it to SAP or other vendors.

3. Optimization – During data preparation, customers often use the opportunity to review their license application and optimize their license estate based on their knowledge or the system knowledge of the users, e.g., contractors whose contracts have ended.

License optimization holds many benefits such as increased employee productivity and cost savings. But doing this manually requires the creation of license reallocation logic which can leave you vulnerable to human error and may lead to business disruption.

How to overcome audit challenges

Now that we’ve identified some of the main challenges of an audit, we want to share a few winning strategies to overcome them. By applying and implementing these processes you can give your business a strong base to be ‘audit ready’ in the future.

Gaining expertise

  • Document your experience throughout an audit process to better understand each SAP audit carried out. Build on this and refine it. This will help build your personal expertise and also help you in preparing for the next one.
  • Build a repository of contracts and licenses to solidify your SAP contractual knowledge.
  • Avoid having a single point of failure. We have all probably been in a work situation where a person leaves without a comprehensive handover. You can prevent that by documenting your processes and saving historical data on a shared drive.
  • Remember, you’re not alone! If you are restricted on time or resources, there are people that can help. Reach out to a third party with strong SAP expertise

Reducing effort

  • Run regular compliance checks. Don’t make this an annual task. Running regular checks will not only help you to stay compliant, but it will help you continually refine your process and reduce the effort required each time you check for compliance.
  • Understand how long the process takes so that you are not rushed or under pressure to present your results. This could be costly to both you and the company. With a project timeline, you can factor in the right time and appropriate resources required to complete an audit.
  • Use the right tools for the right job. With the right technology in place (especially for a reoccurring process), you can significantly reduce the amount of manual effort required and achieve more accurate results.

Automated optimization

  • Analyze and optimize regularly. The past may no longer be applicable to the present. When you originally bought your licenses, you likely based it on an approximation of required licenses and license types. Your requirements today could be completely different for a number of reasons, including M&A, company growth or maturity of the platform. You should, therefore, have an ongoing cadence of analyzing and optimizing your license type allocations.
  • Keep an eye on your joiners, movers and leavers. Remove all inactive users using the latest data to ensure all users are valid and assigned the correct licenses type.
  • Avoid paying list price by knowing what you need and purchasing any additional licenses required before an audit takes place. If you’re caught in a short fall during the audit, you’re unlikely to be able to use your original discounts for any license purchases.
  • Know your unknowns. Exposure to Indirect Access is becoming more and more prevalent in SAP audits and with the rapid growth in SaaS, the risk of Indirect Access is growing greater. We have also heard of enhanced audits resulting from potential indirect access usage. Many organizations are unsure whether to adopt Digital Access licensing or stay on their legacy user licensing. To make the best decision, its important to carry out system checks to avoid unnecessary Indirect Usage and assess which licensing option is the best fit.

Planning and preparation are key to a constant compliant state

Audits can be a daunting task, especially if you are not prepared for what lies ahead. But, by running regular compliance and license optimization checks (monthly or quarterly depending on the business), you can refine the process, build expertise, and produce accurate results in a timely fashion and show SAP the exit to the golden bridge of retreat.

Learn more about the different audit types and how to prepare for audits from Microsoft, Oracle, SAP, IBM and VMware. Be audit-ready, all the time with these winning strategies.