Most companies we advise have purchased SAP HANA Runtime with a limited amount of HANA Full Use (aka HANA Enterprise), often referred to as a sidecar. With SAP now re-positioning its audit practice heavily in the market, many customers are getting audited on HANA Full Use for the first time and the initial difficulty they faced anticipating their requirements is leading to a big non-discountable audit risk.
Most Purchased SAP HANA Database
As part of their journeys to S/4HANA, most companies we advise have purchased SAP HANA for their database needs. Initially, many bought HANA Runtime, which is priced on a percentage of your HANA SAP Application Value (HSAV) and is easy to determine. However, as time passed many companies have decided to make additional investments in HANA Full Use, which is priced on actual GB requirements and is much more difficult to determine. At the time of purchase, many companies had difficulty anticipating their requirements and purchased a limited amount of HANA Full Use as a “sidecar” to their HANA Runtime investment. Since that time, their SAP order form was left to the wayside and IT teams are leveraging their SAP HANA database without regard for what their company had actually purchased.
SAP Has Re-Positioned its Audit Practice
In late 2018, SAP re-positioned its audit practice as a means to drive on-premise sales and hit targets. If you have not been audited recently, you may be surprised to hear that SAP audits are now happening like clockwork. Many companies are receiving audit notifications a month or two after their audit deferrals expire, while other customers are receiving notices shortly after going live on strategic implementations like S/4HANA and investing tens of millions of dollars in SAP software, cloud and services. With such bold positioning by SAP of audits after implementations like S/4HANA, companies need to be proactive to avoid unanticipated exposure.
Difficulty Measuring HANA Full Use is A Big Non-Discountable Audit Risk
The difficulty with being proactive to avoid unanticipated exposure stems from whether you had difficulty anticipating your requirements for HANA Full Use at the time of purchase. If this is the case, you likely purchased a limited amount of HANA Full Use and didn’t look back. Now, with SAP re-positioning its audit practice, the difficulty in anticipating your requirements is potentially a big non-discountable audit risk. In some cases, the exposure related to HANA Full Use can be in the millions of dollars. The biggest issue with this exposure is that this SAP-branded product is expensive and is a standard exclusion from your discount protections. This means that if SAP positions a $2M HANA Full Use exposure, it will be non-discountable.
How Can Your Company Be Proactive to Mitigate Audit Risk?
As many of our readers know, we always recommend taking a proactive approach with SAP as a means by which to maintain your place in the driver’s seat and associated leverage. With audits being no different, undertaking a proactive approach to assess your audit exposure is also important. More specifically for SAP HANA Full Use, you need to review your order forms for all HANA Full Use purchases and determine the number of GB entitlements. Armed with a baseline of GB entitlements, you need to complete a self-audit under the terms of the agreement to determine your usage levels and any associated exposure. If your company is exposed, you may be able to mitigate risk by taking certain actions internally to bring you into compliance. If the actions you take will not bring you into compliance, an opportunity exists to budget for the exposure, stagecraft a strategy, and proactively engage SAP to meet a more competitive commercial resolution than waiting for SAP’s audit notification
In the end, like any SAP purchase, SAP HANA comes with the associated risk of over deployment. However, the risk in this situation is more material, considering this SAP-branded product is expensive and non-discountable. With that being said, I advocate leveraging the opportunity internally to proactively assess audit exposure, which will give you the insights and capability to either mitigate risk internally or budget and stagecraft a strategy prior to engaging SAP.
Register for our upcoming complimentary webinar, “Pulling Back the Curtain on How SAP Will Push Customers to S/4HANA” on Wednesday, May 1st at 11:00 am EDT.
- Top 3 Questions SAP Hasn’t Answered About its New Digital Access Model
- Customers Will Feel SAP’s Sales Organization Shakeup
- Attention SAP Customers: Read Between the Lines
- Is SAP More Flexible Than You Think?
- Is Your Company Buying the Correct SAP HANA Database?