MySAP ERP

Yvonne GenoveseVice President, Research DirectorGartner, 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” toupgrade - 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?

3.1I

4.0B

4.6C4.5B

R/3

From R/3 to R/3 Enterprise

BASIS 4.6D

Now

August 2003 (4.6C: March 2005)

Technology:

Availability:

End ofSupport:

WAS 6.20

Now

R/3 Enterprise

Stable

Evolving

R/3 Enterprise

Core

Extensions

From R/3 Enterprise to mySAP ERPmySAP Application Strategy, Part 1

mySAP Business SuitemySAP Business Suite

CRMCRM

SCM

SCM

PLMPLM

Extensions

2003

SRMSRM

NetWeaver

R/3 Enterprise

mySAP ERP

xApp

xApp

xApp xApp

xApp

xApp

xApp

NetWeaverWebAS

NetWeaver

xApps

mySAP Business SuitemySAP Business Suite

CRMCRM

SCM

SCM

PLMPLM

Extensions

2003

SRMSRM

NetWeaver

mySAP ERP

R/3

From R/3 Enterprise to mySAP ERPmySAP Application Strategy, Part 2

R/3 Enterprise vs. mySAP ERP

R/3 Enterprise

– New functionality over 4.6c

– Unicode

– Based on NetWeaver WebAS

– Enhancements encapsulated in Extensions

– Core remains “stable”

– No license upgrade

mySAP ERP

– R/3 Enterprise Functionality plus Analytics, SEM, Financial Supply Chain Management, MSS/ESS, SAP Learning solution, E-Recruiting, Self Service Procurement, Internet Sales R/3 Edition

– Full NetWeaver Suite

– Requires new license contract

– License conversion option for installed customers

mySAP Business Applications Evolution

Includes NetWeaver

Designed for NetWeaver

Based on NetWeaver

mySAP ERP 2002

mySAP ERP 2003

mySAP ERP 2006

R/3 Enterprise NetWeaver Optional

Technology Transition forces Application Code Change

• 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

Multienterprise Business Process

4. Value Chain Optimization

Enterprise-Spanning Business Process

3. Enterprise Process

Copyright © 2003

mySAP ERP:Componentization of Objects

Business Process

ApplicationApplication

1. Applications

ReceivablesOrder Entry Fulfillment

Business ObjectsConfigureCredit Check Ship Bill Collect

2. Micro-Flows

R/3 Enterprise 2003

mySAP 2008

Price

Demand to Service

Application

mySAP ERP 2005

SAP NetWeaver - Vision vs Reality

DB and OS Abstraction

.NET WebSphere…

People Integration

Com

posi

te A

pplic

ati

on F

ram

ew

ork

Process IntegrationIntegration

BrokerBusiness Process

Management

Information IntegrationBusiness

IntelligenceKnowledge

Management

Life C

ycle

Manag

em

en

t

Portal Collaboration

J2EE ABAP

Application Platform

Multi-Channel Access

SAP NetWeaverSAP NetWeaver

DB and OS Abstraction

Master Data Management

The Vision:• Single Architecture• Java commitment• Integrates APS and SES• Composite Application Framework • Web services pioneer• Bus Apps Differentiator• Enabler of xApps agility

Source: SAP AG

The Reality (Aug 2003):• Many separate components• Big variation in component maturity and time lines• SAP now competing head on with IBM, MS, Oracle, BEA

DB and OS Abstraction

.NET WebSphere…

People Integration

Com

posi

te A

pplic

ati

on F

ram

ew

ork

Process IntegrationIntegration

BrokerBusiness Process

Management

Information IntegrationBusiness

IntelligenceKnowledge

Management

Life C

ycle

Managem

en

t

Portal Collaboration

J2EE ABAP

Application Platform

Multi-Channel Access

SAP NetWeaverSAP NetWeaver

DB and OS Abstraction

Master Data Management

SAP NetWeaver - Vision vs Reality

The Reality (Aug 2003):• Many separate components• Big variation in component maturity

XI:SAP/

non-SAP

XI:SAP/SAP

Source: SAP AG

EP

MI

BW

MDM

Web AS

KM

The Challenge: When to Upgrade, Not “IF”

SAP R/3 Release Types

mySAP Business SuiteContract

mySAP ERP Contract

SAP R/3 Contract

License Types SAP R/3 SAP R/3 SAP R/3 Release 4.6B Release 4.6C Enterprise and below

SAP R/3 Release 4.6C

>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 EnterpriseLatest release of SAP R/3

>Maintenance: Until Q1/2009<

Measuring Upgrade Business Benefits and ROI is Tough

Hard Business Benefits ($) must be tied toreal Key Performance Indicators (KPI’s) Difficult to Justify Technology only Upgrade

Witchcraft needed because everything changes simultaneously during the SAP project: Industries, Enterprise economics, technology, other Projects, ...

KPI’s must be measured before and afterany SAP project or improvement

BUT: Smart Enterprises can still do it In tough times we have to try harderTHE RESULT IF YOU DON’T:

Potentially more expensive upgrade later

• Inventory level• On time delivery

KPI’s

SAP Customer Dilemma:Lack of Best/Next Practice Resources

Implementation

C O

S T

T I M E

Production

Go-LiveGo-Live

Current Current SystemSystem

Upgrade

Best Practices

Production

• ESP• SAP PSO

• ESP• SAP PSO

Customer Choices:1) Build Internal through Competency Center2) Develop Relationship with Regional ESP

Next Practices

License ModelChoice 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 License Terms to Negotiate:

SAP Licensing: ‘This Is Getting Harder…’

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

Pricing Type Strengths Challenges

mySAP Business Suite Pricing Model:

m

y SA

P C

RM

m

y SA

P S

CM

m

y SA

P E

RP

m

y SA

P F

IN

m

y SA

P H

R

m

y SA

P P

LM

m

y SA

P S

RM

Software Engine fees: (e.g Purchase Order/ Sales Order e.g Purchase Order/ Sales Order Industry Solutions based on industry metrics)Industry Solutions based on industry metrics)

Professional

E3800Limited Prof.

E1600

(mobile E800)Employee

E400

Fu

nc

tio

na

lity

/ P

ric

eF

un

cti

on

ali

ty /

Pri

ce

Named User fees (4 categories)

Developer

? Up to E5700

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

License ModelChoice of business suite platform = all SAP applicationsor 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

SAP License Terms to Negotiate:

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.