Maintenance Costs Pinch R/3 Users

By Renee Boucher Ferguson  |  Posted 2005-11-28 Print this article Print

Many SAP AG R/3 users are finding themselves in a tight spot, with maintenance programs coming to an end and the need to relicense with the software maker to get access to newer platforms.

Many SAP AG R/3 users are finding themselves in a tight spot, with maintenance programs coming to an end and the need to relicense with the software maker to get access to newer platforms.

Under the current 5-1-2 program, users on R/3 4.6C and older systems are facing either the end of their Mainstream or Extended Maintenance programs, or a support fee hike by the end of next year. Users of Enterprise 4.7 have several years before their Mainstream Maintenance ends but are planning their next steps now.

"In the past, staying on SAP maintenance has given you automatic access to subsequent releases of the base set of modules at no additional cost," said an IT director at a midsize manufacturing company who requested anonymity. "For anyone currently on 4.7, that option has now gone away, and SAP maintenance has turned into a very expensive insurance policy for support only—no enhancements."

SAP does provide users with a credit toward their R/3 implementations, and not all users have to pay the relicensing fee, according to Jim Dever, a spokesperson for SAP.

"It depends on what type of license they have," said Dever in Newtown Square, Pa. "If they have a license for MySAP ERP, MySAP Business Suite or, then they dont have to be relicensed."

In terms of a credit toward next-generation upgrades, the offer is 75 percent of the original license fee, said Dever.

However, that credit is not enough to offset costs of moving to the newer platforms, as there is still a substantial cost for new functionality, according to some users.

"What no one is discussing is if you want to get to ECC 5.0—the lowest level of product that has any future—youve got to relicense," said the IT director, who is currently on R/3 4.7. "And they still want you to go on paying 17 percent."

Some users are ceasing maintenance payments until they decide on their next move, based on how the ERP (enterprise resource planning) market evolves. However, that approach comes with its own costs. Should users decide to stall maintenance for a year or two, they will have to pay back unpaid fees, in addition to a penalty, to reinstate support for the upgrade.

The other option is picking up maintenance from a third-party provider such as TomorrowNow Inc., a company acquired last year by SAP that provides maintenance support for PeopleSoft applications. Oracle Corp., SAPs main rival, acquired PeopleSoft earlier this year.

Jim Shepherd, an analyst with AMR Research Inc., said SAPs relicense structure is fair. "You purchased a product called R/3, and as long as you stay on maintenance, youre entitled to the next available release of R/3," said Shepherd in Boston. "At the end of 4.7, R/3 no longer exists. There is nothing in the contract that says you have access to whatever [SAP] invents."

Some vendors, such as Oracle, do waive relicensing fees for users moving up to next-generation suites, according to Shepherd.

For SAP R/3 users, upgrading to the next-generation platforms brings added functionality, from financial analytics to new components to enable shared services. At the same time, users on the newer platform are up-to-date with the companys latest development efforts, which include its ESA (Enterprise Services Architecture) and NetWeaver integration platform. About 85 percent of SAPs 30,000 users are still on older R/3 systems, said SAP Consulting, a wholly owned subsidiary of SAP America Inc., a division of SAP AG.

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