SAP upgrade: 6 factors to consider

SAP released ECC6 in 2006. But most Indian companies continue to use SAP R/3 4.6B, launched in 2001. With new taxation and accounting laws coming into force, Indian companies cannot shy away from SAP upgrades for long. However, before making a SAP upgrade, it would be useful to consider a few points:

1) Your business needs

Companies can benefit from quickly adopting new technology as it offers various additional features, thus staying on top of the competition. For example, SAP ECC6 supports parallel accounting. However, new software releases are prone to bugs, and companies must evaluate those risks before SAP upgrade.   

2) The right time for SAP upgrade

It’s a good idea to perform a SAP upgrade to coincide with the expiry of maintenance contracts. SAP provides tech support for a fixed period. For instance, if the vendor releases upgrades every 18 months, at the third upgrade, it may stop supporting the first upgrade, and request customers to use the latest version instead. SAP usually issues such guidelines to customers up to two years in advance.

3) The right type of SAP upgrade

When doing a SAP upgrade, companies may opt for a technological SAP upgrade (standard SAP upgrade) or a functional SAP upgrade. In a standard SAP upgrade, the company’s ERP is upgraded to the latest version, but only with access to the default features.

A functional SAP upgrade, on the other hand, is a customized SAP upgrade, which allows the company to use additional features provided in the new version. For example, SAP ECC6 supports parallel accounting, but to use that feature, companies need to make changes to their system configuration (a functional SAP upgrade). If the system configuration changes aren’t done, the company won’t be able to use the parallel accounting feature, even though the version offers it.

4) Clubbing SAP upgrade with other IT Initiatives

SAP upgrade takes time. Users will be inconvenienced. A smart solution could be to club the SAP upgrade with other IT maintenance tasks such as master data cleansing. The clubbing of IT initiatives can also help a company to manage its IT budgeting better.

5) Why you should upgrade SAP

There are three primary reasons why a company should upgrade SAP:

i.Many companies see no reason to upgrade SAP when they find that their current ERP implementations work to their satisfaction. Many of these companies continue using SAP R/3 4.6B, released in 2001. SAP no longer supports this version. Once SAP stops the support, companies have to spend heavily to maintain their ERP systems.

ii.The new, business critical patches are not available for the old versions. For example, the implementation of Goods and Services Tax (GST) calls for major changes to a company’s ERP systems. SAP provides patches for the latest ERP versions, but not for the old ones. Companies running old versions will have to buy additional software, which can be expensive and incompatible.

iii.For the company’s IT staff, working with outdated ERP systems is a career dead-end. So finding people to work on outdated systems is not easy.

6) A few precautions

A SAP upgrade can be more tedious than implementing an ERP system for the first time.  If a company implements ERP for the first time and fails, employees can revert to the manual systems they were familiar with. But once SAP is upgraded, companies don’t have a rollback option. So ensure that the new SAP version is thoroughly tested before being upgraded.

About the author: Satish Pendse is CIO of HCC Group and the president of Highbar Technologies, the IT company of HCC group. During his tenure, he has been responsible for driving and implementing large IT initiatives, including various SAP implementations such as ERP, SR, CRM, BI-BO, etc. During his 25 years of IT career, he has also worked in Johnson & Johnson, Jet Airways, Marico, and Kuoni Travels.

(As told to Anuradha Ramamirtham)