Giving birth to the human-sector leader within the audit industry.

In the summer of 2020, BDO was invited to pitch for SAP’s global audit, starting from the fiscal year 2023 and to be confirmed by the Annual General Meeting 2022. The tender was initiated at an unusually early stage to give the new audit service supplier sufficient time to familiarise itself and for the transition phase.

KPMG has been SAP’s long-term audit partner since 2002. Public-interest entities appoint a PIE statutory auditor initially for 1 year and a maximum of 10 years, which can be raised to 20 years for a public tendering process and 24 years where then a company is audited by at least two audit firms. A gap of 4 years must occur before an auditor can audit the same company again.

The challenge

The audit industry is dominated by the Big Four Deloitte, PwC, EY and KPMG with over 74 % global market share. They also led the international market with ±€157bn in combined revenue in 2020, with each auditor contributing at least ±$30bn to >$40bn in revenue. Auditing services deliver ±35 % to ±45 % to the Big Four’s revenues.

Until 2020, the Big Four auditors always exclusively held DAX 30 mandates and shared their rotations, building an unbreakable monopoly on these complex, global mandates.

BDO was following at position 5 with ±$10bn annual revenue and was especially perceived as lagging behind in 2020, for being too traditional and not innovative enough, e.g. in the application of modern AI audit technologies. Their customer base is deeply rooted in small to medium sized businesses.

In contrast, SAP is the world’s largest provider of business software and had the largest market capitalisation in the DAX 30 and new DAX 40 (currently ranked no. 1 with ±$277bn, ±$118bn before no. 2).

‘BDO broke the audit rotation monopoly of the Big-4 on DAX 40 mandates for the first time in its industry’s history.’ – Luenendonk Blog (German)

The solution

After reviewing BDO’s Big Four competition, their positionings, key messaging and communications strategies, Marcus Podorf repositioned the BDO brand on behalf of VORN Strategy Consulting for the pitch, making the within the audit industry presumed weaknesses now key strengths for the global SAP tender of the ever-chanceless global No. 5.

The audit and advisory industry, for example, shaped its own and client’s industries with terminology such as ‘efficiency’ for promising ‘cost reductions’, in the best case achieved with the application of AI. Efficiency was one of the globally leading demands and offerings, everyone had the mindset to mandatory buy and sell it as big as just possible. Superficially, services of the Big Five appear identically, measured by across industries standardised, predefined outcomes.

BDO yet is a traditional, Hanseatic-Hamburgian company, standing for honourability and old business virtues against progressive players, such as especially the technology-driven, young positioned EY, global no. 3. Values, the Big Four never could deliver in a permanently perceptible, permanently credible and resilient way.

At BDO, each local audit is led and applied by senior leaders with deep, personal market framework and standards understanding in broad industry sectors, who are additionally supported by technologies, when and where needed, and not vice-versa. Human seniority especially means profound instinct, bringing the need for deeper research and review straight to the surface. Senior humans know what and where to look at.

A value proposition and new global operating model were planned, envisioning the desired values and effectiveness BDO brings through human senior leadership for SAP. The value proposition also sets the frame – the vision and guidance – for further execution of demanded tender materials, such as copybooks for the application, qualification and RFP.

‘BDO convinced us in many ways during the selection process. That includes, among others, the excellent expertise in complex accounting and tax issues, the deep understanding of the SAP business model and the modern and innovative audit concept. We are confident that with BDO we have chosen a very good auditor for SAP and are now pushing the transition process forward together.’ – Christopher Sessar, Chief Accounting Officer at SAP, Business & Accountancy Daily