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Some SAP shops take smaller upgrade steps

SAP wants customers to make the move to mySAP ERP, but not everyone is ready to undertake a major migration just yet.

Pedro Freire, IT manager at Portuguese soft drink distributor Sumol Group, considered upgrading his company to Enterprise after a push by SAP's sales force, but fearing greater problems by such a major upgrade, he ultimately chose to limit risk by making a smaller migration.

Enterprise is the name SAP last year gave its most recent R/3 technical upgrade before it introduced mySAP ERP, a new core offering that is a smaller, less expensive version of SAP's mySAP Business Suite. Freire and the Sumol Group decided to ignore Enterprise and mySAP ERP and instead go from R/3 Version 4.5B to Version 4.6C.

"In the next four years we're expecting to do only minor upgrades, such as disk, memory and eventually CPU," Freire said. "But with the pace systems and applications are changing nowadays, four years is too long a time to have a clear view on how things will evolve."

For now, Sumol Group won't be following the advice that SAP shared at's user event in September. There, SAP America CEO Bill McDermott surprised many companies by urging users planning to upgrade their R/3 systems to Enterprise to instead migrate to mySAP ERP.

But companies may be a bit hesitant to take such a leap, according to Jim Shepherd, a senior vice president with Boston's AMR Research.

Although companies should take advantage of the new technologies in mySAP ERP, Shepherd said, current economic pressures make it difficult to do so. The average deal size for SAP has shrunk dramatically, a reflection of several factors, including smaller IT budgets, an inclination for customers to purchase in smaller increments and considerable pressure on license prices, he said.

"When budgets are down, people are less aggressive about moving to new releases of software," Shepherd said. "But mySAP ERP is the obvious next-generation product, and we think companies will eventually jump on board."

The Sumol Group is running SAP on HP servers running HP-UX with Oracle database 8i. It is still considering upgrading to Enterprise next year, but may hold off until 2005 to see how other companies fare, Freire said.

"I told SAP that we might consider [Enterprise] if it were willing to provide some assurance that the risk wouldn't be higher if we would accept its suggestion," he said. "We received nothing from SAP that provided such assurance, so we went along with our plans and upgraded to 4.6C."

The company recently also had a major upgrade of its hardware platform. Its production system now is made up of two new HP rp7410 servers and a new XP-512 disk array.

Another SAP customer is also holding off for now on a major move to Enterprise or mySAP ERP.

Bonnie Hardy, assistant vice president of technology solutions at Boston-based Slade Gorton & Co. Inc., a seafood distributor, said her company decided to delay an upgrade to Enterprise until the first quarter of 2005. Instead, Slade Gorton plans to pay for extended maintenance on SAP R/3 4.6B, she said.

Since 4.6B support ends Dec. 31, Slade Gorton will be forced to pay an additional 2% or $2,500 per system, whichever is greater, she said. The company is one of SAP's small to medium-sized customers.

"We're not exactly thrilled to be forced to do this upgrade quickly, but in the lifecycle of this software, it's doable," she said. "We're hoping that SAP is true to its word that there won't be any more major upgrades to its core."

An upgrade team will meet in November to begin planning and research into upgrading to Enterprise in 2005, Hardy said. Several members of the Slade Gorton team are also headed to a seminar on SAP upgrade options.


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