UK Financial Firm Avoids Audit Penalties and Cuts SAP Costs by 30% with RISE with SAP
Background
A major UK-based financial services group (insurance and asset management, ~10,000 employees) was facing a tricky SAP situation. They ran SAP ECC for financials and were evaluating RISE with SAP to move to S/4HANA.
At the same time, the company was undergoing a license audit. SAP auditors had flagged potential indirect access issues – specifically, the firm’s customer portal and CRM (Salesforce) were pulling data from SAP without proper licensing. SAP hinted at over £5 M in back-license fees if not resolved.
As a “solution,” SAP’s sales team aggressively pushed a RISE with SAP deal that would purportedly cleanse these compliance issues. The client was interested in moving to the cloud, but wary of being strong-armed into an overpriced contract under audit duress.
Challenges
- Audit Leverage & Compliance Pressure: SAP was using the looming indirect access charges (estimated at £ 5M+) as leverage to expedite a quick RISE sign-up. The firm felt cornered – they had to resolve the compliance issue, but didn’t want to rush into a bad deal. Ensuring the audit findings were settled without incurring exorbitant costs was the top priority.
- High Initial Pricing: The RISE offer presented was expensive – roughly 30% higher than the firm’s current SAP spend over a similar term. It bundled many services and converted existing licenses to subscriptions, but the value wasn’t evident. The client suspected that the quote included a “penalty premium” due to the audit situation. They needed fair pricing that reflected typical discounts, not one inflated by compliance fears.
- Contract Terms & Currency: The standard SAP contract had rigid terms and was priced in euros. As a UK company budgeting in GBP, this introduced currency risk. Moreover, the 5-year term offered limited flexibility to adjust if the business changed (e.g., divestitures or post-Brexit regulatory shifts). The client wanted more agility – the ability to scale down or exit pieces if needed – and to pay in GBP or be protected from FX volatility.
How Redress Compliance Helped
- Audit Defense & Leverage: Redress separated the compliance issue from the cloud deal. Their experts quantified the true indirect usage exposure (i.e., the number of documents/users in question) and found SAP’s £5M claim to be vastly inflated. Using SAP’s framework, Redress demonstrated that the real compliance cost would be much lower. They made clear the client was willing to settle the audit separately. This neutralized SAP’s pressure tactic and forced SAP to negotiate RISE on its merits.
- Fair-Market Pricing: With the audit threat defused, Redress focused on improving the RISE offer. Benchmarking against similar UK/EU deals showed the initial quote was far above the market. Redress was negotiated vigorously, securing a cost reduction of around 30% in subscription fees. They did this by insisting on standard discounts and removing unnecessary components. For example, an unused HR cloud service (SuccessFactors) was discontinued, resulting in immediate cost savings. Pricing was converted to GBP, with clauses in place to shield the client from currency fluctuations, ensuring no budget surprises due to exchange rates.
- Contractual Protections: Redressed contract terms to favor the client. They obtained a clause waiving all the indirect access claims in the new agreement – SAP would drop those charges entirely once RISE was in effect. This eliminated the compliance liability. Additionally, Redress negotiated flexible terms: a mid-term review at year 3 for potential re-scoping, and rightsizing provisions to adjust user counts by 15% annually. These gave the firm confidence that they could adapt the deal if their business changed.
- Future Flexibility: Although SAP typically does not allow easy exits, Redress ensured the client maintained an “out.” They secured language that if the client chose not to renew after 5 years, they’d receive credit for the value of their converted licenses toward any future on-premise licenses. In essence, the company could leave RISE later without having to start from zero on licensing. This safety net was key to the firm’s risk management, as it ensured they weren’t permanently captive to the vendor’s cloud.
Outcome and Impact
With Redress’s intervention, the UK financial firm turned a potentially dire situation into a positive one. Financially, the company secured a significantly improved deal – the RISE contract cost was reduced by approximately 30% from SAP’s initial quote, saving around £3M and aligning it with industry benchmarks. The subscription is now priced in GBP, insulating the firm from post-Brexit currency volatility.
On the compliance front, the threat of a huge indirect access penalty vanished. The signed agreement explicitly resolves the prior audit issues, allowing the firm to begin its RISE journey with a clean slate and no lingering compliance concerns. This saved a massive payout and set the tone that unwarranted fees won’t bully them.
Strategically, the contract is far more flexible and future-proof than the initial SAP offer. The client can adjust usage if the business downsizes or divests units, and they hold an exit card at the end of the term if needed. Essentially, they moved to S/4HANA Cloud on their terms – with cost predictability, legal protections, and options for the future.
For the firm’s executives, this outcome restored confidence. What began as a stressful audit showdown ended as a win-win: they’ll modernize on SAP’s cloud, avoid compliance risks, and all while controlling costs and maintaining leverage.
Client Quote
“We felt backed into a corner by the audit – SAP was holding a hefty fine over our heads. Redress completely changed the game. They neutralized the audit threat and then negotiated a cloud deal that was fair and flexible. We went from feeling extorted to feeling like a valued customer again. In the end, we’re moving to the cloud with zero compliance baggage and a contract we can live with. That outcome is priceless.” – CFO, UK Financial Services Company
Call-to-Action
Facing audit pressure or a tough SAP negotiation in the UK (or anywhere)? Don’t settle for the first offer.
Contact Redress Compliance for a free SAP contract review. We’ll help you turn compliance risks into leverage and secure a RISE with SAP agreement that protects your interests.
Read about our Rise with SAP Contract and Licensing Advisory Services.
