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MySAP ERP

Yvonne Genovese
Vice President, Research Director
Gartner, Inc.
mySAP ERP - The big AHA!

By 2005, mySAP ERP will be a different


product than R/3 Enterprise
(.8 probability).

User Imperative: The question is not “if” to


upgrade - it’s when!
Key Issues

■ What is mySAP ERP and how will it impact


SAP users?
■ How will SAP’s technology and application
strategy affect users through 2008?
■ What are SAP users key challenges in
selecting to deploy mySAP ERP over R/3
Enterprise?
From R/3 to R/3 Enterprise

R/3 R/3 Enterprise


4.6C
4.5B
R/3
4.0B Enterprise Stable
Core
3.1I

Extensions
Technology: BASIS 4.6D WAS 6.20
Availability: Now Now Evolving

End of August 2003


Support: (4.6C: March 2005)
From R/3 Enterprise to mySAP ERP
mySAP Application Strategy, Part 1

2003
xApp xApp
xApp xApp

xApp mySAP Business Suite xApp

PLM xApp
CRM

R/3 Enterprise SRM


SC
M mySAP ERP
NetWeaver NetWeaver
NetWeaver
WebAS
Extensions
From R/3 Enterprise to mySAP ERP
mySAP Application Strategy, Part 2

2003 xApps

mySAP Business Suite


PLM
CRM
mySAP ERP

SC R/3 SRM
M

NetWeaver

Extensions
R/3 Enterprise vs. mySAP ERP

■ R/3 Enterprise ■ mySAP ERP


– R/3 Enterprise Functionality
– New functionality over 4.6c plus Analytics, SEM, Financial
Supply Chain Management,
– Unicode MSS/ESS, SAP Learning solution,
E-Recruiting, Self Service
– Based on NetWeaver Procurement, Internet Sales R/3
WebAS Edition

– Enhancements – Full NetWeaver Suite


encapsulated in Extensions – Requires new license contract

– Core remains “stable” – License conversion option for


installed customers
– No license upgrade
mySAP Business Applications
Evolution

Technology Transition forces Application Code Change

R/3 Enterprise NetWeaver Optional

mySAP ERP 2002 Includes NetWeaver


mySAP ERP 2003 Based on NetWeaver
mySAP ERP 2006 Designed for NetWeaver

• Requires Componentization of R/3 Enterprise code within mySAP ERP


• R/3 Enterprise code will remain a “black box” inside mySAP ERP

Result - At some point, users must migrate from R/3 Enterprise


to mySAP ERP
mySAP ERP:
Componentization of Objects
1. Applications
R/3 Enterprise 2003
Business Order Entry Fulfillment Receivables
Process

Application Application Application


2. Micro-Flows Credit
Business ObjectsConfigure Check Price Ship Bill Collect

mySAP ERP 2005


3. Enterprise Process
Demand to Service
Enterprise-
Spanning Business
Process
4. Value Chain Optimization mySAP 2008
Multienterprise
Business Process
Copyright © 2003
SAP NetWeaver - Vision vs Reality

The Vision:
SAP NetWeaver • Single Architecture
People Integration • Java commitment
Multi-Channel Access

Portal Collaboration
• Integrates APS and SES
Life Cycle Management
• Composite Application Framework
Information Integration • Web services pioneer
Business Knowledge
Intelligence Management • Bus Apps Differentiator
Master Data Management
• Enabler of xApps agility
Process Integration
Integration Business Process
Broker Management

Application Platform
The Reality (Aug 2003):
J2EE ABAP • Many separate components
• Big variation in component
ar F noi t acil pp A eti s op mo C

DBDB
and
andOS
OS Abstraction
Abstraction

maturity and time lines


… .NET WebSphere
• SAP now competing head on
with IBM, MS, Oracle, BEA
Source:
SAP AG
SAP NetWeaver - Vision vs Reality

MI KM
SAP NetWeaver
People Integration
The Reality (Aug 2003):
Multi-Channel Access • Many separate components
Portal Collaboration • Big variation in component

Life Cycle Management


Information Integration
maturity
EP Business Knowledge
Intelligence Management
Master Data Management

Process Integration MDM


Integration Business Process
Broker Management

BW Application Platform
J2EE ABAP
XI: XI:
SAP/ SAP/
mar F noi t acil pp A eti s op mo C

DBDB
and
andOS
OS Abstraction
Abstraction
non-SAP SAP
… .NET WebSphere

Source:
SAP AG

Web AS
The Challenge: When to Upgrade,
Not “IF”
SAP R/3 Enterprise
Latest release of SAP R/3
>Maintenance: Until Q1/2009<
mySAP Business Suite
Contract
SAP R/3 Release 4.6C
mySAP ERP Contract >Maintenance: Until Q1/2006<

SAP R/3 Release 4.6B and below


>Maintenance: Until end of 2003<

! Risk for customer to go out of maintenance !

SAP R/3 Contract

SAP R/3 SAP R/3 SAP R/3


License Types Release 4.6B Release 4.6C Enterprise
and below
SAP R/3 Release Types
Measuring Upgrade Business
Benefits and ROI is Tough
Hard Business Benefits ($) must be tied to
real Key Performance Indicators (KPI’s)
Difficult to Justify Technology only Upgrade
KPI’s
KPI’s must be measured before and after • Inventory level
• On time delivery
any SAP project or improvement

Witchcraft needed because everything changes


simultaneously during the SAP project: Industries,
Enterprise economics, technology, other Projects, ...

BUT: Smart Enterprises can still do it


In tough times we have to try harder
THE RESULT IF YOU DON’T:
Potentially more expensive upgrade later
SAP Customer Dilemma:
Lack of Best/Next Practice Resources
Customer Choices:
1) Build Internal through Competency Center
2) Develop Relationship with Regional ESP
Implementation

Go-Live
Upgrade
Production Production

Best Practices Next Practices


COST

Current
System
• ESP • ESP
• SAP PSO • SAP
PSO

TIME
SAP License Terms to Negotiate:
License Model
Choice of e-business platform or component strategy.
Fee for three role-based, named users.
Automated B2B transactions charged via software engines based
on sales and purchase orders.
Maintenance: 17 - 23 percent

Top Five Terms to Negotiate:


 Full 100 percent credit for R3 investment, and for future conversion
from mySAP ERP to mySAP Business Suite if required.
 On larger deals, minimize uplifts outside
Euro-zone countries
 Understand ‘indirect access’: Specify exactly when licenses for
external systems accessing SAP software are required, be
particularly careful with BW (OpenHub)
 Right to outsource
 Rights to custom-developed code
SAP Licensing:
‘This Is Getting Harder…’

Pricing Type Strengths Challenges


Business Suite Licensing Access to Everything Shelfware
Solution Licensing Pay as required Higher Overall Cost
Maintenance No Option Maint for Shelfware
New functionality Next/Best Practices SAP Option to Charge
Engines Industry Functionality Separate Pricing
Data Extraction (BW, XI) Pay as required Not Included in Suite
International Transl/Local. Price Uplift
mySAP Business Suite Pricing Model:

Named User fees


(4 categories)
Functionality / Price

Developer
Professional
? Up to E5700 Limited Prof.
E3800 E1600
Employee
(mobile E800)
E400

Software Engine fees: (e.g Purchase Order/ Sales Order


Industry Solutions based on industry metrics)
■ mySAP CRM

■ mySAP SCM

■ mySAP SRM

■ mySAP ERP

■ mySAP PLM

■ mySAP FIN
■ mySAP HR
SAP Maintenance

■ Standard offering (17%)


– Technical Support and Rights to New Versions
– 2 Early Watch checks and either SAP GoingLive
Check, SAP GoingLive Functional Upgrade Check,
or SAP OS/DB Migration Check.
■ Max-Attention Service Level offering (20%)
– Guaranteed response time for very high priority
incidents
– Safeguarding for up to 2 mission critical projects
and named contact in SAP support services
■ Max-Attention OnSite offering (23%)
– Above plus two full-time on-site consultants
SAP License Terms to Negotiate:
License Model
Choice of business suite platform = all SAP applications
or solutions = mySAP ERP, or other single application.
Fee for three role-based, named users.
Automated B2B transactions charged via software engines based
on sales and purchase orders.
Maintenance: 17 - 23 percent
Top Five Terms to Negotiate:
 Full 100 percent credit for R3 investment, and for future conversion
from mySAP ERP to mySAP Business Suite if required.
 On larger deals, minimize uplifts outside
Euro-zone countries
 Understand ‘indirect access’: Specify exactly when licenses for
external systems accessing SAP software are required, be
particularly careful with BW (OpenHub)
 Right to outsource
 Rights to custom-developed code
Six Steps of Preparation for mySAP Licensing

1. Establish a negotiating team with representation from all


participating business units.
2. Define requirements (technology and functionality) over
two to three years with focus on funded projects.
3. Perform a physical inventory of SAP licenses and existing
contract terms; understand new models and terms.
Compare with new proposal.
4. Determine whether purchase can be made under existing
agreement (mySAP Business Suite - .com). Weigh re-
licensing benefits against loss of favorable terms.
5. Balance additional discount with potential shelfware.