SAP Digital Access Case Study – California Tech Company Saves $3.2M
Background
A California-based software company, renowned for its cloud-based solutions, relied heavily on SAP ERP to manage core business operations. With over 5,000 employees and numerous integrated applications (including e-commerce and CRM systems), the firm’s SAP landscape was highly interconnected.
The IT environment was constantly exchanging data between SAP and external platforms.
This U.S. tech company had grown rapidly, and its digital architecture included scenarios where non-SAP systems created SAP business documents – a classic case of indirect usage.
Challenges
The company’s growth and integrations triggered an unexpected licensing scare.
An internal review – prompted by SAP’s evolving policies on Digital Access licensing – revealed that third-party applications were creating thousands of SAP documents (sales orders, invoices, etc.) behind the scenes.
Under SAP’s indirect access rules, these document creations required additional licensing. SAP’s initial audit findings projected a hefty fee of around $3.2 million to license this indirect usage, blindsiding the IT department.
Key challenges included:
- Understanding the new Digital Access model (which licenses documents instead of users) and how it applies to their situation.
- Validating SAP’s claim figures, which seemed overly inflated.
- Avoiding an unbudgeted multi-million dollar true-up that would jeopardize the IT budget for other projects.
The CIO and CTO realized they needed expert SAP license negotiation support to contest and reduce this massive compliance claim without straining the relationship with SAP or risking system usage.
Solution (How SAP Licensing Experts Helped)
- Digital Usage Assessment: The company engaged SAP Licensing Experts to perform a detailed analysis of indirect usage. The team used SAP’s own Digital Access Estimation Tool and custom usage scripts to get an accurate count of documents created via third-party systems. This assessment found that the actual usage was significantly lower than what the audit suggested, immediately reducing the exposure.
- License Optimization Strategy: The experts examined whether some integrations could be covered under existing named-user licenses or alternative licensing approaches. They identified cases where data exchange could be restructured (for example, through user-centric APIs) to fall under named user entitlements instead of triggering separate document licenses.
- Data-Driven Negotiation: With hard data in hand, the advisors entered negotiations with SAP’s audit and sales teams. They presented the refined usage figures and highlighted discrepancies in SAP’s assumptions. By referencing SAP’s Digital Access Adoption Program (a limited-time incentive to encourage transitioning to document-based licensing), they convinced SAP to significantly adjust its proposal. Willing to adopt the new model but only at a fair price, the company secured a much more favorable deal.
- Cost Offset & Settlement: The team also explored bundling the compliance resolution with future investments. They helped the company agree on a modest purchase of additional SAP cloud modules in exchange for SAP waiving the majority of the indirect access fees. This approach turned a potential penalty into an opportunity – the customer’s money went toward new functionality with business value rather than a sunk cost for an audit finding.
- Contractual Safeguards: Finally, SAP Licensing Experts ensured the revised agreement included clear definitions of indirect use going forward. They added clauses to prevent surprise charges, stipulating how new integrations would be licensed and establishing a periodic internal audit process to stay compliant.
Outcome and Savings
Through a combination of data-driven defense and strategic negotiation, the potential $3.2 million SAP digital access bill was eliminated. In total, these efforts translated into approximately $3.2 million in SAP contract savings, preserving funds for other initiatives.
In the end, the company paid virtually nothing in back fees, aside from investing in a few new SAP tools that they genuinely wanted to implement. This effectively turned a looming compliance cost into a forward-looking IT investment.
The California tech firm not only avoided multi-million dollar costs but also gained confidence in managing SAP licensing for its complex integrations. The proactive license management and new contract terms put the company in control of its SAP usage.
The CIO reported that the budget originally earmarked for a “compliance fire drill” was reallocated to innovation initiatives instead.
“We were stunned by the initial $3M+ license fee demand. SAP Licensing Experts turned it around completely – no penalties, no surprise costs, and even a better understanding of our usage. They gave us the SAP license negotiation leverage we wouldn’t have had on our own,” — CTO, U.S. Software Company
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