SAP Watch

Feb 5 2009   7:22PM GMT

Who’s ready to upgrade now?

CourtneyBjorlin Courtney Bjorlin Profile: CourtneyBjorlin

Business Suite 7 is supposed to be easier and cheaper to deploy and use, and will give upgrades, “the kiss of death,” as SAP Co-CEO Leo Apotheker put it during yesterday’s press conference.

But most customers have to get past one more “traditional” upgrade before they can leverage Business Suite 7. So one question for the new release is — will it push more customers to upgrade?

About 13,000 — around 1/3 — of SAP’s customers have upgraded to ERP 6.0 so far, the ERP component of Business Suite 7 and a requirement for customers who want to take advantage of enhancement packs for other SAP products like CRM, SCM and SRM. SAP Co-CEO Leo Apotheker himself said yesterday that Forrester Research predicts IT spending will decrease by 3% this year.

SAP’s extended its enhancement package initiative across the business suite, meaning customers can now pick and choose the functionality that they want, and leave behind that they don’t. With Business Suite 7, SAP has also synchronized the release schedule of its software suite, and harmonized the user interface across it.

Forrester Research analyst Ray Wang asks the upgrade question in his latest research note. He said extending the switch framework mechanism that control enhancement packages to all the suites is no small feat, and the enhancement packages do offer some strong business drivers. However, his conversations with more than 800 SAP clients in the past five months indicate that SAP can do more to help its customers by emphasizing financing options and potentially lowering maintenance fees, he wrote in a research note.

Customers on the press panel at yesterday’s announcement cited enhancement packs as a bonus to upgrading, but the prospect didn’t seem to drive their upgrade decisions.

Colgate-Palmolive is in the middle of the upgrade and it was driven by wanting to keep up with the vendor’s research and design initiatives, according to Ed Toben, vice president of GIT & Business Services.

“It just makes sense to do the upgrade and get the value out of it,” Toben said.

IBM is also in the process of rolling out SAP ERP 6.0. It wants to leverage the new capabilities in human resource management, and the value in its upgrade is around the business opportunities that move enables.

SAP stressed yesterday that its new suite model would help customers get through these difficult economic times — times that are also hitting the vendor itself, as SAP announced last week it would lay off 3,000 people.

But will Business Suite 7 be a good justification for another traditional upgrade in this recession? Or do customers need more help to move?

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