R/3 users reprieved in SAP licensing review

6 November 2003 SAP has granted a reprieve to thousands of customers who had been threatened with a loss of support if they did not upgrade to newer versions of the R/3 enterprise resource planning (ERP) suite by early 2004.

The shift in policy was revealed by CEO Henning Kagermann at the Gartner Conference in Cannes this week. He promised that no SAP customer would be left without support under a new compromise solution that would now be offered to customers who are not ready to upgrade.


The change means that users of the earlier versions of R/3 would now be offered support for an extra fee for a further two years. Alternatively, they could be supported on a time and materials basis.

Kagermann stressed that, contrary to reports, “No SAP customer is without support”, although he agreed that the company is not actively shipping support materials to some customers.

Like rivals Oracle and PeopleSoft, SAP is trying to move large numbers of customers off older versions onto new releases, partly for financial reasons but also because newer versions of the software are so much more advanced. SAP is now supporting eight major releases of its ERP software.

Gartner research director Derek Prior said the move to extend support was “major news” for customers. But some financial analysts may worry that it has revenue implications.

Kagermann acknowledged that SAP is grappling with a number of licensing issues and indicated that some major changes are on the way. “Next year we will rethink pricing to address issues of complexity,” he said.

One problem is that, as more operations become automated, there will be fewer end-users of SAP’s software. “In future, only exceptions will be handled by users. We have to protect ourselves, if we have only 5 users but the system is handling hundreds of thousands of transactions,” said Kagermann. That could mean more charges for core engine products, or for industry specific applications.

Gartner research vice president Yvonne Genovese said that many customers were confused about how SAP would charge for its NetWeaver product, which includes an integration broker, and for the xApps composite applications that can be built or bought from SAP.

Kagerman said that some composite applications will be bundled in other offerings [suites], and will not be priced separately. Others, however, will indeed be priced separately, namely those that are what he calls “next practice” – meaning new xApps.

He went on to say that charges for new, industry specific applications are likely. He also said that SAP may charge differently for different types of customers working in different industries.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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