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
4.6C
4.5B
4.0B
3.1I
R/3 Enterprise
R/3
Enterprise
Core
Stable
Extensions
Technology:
BASIS 4.6D
WAS 6.20
Availability:
Now
Now
End of
Support:
August 2003
(4.6C: March 2005)
Evolving
From R/3 Enterprise to mySAP ERP
mySAP Application Strategy, Part 1
2003
xApp
xApp
xApp
xApp
xApp
mySAP Business Suite
xApp
PLM
R/3 Enterprise
xApp
SRM
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
mySAP ERP
R/3
NetWeaver
Extensions
SRM
R/3 Enterprise vs. mySAP ERP
 R/3 Enterprise
– New functionality over 4.6c
– Unicode
– Based on NetWeaver
WebAS
– Enhancements
encapsulated in Extensions
 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
– Core remains “stable”
– Full NetWeaver Suite
– No license upgrade
– Requires new license
contract
– License conversion
option for installed
customers
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
Business
Process
R/3 Enterprise 2003
Order Entry
Fulfillment
Receivables
Application
Application
Application
2. Micro-Flows
Credit
Business ObjectsConfigure Check
Price
Ship
Bill
Collect
mySAP ERP 2005
3. Enterprise Process
EnterpriseSpanning Business
Process
4. Value Chain Optimization
Multienterprise
Business Process
Demand to Service
mySAP 2008
Copyright © 2003
SAP NetWeaver - Vision vs Reality
The Vision:
People Integration
Multi-Channel Access
Portal
Collaboration
Information Integration
Business
Intelligence
Knowledge
Management
Master Data Management
Process Integration
Integration
Broker
Business Process
Management
Application Platform
J2EE
Life Cycle Management
Composite Application Framework
SAP NetWeaver
ABAP
andOS
OS Abstraction
Abstraction
DBDB
and
…
.NET
Source:
SAP AG
WebSphere
• Single Architecture
• Java commitment
• Integrates APS and SES
• Composite Application Framework
• Web services pioneer
• Bus Apps Differentiator
• Enabler of xApps agility
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
SAP NetWeaver - Vision vs Reality
MI
Composite Application Framework
BW
SAP NetWeaver
The Reality (Aug 2003):
People Integration
• Many separate components
• Big variation in component
maturity
Multi-Channel Access
Portal
Collaboration
Information Integration
Business
Intelligence
Knowledge
Management
Master Data Management
Process Integration
Integration
Broker
Business Process
Management
Application Platform
J2EE
Life Cycle Management
EP
KM
XI:
SAP/
non-SAP
ABAP
andOS
OS Abstraction
Abstraction
DBDB
and
…
.NET
Source:
SAP AG
Web AS
MDM
WebSphere
XI:
SAP/
SAP
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
mySAP ERP Contract
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 Contract
License Types
SAP R/3
Release 4.6B
and below
SAP R/3
Release 4.6C
SAP R/3 Release Types
SAP R/3
Enterprise
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
any SAP project or improvement
• Inventory level
• On time delivery
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
COST
Upgrade
Current
System
Production
Production
Best Practices
Next Practices
• ESP
• SAP PSO
• ESP
• 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
Business Suite Licensing
Solution Licensing
Maintenance
New functionality
Engines
Data Extraction (BW, XI)
International
Strengths
Access to Everything
Pay as required
No Option
Next/Best Practices
Industry Functionality
Pay as required
Transl/Local.
Challenges
Shelfware
Higher Overall Cost
Maint for Shelfware
SAP Option to Charge
Separate Pricing
Not Included in Suite
Price Uplift
Functionality / Price
mySAP Business Suite Pricing Model:
Named User fees
(4 categories)
Developer
? Up to E5700
Professional
Limited Prof.
E3800
E1600
(mobile E800)
Employee
E400
Software Engine fees: (e.g Purchase Order/ Sales Order
Industry Solutions based on industry metrics)
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.