Strategic Audit Defense and License Optimization for Prominent Fashion Company

Our client, *IndigoFusion a notable fashion company faced significant licensing compliance challenges during their transition to S/4HANA Cloud. Despite committing to a cloud transition, SAP initiated an audit of their on-premise estate in 2023, and IndigoFusion was still facing substantial audit findings of $31 million to resolve compliance risk. Given their planned use of the system for only another 18-24 months, IndigoFusion was reluctant to pay these charges for a legacy system. Contesting the fees was proving problematic, however, as they did not have inhouse licensing expertise. They needed expert assistance to refute claims in certain areas where they were unsure of their compliance, specifically excluding some areas from the scope because they acknowledged the need to purchase a license. The total sum involved amounted to $26 million.

Challenges

IndigoFusion faced significant challenges in managing Named User licenses, ensuring compliance with BusinessObjects deployments, and aligning the usage of SAP HANA database with licensing agreements. These issues underscored the critical need for strategic review and remediation to safeguard compliance and optimize licensing efficiency.

• Named User License Management: Difficulties were encountered in effectively assigning licenses, primarily utilizing costly licenses across their user base due to uncertainties in license definitions. This resulted in suboptimal allocation practices where cheaper license options remained underutilized.
• Business Objects Licensing Issues: IndigoFusion’s deployment of BusinessObjects software posed compliance risks due to improper assignment of editing capabilities, leading to unnecessary licensing requirements. This issue arose from a misunderstanding of license entitlements, highlighting gaps in authorization management and potentially exposing the organization to compliance penalties.
• HANA Database License Evaluation: Initial assessment revealed discrepancies in the client’s utilization of SAP HANA Runtime edition, with indications of potential overuse beyond licensed functionalities. This triggered concerns over compliance with license agreements, particularly regarding the interpretation of usage rights and the need for more expensive license upgrades.

The Solution

The professional JNC team leveraged extensive expertise in handling compliance claims by methodically addressing each issue. The approach involved deploying specialists across different domains, engaging multiple teams simultaneously to initiate comprehensive analyses.

• Named User License Optimization: Through intensive workshops and analysis, JNC identified opportunities to reallocate licenses, leveraging existing cheaper options where applicable. By defining user profiles suited to less costly licenses, wit was possible to successfully optimize their license allocation strategy. This initiative not only mitigated compliance risks but also resulted in significant cost savings by freeing up expensive licenses for critical users.
• BusinessObjects Compliance: In our experience BusinessObjects non-compliance is commonplace and improper user assignments often lead to unnecessary licensing costs. Drawing on our extensive expertise in this area, we promptly pinpointed the root cause and provided the client with the necessary authorizations and guidance to rectify license assignments. JNC’s proactive approach effectively eliminated the compliance risk associated with unauthorized editing access, ensuring adherence to licensing regulations and minimizing potential financial exposure.
• HANA Database License Compliance: Leveraging our familiarity with SAP’s HANA functionality tool, JNC conducted comprehensive workshops to scrutinize usage scenarios against licensed entitlements. This meticulous review identified false positives and clarified “grey areas,” thereby preemptively addressing SAP’s claims and fully eliminating the risk of non-compliance. Our strategic remediation efforts ensured the client remained compliant while optimizing their HANA database usage within existing license constraints.

JNC’s tailored approach and deep domain expertise enabled a collaborative navigation and resolution of IndigoFusion’s complex compliance challenges across Named User licenses, BusinessObjects deployments, and HANA database usage.

Conclusion

In summary, the deployment of JNC’s deep professional expertise led to:

• Audit Risk Reduction: Achievement of a 90% reduction in audit exposure, slashing the initial $26 million risk to $2 million.
• Expertise Deployment: The utilization of specialist resources in key areas ensured focused expertise to effectively tackle major risks, delivering targeted solutions with precision. The cohesive team strategy and robust defense cases swiftly addressed complex challenges, securing favorable outcomes in settlement negotiations
• Solution Implementation:
  o Optimized license assignments to utilize cheaper options.
  o Corrected BusinessObjects license misuse, eliminating unnecessary costs.
  o Clarified HANA database usage, avoiding expensive upgrade requirements.
• Strategic Guidance: Advised on effective arguments and actions to counter SAP’s audit findings, protecting the client’s interests.
• Financial Impact: The realization of significant cost savings and risk reduction through precise technical and commercial insights.

JNC’s intervention comprehensively resolved complex SAP audit challenges, delivering precise solutions, proactive remediation strategies, substantial savings, and strategic protection for the client, safeguarding Indigofusion’s compliance position and maximizing their licensing efficiency and cost-effectiveness.

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