12.07.2004

What if…We Do Nothing?

Companies whose applications are based on older releases of SAP R/3 should not put off upgrading. A wait-and-see attitude entails higher maintenance costs and jeopardizes market competitiveness. There are several options on offer for changing over to a new SAP solution. Customers’ requirements concerning issues such as open standards and extended applications are decisive.

Last year, SAP announced plans to phase out support for older versions of SAP R/3 prior to SAP R/3 Enterprise. After ending the standard service für SAP R/3 4.6b and below in December 2003 the service and support for SAP R/3 4.6c will discontinue in December 2006.

This announcement raised a number of questions for SAP customers who are not currently using SAP R/3 Enterprise or mySAP ERP. What is the right next step on the upgrade path: SAP R/3 Enterprise or mySAP ERP? How will this choice impact the SAP installation on a strategic, functional and technical level? Is an upgrade even required? What if … we do nothing?

Increasing maintenance costs in the longer term

Of course, SAP customers may choose not to upgrade and continue to operate their current installed SAP releases. However, this may limit flexibility and increase costs in the longer term. Customers deciding not to upgrade will need to take increasing responsibility for the maintenance and support of their own SAP systems. More specifically, SAP customers choosing not to upgrade will:

• be responsible for the compliance of their SAP systems with regulations such as Sarbanes-Oxley
• need to depend increasingly on in-house resources to resolve any production issues
• incur increasing maintenance costs
• risk losing their competitive edge in the marketplace if they fail to capitalize on new and improved technologies.

In light of these issues, SAP is strongly advising customers currently running SAP R/3 4.6b and below to schedule their upgrades now. But if doing nothing is not a wise policy, what paths are available for moving ahead?

Options for SAP customers

SAP customers can choose from the following alternatives. The first is to extend support until the end of 2004 by paying a 2% premium on the maintenance fee. This option is applicable for the SAP customers who are currently using earlier releases of SAP R/3 (3.1i, 4.0b, 4.5b and 4.6b). SAP has agreed to extend support of these releases through December 2004 in exchange for a 2% premium on maintenance fees. However, since support for these releases will expire soon, SAP customers should only consider this option when some extra time is required for planning and preparing for the upgrade. For the longer term, they will need to evaluate the remaining alternatives.

The second option is to upgrade to SAP R/3 4.6c. This release offers proven product quality in both applications and infrastructure. SAP customers who upgrade to SAP R/3 4.6c will require only a technical upgrade to move to SAP R/3 Enterprise at a convenient time in the future. However, since the standard support for SAP R/3 4.6c terminates in December 2006, this option offers a relatively short-term haven. Customers who choose this option will be required to perform another upgrade in about two years. Consequently, SAP customers should consider this option only if they meet one or more of the following criteria:

• the upgrade project is underway and more than 25% complete
• the required industry solution is not yet available for SAP R/3 Enterprise or mySAP ERP
• release SAP R/3 4.6c represents a viable platform because the business requirements do not extend beyond traditional ERP functions.

Other customers are advised to consider the upgrade to SAP R/3 Enterprise or mySAP ERP as the third option. SAP R/3 Enterprise uses the SAP Web Application Server and the new SAP NetWeaver architecture, which are based on open technology standards and connectivity protocols. This release supports comprehensive internet-enabled processing, improved portal integration, and flexible upgrade strategies, as well as better performance, quality, and stability. SAP customers adopting this strategy will benefit not only from improved application functionality but also from shorter upgrade cycles in the future. The SAP R/3 Enterprise Core will be frozen moving forward and future enhancements will be provided in smaller pre-packaged extension sets. Once implemented, these extension sets can be upgraded independently from the SAP R/3 Enterprise Core.

SAP customers can upgrade to SAP R/3 Enterprise directly from SAP R/3 3.1i, 4.0b, 4.5b, 4.6b and 4.6c. AS/400 users must upgrade to SAP R/3 4.6c before upgrading to SAP R/3 Enterprise. Users of all other versions should work directly with SAP to define an upgrade path.

Alternatively, SAP customers can buy mySAP Business Suite solutions, such as mySAP Product Lifecycle Management or mySAP Supply Chain Management and implement them alongside the mySAP ERP Central Component (ECC). This alternative has led some customers to ask, how the mySAP ERP architecture differs from previous platforms.

A foundation to serve all business applications

mySAP ERP is SAP’s next-generation enterprise resource planning solution. Powered by SAP NetWeaver technology, it provides a comprehensive integration platform that extends mySAP ERP and integrates non-SAP systems, thus delivering a foundation to serve all ERP applications.

mySAP ERP takes the SAP R/3 Enterprise application core and extends it with additional functions and features, such as people-centric usability and collaborative ERP processes. SAP customers should consider mySAP ERP when there is a business need for the mySAP Business Suite solutions, or when integration of a range of different technologies and platforms is required. The mySAP ERP Central Component will first be shipped in June 2004, with general availability in January 2005.

Minimal risk and zero business disruptions

New tools are available to lessen the pain of the upgrade. For example, SAP offers a service to upgrade master data files eliminating the need to export and re-import the data. A custom program generator uses client-specific parameters to find and replace fields in the data dictionary based on mapping tables provided by the client. Deloitte has also developed a utility called SMARTtool which identifies all the custom objects and prepare them for migration to the upgraded SAP environment.

With these tools, the upgrade can be accomplished with minimal risk and zero business disruption. This leaves little reason to postpone it, especially in view of the advances in both applications and architecture that upgrading to SAP R/3 Enterprise or mySAP ERP would bring.

A number of different upgrade paths are available. The right strategy for an organization depends on the need for advanced applications and open architecture standards. Companies strongly consider upgrading directly to SAP R/3 Enterprise from their current release (remember that the R/3 Enterprise core will be frozen going forward and future releases will be built around that core). Also, for businesses running release SAP R/3 4.6b or earlier, do nothing is not an option.

Devjeet Haldar

Neil Taylor

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