Why Upgrade?

What compels a firm running multiple versions and multiple products of SAP to upgrade its ERP and other usage types? The (not always) obvious reason is the need for new functionality, which can better support company business needs and help them thrive in an ever growing competitive landscape. Basically, they want their business to run better than other businesses in their market. So a brief note on the release strategy for SAP applications, which follow a “5-1-2” maintenance concept: “5″ years of mainstream maintenance; “1″ year of extended maintenance at an additional two percent of the maintenance fee; and finally, “2″ years extended maintenance at an additional four percent fee. Not cheap, but it may be cheaper than a big upgrade project. After that, if you still don’t want to let go of the SAP release, there is always customer-specific maintenance, which is expensive.

I am sure that most of the decision makers are not aware of this information, and that is why I’m  writing this post.  SAP customers need to know of the additional investment they would have to make to keep their SAP system, running status quo.  I would encourage you, and your bean counters, to do the math on considering your SAP installations. After that, I am sure you would be compelled to focus on the upgrade (if not now, when?).

New Functionality

The main reason for upgrading has almost always been the additional functionality.  There are other reasons as well, like instance consolidation, virtualization, and requirements based on hardware, software and O/S.  Every SAP release brings new features, challenges and opportunities.  The need to upgrade is mostly driven by business needs, which in turn require new functionality in your SAP environments.  This empowers your company by transforming your processes and moving your company to higher levels of efficiency, richer reporting with new and improved analytic tools like BIA and HANA, and ability to make timely and informed business decisions.  The choice must be made whether to implement and develop the new functionality or perform an upgrade. This is not always an easy evaluation and the amount of customizing you do will certainly drive this decision.  This is the so-called “solution gap” and you have to ask, is the solution gap large enough to justify the SAP release upgrade?  And since SAP upgrades are time consuming and usually complex, is it worth investing time, money and resources to address this solution gap with an upgrade?

Yesterday’s Technology

SAP systems need to be constantly customized and enhanced in order to support evolving business needs. The time will come when the installed instances will no longer be able to suit your needs.  Staying on the same release is unsustainable from an infrastructure point of view as you will be required to stay on older hardware, software, and O/S.  If you have systems with many external touch points, it becomes more difficult over time to keep these working, especially if you are running much older SAP software. [Read more...]