10 SAP ERP Upgrade misconceptions a CIO needs to know

23 May 2012

John Appleby

John Appleby

Global Head of Sales

Here at Bluefin Solutions we've recently done a number of upgrades to SAP ERP 6 and it got me thinking - - why are people doing it this year and why, if you've not upgraded, should you do so now?

I did some analysis and found that there are a surprising number of customers that have yet to make the jump, so I decided to have a chat with some of them.  During the conversations I was given a bunch of reasons why they hadn't upgraded yet, and since some of them are based on misconceptions, I thought it was worth sharing some of them. 

So here are the top 10 misconceptions, as told by customers.

1) There is no imperative

This is often the case, but in the case of customers running R/3 4.6, 4.7 and ECC 5.0, the extended support from SAP at 4% above the standard support rate ends on 31/03/2013. If that is of concern to you, you need to be planning an upgrade now to get it in by then.

If that's not an imperative then the following 9 misconceptions may give you one!

2) There is no business benefit

It is true that, generally, there are no business benefits of technical upgrades. After 31/03/2013 you will need to move to a customer-specific support contract, which could cost you hundreds of thousands of pounds a year.

If that's not important to you, there will be restrictions on the versions of Windows, Oracle and Microsoft SQL Server that you will be able to run. This means it may no longer be possible to replace your hardware, which may add cost.

And if that doesn't bother you then any one of the many benefits of SAP ERP 6 may be of interest. Take a look at the Business Function Predictor, which allows you to run a program on your R/3 system to tell you what stuff would be useful when you upgrade.

Your R/3 functional team can look at where the benefits are with your business and see what is of interest. Perhaps Treasury Management and Financial Supply Chain Management. Perhaps the shared services structure for HR and Finance. There are so many things!

One option I have taken in several upgrades recently is to build a technical benefits case based on the "change many test once" philosophy. In one example, we built a case to move from AS/400 to HP/Microsoft, upgrade to SAP ERP 6 and move to Unicode in one project, which had a much more solid benefits case around cost of support than it would have on its own.

3) There is no risk

No - there are at least 4 serious risks!

  1. Actually there is a huge risk if you value your people because IT people hate old software. If you don't plan an upgrade then there is a big risk they will walk...to one of your competitors
  2. What's more, there is massive risk if you are running SAP HR because there will be no legal updates after 31/03/2013
  3. It presents a serious risk if you are in a regulated market, because you may be required to run a supported platform
  4. Shareholders sometimes shy away from companies that do not invest in up-to-date systems. One of my customers made a point of announcing their upgrade to the shareholder market to build confidence in them as a company.

4) My last upgrade meant I couldn't have business change for 6 months
and it crippled our business

I've heard this numerous times. This was certainly the case in the past and you may well have been burnt by this. However, this is no longer the case for SAP ERP 6. Using current project methodology and a Proof of Concept system we can get the change freeze down to within 8-12 weeks, which is usually acceptable.

5) My business cannot accept the downtime

Yes it can! This can be easily worked around.

  1. You'll be surprised what IT can negotiate with the business if you get in a good negotiating project manager. I have seen our head of Project Services, Kiran Patel, negotiate 4 days for an unusually complex project. The business worked around things with ease when they had a proper communications plan
  2. SAP ERP 6 upgrade downtime is now pretty low in downtime minimised mode. It can be 2-8 hours depending on the scenario with proper planning. Are you sure you can't accept that?
  3. If you can't, then SAP has a Zero Downtime upgrade option which requires minutes of downtime....eBay take note!!!

6) The upgrade would be too costly

Firstly, most companies spend millions implementing an ERP system and they do so with good reason. They centralise services, save massive amounts of money and have a platform which supports many languages and legislations. There are very good reasons for implementing an ERP platform. So why be afraid to invest in some money to feed and water it? It is your most valuable IT asset.

Secondly, it may be less than you think. Upgrade costs and overall project timeline vary wildly depending on the type of system you have, usage and customisation. But don't take that too seriously - look into the detail and find out if it can work.

7) Our system is too bespoke

Custom code can increase the cost of an upgrade, especially if you have a system that predates R/3 4.6. However in some case, this can be a benefit. . At one customer I worked with recently it appears that the amount of custom code means that the system may upgrade more easily than if they had a medium bespoked system! Remember that custom ABAP code still runs great on ERP 6.

8) Tools to help with the upgrade are too costly

A great change in 2011 was the release of SAP Solution Manager 7.1. Within the SAP Solution Manager 7.1 toolkit, there are a number of tools that are excellent in helping manage upgrades. These include:

  • Custom Code Manager - this helps you categorise your customisations
  • Business Process Repository - this automatically documents business processes and is  provides a structure for test management
  • Test Manager - this assigns tests to your processes and automates them
  • Maintenance Optimizer - for the automation of downloading patches
  • Project Repository -download the SAP ASAP upgrade framework and use it for documentation

In essence, all you really need is SAP Solution Manager so you don't have to worry about buying expensive tools any more. Note that I would say there are two exceptions to this:

  1. Test Management - if you use another tool like Quality Centre already, then continue to use this
  2. Panaya - there are cases where Panaya's code rectification tools can save you money.

9) SAP R/3 works just fine

Your system may work by you are missing out on a wealth of value. There are so many things that SAP ERP 6 has - the Enhancement Framework that gives you easy updates every 3 months. For example: HR and Finance Shared Services, Financial Supply Chain Management and thousands of other benefits in your core ERP.

In addition, SAP ERP 6supports Service Oriented Architecture and SAP Gateway, enabling you to link in your systems of innovation back to your core ERP easily, and be agile in the way you serve your customers.

SAP R/3 may work just fine but you are missing out on some business benefits that will help your staff and customers alike and give you market differentiation if you choose to use it. SAP ERP 6is truly a platform for the future of your systems of record.

10) I want to involve my technical team but the consulting firm wants to "do it to me"

An upgrade project can be structured any way you like. One of my favourite approaches is when customers take charge of the business change management, business project management and ERP functional roles. After all, who knows your business better than you?

Then we add some technical roles including (usually) a Technical Basis person to help the internal basis team with bandwidth and expertise, some Technical Architecture to come up with a plan and a Technical Project Manager who knows all about upgrades and the ASAP methodology. Plus a developer who knows all about SAP ERP 6and lets you get along with BAU.

Conclusion

I hope you think I'm right - not doing an upgrade to your R/3 system before next March is sheer madness. I highly recommend thinking seriously about, or at least looking at, it to make a decision.

And if you don't think I'm right, then please argue away in the comments section right below!

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About the author

John Appleby

Global Head of Sales

I've always been passionate about new technology. I cut my teeth helping global financial services and consumer goods companies build data warehouses to manage their business - especially when they wanted to run faster.

These days, I travel weekly across continents, helping clients differentiate themselves using analytics technologies. This then involved building a team to design the solution, make it work and lead it through to successful completion.

I believe that in-memory computing is radically changing the face of business so you can ask me about SAP HANA, or about any other data platform like DB2 BLU, Hadoop or MongoDB for that matter.

I'm passionate that giving back to the community reaps long-term rewards and this has shaped the last few years of my career - being a contributor to knowledge sharing websites as an SAP Mentor; and a sometime advisor to Wall Street investors on emerging technologies and those companies bringing to market new innovations.

When I'm not busy designing in-memory apps, you may find me pounding the pavement to the beat of music in the hilly suburbs of Philadelphia, or traveling the world to meet new people and new cultures.

Bluefin and SAP S/4HANA - welcome to the one horse race

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