Why SAP upgrade?
Information Technology, as we all are aware, undergoes rapid advancements. Technology becomes obsolete within a very short time period. The transfer rate of data is one such example. A few years back, the data transfer rate was only a few bits per second (bps) in a telephone modem {8 bits add up to one byte}. From bps, the data transfer rates has reached mbps speeds {1032 bits is 1 Kbps. 1 Kbps X 1 Kbps – 1 Mbps). Today every service provider offers broad band speeds (mbps) even on wireless data cards. Hence, when technology changes all associated components under go change i.e. the Hardware, the operating systems, the databases and software.
SAP ERP Solution is an Enterprise Resource Planning (ERP) software solution that supports and integrates an organization’s business processes. Organizations that use SAP derive tremendous benefits due to the visibility of information across the entire business value chain, hence enabling the decision makers at every level in the organization to make informed decisions about the Business and Operations.
SAP being a solution that is developed on Information Technology platforms, need to be enhanced and upgraded on a periodic basis i.e. once in a few years. Upgrading SAP not only benefits organizations by substantially enhancing transaction speeds – which help improve efficiency of personnel, it also provides numerous new functional processes that are relevant to the current dynamic business environment.
The benefits an organization derives from upgrading SAP can be broadly classified into:
- Overcoming Technical Limitations
- Reduction of interfaces
- Additional functional Processes
Overcoming Technical Limitations
SAP AG has moved away from their proprietary development platform (ABAP) to support other development platforms like Microsoft Dot.Net, Java, etc. This has removed the dependency of the customer organization on ABAP as a development platform. Skill sets in Dot.Net and Java technology being abundantly available in the market.
Built on the SAP Netweaver technology platform, the customer organizations get the much required flexibility for interfacing with other systems like SCADA, LIMS, Weighing scales, Weigh Bridges, etc , hence reducing the human intervention in the transaction process and reducing data errors.
Benefits: Cost of development and maintenance of the reports, interfaces and the recurring cost of ownership of SAP is reduced substantially.
Reduction of interfaces:
Many customer organizations had continued to use other software systems as the functional processes that are critical to the customer organization’s business were not supported in SAP. Interfaces have been built between SAP and the stand alone software. Many customers extended SAP itself, by developing on the SAP technical platform using ABAP programmes. The interfaces or the custom developed SAP programmes have to be maintained, every time there is a change in any one of the solutions.
A huge number of such functional processes, which were not available in the earlier versions of SAP ERP have been added in the core SAP ERP ECC 6.0 solution itself, hence eliminating many interfaces. SAP has also provided many interfaces to 3rd party solutions, there by reducing the dependency on local software companies or in-house programmers for maintenance of the interfaces and custom programmes.
Benefits: The recurring maintenance costs and the cost of ownership of the total software solutions substantially reduces.
Additional functional Processes:
- SAP ERP ECC 6.0 has been substantially enriched with the additional of a host of additional functionalities
- All new functionality developed by SAP is on the newer technology platforms
The additional functionalities available in SAP ERP ECC 6.0 are as follows:
Materials Management
Procurement:
- Requisitioning
- Purchase Request Processing
- Purchase Order Processing
- Receiving
- Financial Settlement
- Managing Catalogue Content
Inventory & Warehouse Management:
- Cross Docking
- Warehouse Storage
- Physical Inventor
Procurement Logistics Execution:
- In Bound Processing
- Out Bound Processing
- Transportation Management:
- Transportation Execution
- Freight Costing
Supplier Collaboration
- Development Coordination
- Purchase Order Collaboration
- Confirmation Of Goods And Services
- Invoice Processing
Manufacturing
- Manufacturing Execution
- Supervision & Control
- Product Development
- Product Development
- Development Collaboration
- Life Cycle Data Management
- Document Management
- Product Structure Management
- Specification Management
- Change & Configuration Management
Sales & Service
- In Bound Telesales
- Contract Processing
- Returnable Package Management
- Consignment
After Market Sales & Service
- Phase-In Equipment
- Phase-Out Equipment
- Asset Scrapping
- Product And Warranty Registration
- Warranty Claim Processing
- Service Contract Processing
- Service Employee Resource Planning
- Service Notification Processing
- Service Order Processing
- Returns Processing
- In-House Repair Processing
Sale Order Processing
- Account Processing
- Internet Sales
- Managing Auctions
- Enquiry Processing
- Quotation Processing
Professional Service Delivery
- Project Planning & Scope Management
- Resource And Time Management
- Project Execution
- Time & Attendance
- Travel Expense Management
- Project Accounting
- Resource Related Billing
- Resource Related Inter-Company Billing
Financial Accounting
- Credit Management
- Electronic Bill Presentment And Payment
- Collections Management
- Dispute Management
- Cash & Liquidity Management
- Treasury & Risk Management
- General Ledger (New)
- Bank Accounting
- Bank Journal Accounting
- Inventory Accounting
- Accrual Accounting
- Tax Accounting
Human Capital Management
- Talent Management
- Recruitment
- Career Management
- Succession Management
- Enterprise Learning
- Employee Performance Management
- Compensation Management
- Work Force Process Management
- Employee Administration
- Organization Management
- Benefits Management
- Time & Attendance
- Payroll & Legal Reporting
- Hr Processes & Forms
- Work Force Deployment
- Project Resource Planning
- Resource & Programme Management
- Call Center Staffing
- Retails Scheduling
Corporate Services:
- Property Acquisition And Disposal
- Portfolio Management
- Property Management
- Technical Management
- Support Processes
- Project & Resource Management
- Project Execution
- Project Accounting
- Prototyping & Ramp Up
- Development Collaboration
Enterprise Asset Management
- Investment Planning & Design
- Procurement & Construction
- Maintenance & Operations
Document And Knowledge Management
- Document Management
- Knowledge Management
Benefits: Many Functional processes that were earlier manual or on independent software are available in SAP ERP ECC 6.0. Many more functional processes relevant to current business dynamics also have been added, hence enhancing efficiency, effectiveness of decision making and improved performance.
END OF MAINTENANCE
Consequent to obsolescence of technology, SAP AG also has a planned structured policy of phasing out the earlier versions of SAP ERP.
- SAP 4.6 standard maintenance has expired. Extended maintenance expires in 2009.
- SAP 4.7e standard maintenance expires by 2009 and extended maintenance by 2012.
- The extended maintenance is with an annual increase on a year-on-year basis and the rates are +2% first year, +4% second year and so on.
It is advisable to upgrade to the latest version of SAP, on expiry of normal maintenance, as this would benefit customer organizations on many fronts and they are:
- Advantages from the new functionality added in SAP ERP ECC 6.0 would be available. Implementation of these new functionalities would enhance the visibility of business, bring in tighter controls and enhance the quality of decisions.
- SAP fixes programming bugs only during the extended maintenance period. Hence, the impact on statutory and other changes will be significant
- The bug fixes are not under a Service Level Agreement. Hence, priority for fixing of bugs would not be prevalent. This could have business consequences
Benefits gained by SAP upgrade
- Benefit from regular support package updates, especially those in statutory and sensitive areas like legal, tax, human resources, payrolls
- Streamlined business processes – with system upgrades new capabilities are provided, helping streamline and automate additional business processes
- Latest upgrades provide systems that are easier to manage, are faster and require less hardware leading to lower support and administrative costs
- Less server hardware configurations
- Lower application / database administration and support requirements
- Lower bandwidth consumption
- Improved availability and service levels – with customer opting for High Availability h/w, system upgrades can provide higher availability and service levels – as applications mature they become higher performance and more reliable
- Less downtime
- Less performance tuning
- Improved user productivity via higher performance
- Improved transactions via higher performance
- Availability of Skilled man power – With obsolesce of technology, skilled man power to maintain the SAP system may not be available and if available will be very expensive.
- Implementation of new dimension products like SCM, CRM, EHS, EP, ESS, BI, SEM would become easier as the base core product has the technology (netweaver) to interface with them
- Bring the customer into alignment with peer institutions using SAP, enhancing opportunities for collaborative management.
Conclusion:
It is beneficial for customer organizations to upgrade to the current version of SAP to reduce recurring cost of ownership and business continuity risks. |
