SAP 2009 Spend Trend Trifecta
Part One
By Sam Sliman
President, Optimal Solutions Integration, Inc.
According to a recent report by financial analyst firm UBS, European and US businesses expect to cut technology spending by 2% in 2009. While bad news for most tech vendors, the same study forecasts spending on SAP to increase this year. So what are the top three trends that will drive SAP spending in 2009? In this three-part article, we share our best bets for the SAP 2009 Spend Trend Trifecta.
Number One SAP Spend Trend of 2009 – SAP Upgrades & SOA Framework
According to Forrester, approximately 20% of SAP ERP customers have upgraded to SAP ERP 6.0 in the past two years. While this uptake is impressive, it still leaves the vast majority of SAP ERP customers facing the end of standard support and extended maintenance for their SAP deployments in 2009.
Extended maintenance for SAP R/3 4.6C stops at the end of 2009, and for an additional 2% fee, SAP R/3 4.7 customers can extend their maintenance until the end of March 2010. Options for SAP ERP customers choosing to upgrade after 2009 and hoping to avoid unexpected price hikes include negotiating customer-specific maintenance and support, buying shelf-ware, or engaging third-party maintenance vendors. The imminent end of standard support and extended maintenance, Forrester reports, will be the strongest driver of SAP ERP upgrades in 2009.
While the cost and uncertainty associated with the end of standard support and extended maintenance clearly weighs heavily in the decision to upgrade, these factors should by no means be the sole criteria for making such an important decision. There are several additional, meaningful and measurable reasons for upgrading to SAP ERP 6.0 that SAP customers are well advised to educate themselves on in order to realize the maximum business value of upgrading.
SAP ERP 6.0 and the SOA-enabled NetWeaver 7.0 platform deliver immediate cost savings and enable significant business process innovation and improvement, and it is important to realize that upgrading is in no way a ‘rip-and-replace’ endeavor but is a process that can be executed incrementally and in step with evolving business needs.
In fact, SAP customers can opt for only a technical upgrade to NetWeaver 7.0 (included with SAP ERP 6.0), which lays the foundation for future service-oriented architecture (SOA) initiatives, enables selective implementations from enhancement packages, and allows time to map out a more fleshed out, strategically sound upgrade roadmap.
It is well known by now that SAP has done away with the large-scale and costly upgrades associated with SAP R/3. Keeping the core of SAP ERP 6.0 stable through 2010, SAP’s current practice of issuing upgrades more frequently (presently 2 per year) via smaller, more easily implemented enhancement packages, enables customers to selectively chose, implement and pay for only the enhanced functionality that makes sense for their business — with little-to-no disruption to their business.
But to fully appreciate the value of SAP’s new incremental and customizable upgrade process, it is equally important to understand how an SAP upgrade plays out in the larger picture of the gradual yet inevitable adoption of SOA.
The promised fruits of SOA include easier and speedier application development, faster and more responsive business process innovation, and deeper, more extensive application and data integration.
Since the introduction of the SOA-ready NetWeaver business process platform in 2003, SAP has successfully migrated its entire SAP Business Suite application portfolio and Business All-in-One Solution platform to NetWeaver; completed development of the SAP NetWeaver Composition Environment; issued four enhancement packages; and has made available more than 2000 enterprises services that customers can creatively bundle into composite applications (xApps) for establishing new or improving existing business processes.
With its enterprise SOA roadmap complete, NetWeaver adoption gathering steam, and more than 170 reference SOA accounts, SAP — more than any other major vendor — has delivered on the promise of SOA, enabling its customers to gain SOA efficiencies and realize greater value from their SAP ERP investment today.
More immediately, consolidating and standardizing all SAP instances on SAP ERP 6.0 reduces costs quickly and deeply, with money saved on hardware, software and reduced administration and maintenance expenses topping the list.
When the SOA business benefits, the TCO reduction, and the stability of Enterprise Support are collectively considered, the case for an SAP upgrade is very compelling.
CIOs want a predictable cost for running and maintaining core enterprise systems. At the same time, they need the flexibility to make strategic, cost-efficient business process innovations that satisfy their most vital and pressing business needs.
Upgrading to SAP ERP 6.0 and the SOA-enabled NetWeaver 7.0 platform delivers on all these fronts, making it is our first pick in the 2009 SAP Spend Trend Trifecta.
Stay tuned for picks two and three!
