SAP upgrade poses challenge for FDs

Like getting the builders in for a home improvement project, IT upgrades have a habit of springing some unwelcome surprises on companies, including their finance departments.

Problems range from cost-overruns, the loss of important business data and angry employees who can’t log-on on to their computer. IT upgrades are not just a problem for IT directors; projects that go badly wrong can hit a company’s bottom line.

A new survey highlights concerns over IT upgrades ­ 90% of SAP software users from the UK, France and Spain questioned by Macro 4, admitted that they find performing upgrades a challenge.

Challenges include the time upgrades take (73%), the complexity involved (60%) and the staff needed for the upgrade (50%).

In addition, 41% of respondents said they were worried about the risk of system failure following an upgrade and 39 % were concerned about potential loss of data.

The survey’s findings come as hundreds of UK businesses using SAP face a tricky decision over a major software upgrade. Many customers of SAP, whose products are heavily used by finance departments, will see support for older versions of SAP software end in 2010, encouraging them to upgrade to the latest product, SAP ERP 6.0

According to figures from business software supplier Macro 4, about 1,800 UK businesses use SAP software. Of UK companies surveyed, 45% said they had upgraded to the ERP 6.0 product.

Finance directors who are reluctant to sign off the cost of upgrading an IT system have a number of options, says Simon Holloway, of IT research company Bloor Research. These include building or buying ‘work-around’ software ­ a kind of band-aid for IT, which allows companies to carry on using old software and delay upgrading.

The first option is normally cheaper than upgrading their software, while moving to a new supplier is often too costly for many companies, says Holloway.

‘The key question is, “does this upgrade help me solve any of my business problems”,’ says Holloway. ‘If not, you don’t have the luxury to do it.’

FDs should also bear in mind that software that has been customised may make upgrades trickier. Often the upgrade of an ERP system requires other systems, such as the operating system, database and desktop applications, to be updated too.

‘The old adage applies ­ “if it isn’t bust don’t try to fix it”,’ says Dennis Keeling, an IT analyst and former chief executive of the Business Application Software Developers’ Association. ‘Of course the software developers will try to remove support of old versions to force companies to upgrade, but that tends to be sabre-rattling. In the end they are still happy to take maintenance income for old versions.’

A SAP spokeswoman said that SAP has provided customers with ‘services and tools’ to help them identify the benefits of a potential upgrade. She added that 14,000 customers had installed SAP ERP 6.0, with upgrades lasting on average between two to nine months.