Turning a finding into a forward deal on your terms. Three knowledge checks along the way, and 4 clips from a senior licensing analyst.
This is a taught session, not a talking head. The instructor works through analyst grade slides, and three times the video stops on a question with four options on screen. Pause, commit to an answer, and the next slide explains which option is right and why each of the others is wrong. 4 times in the session the frame splits and a senior licensing analyst gives the view from inside real SAP negotiations, and the instructor picks the clip apart when the slides return.
The full narration of this session, section by section, for reading and reference. Guest analyst clips are marked.
Welcome back. Session thirty four, and this is where the money actually moves. Module seven has been about producing a defensible number: what gets measured, how to run the measurement, how to defend a digital access finding. Today is what you do with that number, and I will tell you now that the gap between a good settlement and a poor one is usually larger than the gap between a good defence and a poor one. Today: what each side genuinely wants, the five structures a settlement can take, the terms that decide whether it is really over, and the order to do it in. Three knowledge checks. Let's begin.
Five objectives. First, reframe the conversation, because a finding is the opening of a purchase negotiation and treating it as an accusation costs money. Second, know what each side wants, since the vendor wants forward commitment and a closed item, and cash for history is nobody's best outcome. Third, choose the structure, because cash, forward purchase, model change, credits and phased deals are not equally good for you. Fourth, win the two documents, meaning a written release for the audited period and the corrected count as the agreed forward baseline. And fifth, sequence it properly: verify, then scope, then model, then price, then paper, because price first is how settlements go wrong.
Four things to frame it. One conversation, because historic exposure, forward licensing and your next purchase are all on the table together. Their leverage, which is a back dated liability with a number attached, arriving on their timetable. Your leverage, which is that they would rather close a forward deal than win an argument about three years ago. And paper decides it, meaning a release and an agreed baseline, or the same conversation returns next year. Let me start with the reframe, because it changes how the whole thing goes.
Guest analyst clip.
On better terms than you would have got on an ordinary Tuesday. That is the opportunity hiding inside an unpleasant letter, and I am not being glib about it. The exposure is real and the money is real. But the person across the table has objectives too, and almost none of them are best served by extracting a cheque from you for something that happened in twenty twenty three.
So what do you bring into the room? Four things, and only the first is about the finding itself. A verified count: your own number with the method behind it, which is session thirty three's work and it is what makes every later position credible. A costed alternative: what leaving or re architecting would take, and you may never use it, because knowing changes how you negotiate even when you stay. Time you control, since their quarter is a date and yours should not be, because a self imposed deadline is a concession you gave away free. And something you wanted anyway, meaning the module, the volume or the migration already on your roadmap, which is the currency you spend. Notice that three of those four exist before any finding arrives, which is the argument for doing this work in the quiet years.
Now, what each side is actually trying to get. Five points. They want forward commitment, because multi year volume on the current price list beats a one off payment for historic use every time. They want movement, so cloud, S four HANA or a new product line, and findings frequently resolve inside a transformation deal. They want it closed, since an open compliance item is friction on the account and closing it has value to them beyond the money. You want a release, meaning the audited period settled in writing so it cannot be revisited and repriced later. And you want the forward model right, which is the corrected baseline, the measurement method, and price protection on whatever metric you land on.
First knowledge check. SAP offers to waive the entire historic finding if you commit to a multi year cloud deal. What is that? A, a concession, and clearly the best available outcome. B, a discount, which should be priced against the same deal without it. C, unrelated to the audit, since the two are separate transactions. D, a trap that should always be refused. Pause here and pick an answer before you continue.
B. A waiver is a number, so treat it as one and ask what the cloud deal costs without it. Then two questions decide whether this is good: would you have chosen that platform on its merits this year, and what is the waived finding actually worth after the corrections from session thirty three? A accepts the framing without testing it. C is wrong because the two are deliberately linked and the linkage is the offer. And D throws away a structure that is frequently the best outcome available, provided you priced it. Let me say more about waivers, because they are easy to overvalue.
Guest analyst clip.
A very effective way of preventing you from verifying it. So the order matters: verify first, then discuss the waiver, because a waiver offered before verification is worth whatever the count was inflated by. Right, five ways a settlement gets built. Cash for history, where you pay for past use and buy nothing forward, which is the weakest outcome and the one to move away from first. Forward purchase with the exposure waived, so you buy the licences or volume you genuinely need and the historic finding goes with the transaction. Model change, meaning you move to the metric that fits at a verified volume, which fixes the cause rather than the symptom. Credits against future spend, where the exposure converts into credit for products you will actually deploy, and watch the expiry and the scope. And phased with milestones, staged commitment tied to adoption dates, which is useful where the business case is real but the timing is not yet.
Second knowledge check. You settle by paying cash for historic use. What have you bought? A, full resolution, since the finding is closed. B, the past only, so next year's licensing is unchanged and the same gap reopens. C, a better position at the next renewal. D, protection against a future audit of the same period. Pause here before you continue.
B. Cash for history is the only structure that leaves your licensing exactly as it was, which means the same measurement next year produces the same gap and you have the same conversation with less money and less goodwill. A confuses closing a finding with fixing a cause. C has it precisely backwards, because you spent your leverage and received nothing that helps at renewal. And D is only true if you obtained a written release, which is a separate term you have to ask for rather than something the payment implies. If you are paying anything at all, convert it into something you will use.
Which brings me to the paperwork. Five terms. A release for the period, which states the audited years are settled, and without it you paid and the same years stay open. An agreed forward baseline, so the corrected count becomes the shared number, and without it the next measurement restarts from their figure. A defined measurement method, meaning how the metric is counted from now on, and without it you re argue the method every single year. Price protection, capping the uplift on the new metric, and without it the fix becomes next year's problem. And no admission, settling commercially without conceding history, because otherwise you leave an unhelpful precedent in your own file. Let me be emphatic about the first two.
Guest analyst clip.
They cost nothing at signature and are almost impossible to add afterwards. That is the test I would apply to every term in this list. If it is free today and unobtainable in six months, it goes in today, even if nobody expects to need it.
So, the order that produces a good outcome, and it is five steps in a specific sequence. First, verify the count: method, data, attribution, weighting, because everything downstream is built on this number. Second, agree the scope, so what is in the finding and what is not, in writing, before anybody discusses value. Third, choose the forward model, which is what you actually need going forward and the part you will live with for years. Fourth, price it, now and only now, because the number you are pricing is finally the right one. And fifth, paper it, so release, baseline, method and protection, with the lawyers drafting terms you already agreed rather than inventing them at the end.
Five traps. Negotiating price first, which is a percentage off an unverified number and it locks in both the error and the structure. Settling without a release, so money paid, period still open, and no document saying otherwise. Accepting their count as the baseline, which discards every correction you won and starts next year from the original figure. Your own deadline, meaning an internal decision that this must close by year end, handed to the other side for free. And no definition of resolved, because if you have not agreed internally what a good outcome looks like then you will accept whatever arrives.
Last knowledge check. Which single item matters most in the settlement paperwork? A, the discount percentage achieved. B, the written release plus the agreed forward baseline and method. C, extended payment terms. D, a commitment that no audit occurs for two years. Pause here, and think about which one decides whether this is genuinely over.
B. Those two together are what make the matter finished: the release closes the past, and the baseline plus method stops next year's measurement restarting the same argument from the same inflated figure. A is a number in a spreadsheet that says nothing about whether the problem recurs. C is cash flow, which is useful and not structural. And D sounds attractive and mostly is not, because a standstill delays a measurement you should be running yourself anyway, and it does nothing about the count everybody works from when it resumes. One more thing on timing, because it cuts both ways.
Guest analyst clip.
Know their dates, and do not create your own. Now, the six months after signature, which is the part nobody plans and it decides whether the settlement was worth anything. Implement what you bought, because a settlement that changed the model and nothing else is a licence purchase with extra steps. Fix the cause: the interfaces, classifications or engines that produced the finding, otherwise the baseline drifts again. Publish the baseline internally, so the agreed number sits where everybody who can move it can see it, including architecture. Diarise the review, running the first measurement against the new method early, so you find out whether the definitions actually work while it is still cheap to ask. And write down what happened, meaning the method, the corrections, the terms and the reasoning, because in three years nobody will remember and it will matter.
That last one sounds like administration and it is the single most valuable half hour in this module. Every organisation I have seen handle a second audit well was handling it well because somebody documented the first one.
Three sentences. A finding is the opening of a purchase negotiation rather than an accusation, and the vendor would rather have forward commitment and a closed item than a cash payment for something that happened three years ago. Structure decides the value, so move away from cash for history toward the licences, model or migration you genuinely need, and price any waiver against the same deal without it. And the paperwork is what makes it over: a written release for the audited period, the corrected count as the agreed forward baseline, a defined measurement method, and price protection on whatever metric you land on. Next session closes module seven with software asset management for SAP: the tooling, the governance and the standing baseline that stops the next finding being a surprise.
Homework before session thirty five, about ninety minutes, and the first item is the one to do even if you skip the rest. One, define a good outcome: write down in one page what resolved means for your organisation, and do it now rather than when you need it. Two, find your last settlement, if there was one, and read the terms, asking whether there was a release and an agreed baseline, because usually there was neither. Three, list what you were going to buy, meaning the modules, volumes or migrations already on the roadmap, because that is your currency and you should know it. Four, check the internal deadline, so is anybody in your organisation committed to closing something by a date, and find out before the vendor does. And five, name the negotiating team: who leads, who verifies numbers, who signs, which is three roles and three names, agreed in advance.
Five guides, all on redresscompliance dot com. Audit settlements and forward deals covers the structures, the terms and worked settlement examples, which is the reference version of today. Defending an audit finding is session thirty three's reference and covers verifying the number you are settling. SAP negotiation and the fiscal calendar goes into their quarter, your timing, and what actually moves in the final weeks. Price protection and capped uplifts covers the term to attach to whatever metric the settlement lands on. And SAM tooling for SAP estates is where session thirty five picks up, so the standing baseline that prevents the next one.
That is session thirty four. The thing to take away is that a finding is a purchase negotiation with an unusual opening, so verify first, structure it forward, and get the release and the baseline in writing. Next time, module seven closes on software asset management. See you then.