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

‘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.

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