SAP will use its Sapphire user conference the week of May 15 to try to persuade customers to move from R/3 to MySAP ERP.
The company, based in Walldorf, Germany, seeks to entice customers with the recent development bonanza around its ESA (Enterprise Services Architecture) concept and underlying NetWeaver integration platform, including ecosystem initiatives like its Industry Value Networks.
SAP also will announce at the Orlando, Fla., show the long-awaited release of MySAP ERP 2005, which brings full NetWeaver capabilities.
Under the covers, however, pushing customers to MySAP, will be users growing unease with rising maintenance costs and at least the perception that older R/3 products will be retired.
Customers now are caught in the middle. While mySAP 2004 is available—it has about 500 customers, according to Gartner—there are not many technical changes from R/3 to mySAP 2004. The real release that has any significance is mySAP 2005, which has too few users to be considered proven.
“Most people are not there yet—theres a whole continent of 4.6 C users, and at the end of the year their maintenance goes up,” said Gartner analyst Yvonne Genovese. “Their problem: SAP has not GAed mySAP ERP 2005 early enough to [enable them to] make a decision.”
The value of upgrading to MySAP 2005 stems from the more modern development concepts in play at SAP, particularly around the service enablement of MySAP ERP, and the process integration capabilities inherent with that.
The problem with upgrading is that the technology is confusing, expensive and difficult to implement, customers say.
“In the past, when you just ran R/3, you had a single environment to deal with,” said John Wheeler, CIO of Nova Chemicals, in Calgary, Alberta, which is upgrading to MySAP ERP 2004.
“Now, all the new products run in separate environments, so instead of one production management environment, you end up with something thats four or five times more complex. If one doesnt mitigate that complexity, its a significant increase in your IT budget.”
Visions of SOA, mySAP
During the Sapphire event, SAP is expected to highlight its vision of SOA (service-oriented architecture), and how thats applied to the core mySAP applications, according to SAP spokesperson Bill Wohl.
SAP has a “mature mySAP ERP [offering], particularly if you think about what ERP will look like in a service-enabled world,” said Wohl, in Newtown Square, Pa.
“That includes the continuing maturity of our ecosystem around…Industry Value Networks around industries. We think we have a couple-year advantage over our competitor, where we can build a serious ecosystem.”
With IVN, SAP is seeking to define a services standard for various industries. The goal, SAP officials say, is to enable users to conduct business processes across IT systems using SAP and partner services. However, IVN also ties users to NetWeaver.
The work SAP is doing with Nova Chemicals and Pavilion Technologies around the IVN for chemicals is a prime example.
Using NetWeaver and SAP composite applications, Pavilion has been able to tie in the production processes that its software controls in Novas manufacturing plants with the business processes contained in Novas ERP system.
Pavilion and Nova also are taking advantage of SAPs ESA capabilities by service-enabling Novas manufacturing processes.
“Were trying to develop that intersection between business processes and production processes,” said Matt Tormollen, vice president at Pavilion, in Austin, Texas.
Pavilion and Nova are also taking advantage of SAPs ESA capabilities by service-enabling Novas manufacturing processes.
“As part of the Nova pilot, we have a Web services interface into the production model,” said Tormollen.
“Then we expose the ability to be able to integrate that model … into any application. We believe this opens up the next generation in manufacturing performance.”
SAP execs are counting on this type of innovation to spur users to adopt its next-generation software.
“If SAP doesnt get its installed base to come along with it, its going to be hard to maintain the level of development that theyre doing,” said Genovese.
“A lot of people who have signed license agreements [for MySAP ERP products] havent upgraded. To me, if you signed a license agreement and havent upgraded, that makes an unhappy customer.” To date, SAP has 15 customers on MySAP ERP 2005, according to Gartner.
Novas Wheeler, who is also partnering with SAP and IDS Scheer to renovate the way it implements CRM and SRM (supplier relationship management) by taking a process model-based implementation approach, believes there is value in moving ahead with SAP, but only if users can tap newer capabilities.
“Right now its a major struggle to put this infrastructure in place,” said Wheeler. “To begin to understand it and bring the CRMs and PLMs [product lifecycle management] online, and then to integrate it to the Pavilions of the world—we believe its worth it, but its not something you take on lightly.”