SAP uses support, price to push mySAP

SAP AG is nudging customers of its flagship R/3 enterprise software to migrate quickly to its newest version, mySAP ERP, with some financial incentives — and a warning that maintenance service for the aging enterprise application will end by 2009.

Customers who decide over the coming months to upgrade to SAP’s new ERP (enterprise resource planning) product can receive discounts of up to 75 percent against the cost of their R/3 software license, according to SAP spokesman Markus Berner, who confirmed several remarks made by the company’s Chairman and Chief Executive Officer, Henning Kagermann, on the sidelines of the Strategic IT Management conference, which ended Wednesday in Neuss, Germany.

Under the discount plan, customers who, for example, paid €1 million ($1.3 million) for an R/3 license could take 75 percent of that license, or €750,000, and deduct this amount from the cost of a license for mySAP ERP, according to Berner.

If the discount plan doesn’t woo all of SAP’s some 20,500 R/3 users to switch, the thought of having no service for the product will likely convince many of the rest. The Walldorf, Germany, company plans to pull the plug on all of its so-called mainstream support services, which include patches, updates and other maintenance services, in five years, according to Berner.

Yet, in a sign that SAP is still eager to milk its cash-cow R/3 product until the last drop, Berner said the company is weighing the possibility of extending support for a fee of 19 percent of the license price, up 2 percent from the current support fee. “This is something we are considering,” he said. “We haven’t made a definite decision on whether or not we will extend R/3 support.”

At the start of this year, SAP dropped R/3 from its price list, according to Berner. “You can no longer purchase the product,” he said.

The company expects mySAP ERP, which was launched in March, to include all newly announced functions, including role-based, device-independent access, by 2005, according to Berner.

The R/3 successor comes with SAP’s new NetWeaver technology at no added cost, Berner said.

NetWeaver is designed to link disparate applications and data sources, allowing companies to make use of their existing IT investments and personnel skills while exploiting new Web services. The system is interoperable with Microsoft Corp.’s .Net and IBM Corp.’s WebSphere platforms, and allows users to provision Web services that have been developed in Java.

The Strategic IT Management conference was sponsored by the German business newspaper Handelsblatt and The Wall Street Journal.