1. MySAP ERP Yvonne Genovese Vice President, Research Director Gartner, Inc.

2. mySAP ERP - The big AHA! By 2005, mySAP ERP will be a different product than R/3 Enterprise (.8 probability). User Imperative: The question is not “if” to upgrade - it’s when!

3. Key Issues nWhat is mySAP ERP and how will it impact SAP users? nHow will SAP’s technology and application strategy affect users through 2008? nWhat are SAP users key challenges in selecting to deploy mySAP ERP over R/3 Enterprise?

4. 3.1I 4.0B 4.6C 4.5B R/3 From R/3 to R/3 Enterprise BASIS 4.6D Now August 2003 (4.6C: March 2005) Technology: Availability: End of Support: WAS 6.20 Now R/3 Enterprise Stable Evolving R/3 Enterprise Core Extensions

5. From R/3 Enterprise to mySAP ERP mySAP Application Strategy, Part 1 mySAP Business Suite CRM SC M PLM Extensions 2003 SRM NetWeaver R/3 Enterprise mySAP ERP xApp NetWeaver WebAS NetWeaver

6. xApps mySAP Business Suite CRM SC M PLM Extensions 2003 SRM NetWeaver mySAP ERP R/3 From R/3 Enterprise to mySAP ERP mySAP Application Strategy, Part 2

7. R/3 Enterprise vs. mySAP ERP nR/3 Enterprise –New functionality over 4.6c –Unicode –Based on NetWeaver WebAS –Enhancements encapsulated in Extensions –Core remains “stable” –No license upgrade nmySAP ERP –R/3 Enterprise Functionality plus Analytics, SEM, Financial Supply Chain Management, MSS/ESS, SAP Learning solution, E-Recruiting, Self Service Procurement, Internet Sales R/3 Edition –Full NetWeaver Suite –Requires new license contract –License conversion option for installed customers

8. mySAP Business Applications Evolution Includes NetWeaver Designed for NetWeaver Based on NetWeaver mySAP ERP 2002 mySAP ERP 2003 mySAP ERP 2006 R/3 Enterprise NetWeaver Optional Technology Transition forces Application Code Change Requires Componentization of R/3 Enterprise code within mySAP ERP R/3 Enterprise code will remain a “black box” inside mySAP ERP Result - At some point, users must migrate from R/3 Enterprise to mySAP ERP

9. Multienterprise Business Process 4. Value Chain Optimization Enterprise- Spanning Business Process 3. Enterprise Process Copyright © 2003 mySAP ERP: Componentization of Objects Business Process Application 1. Applications Receivables Order EntryFulfillment Business Objects Configure Credit Check ShipBillCollect 2. Micro-Flows R/3 Enterprise 2003 mySAP 2008 Price Demand to Service Application mySAP ERP 2005

10. SAP NetWeaver - Vision vs Reality DB and OS Abstraction.NET WebSphere … People Integration Composite Application Framework Process Integration Integration Broker Business Process Management Information Integration Business Intelligence Knowledge Management Life Cycle Management PortalCollaboration J2EEABAP Application Platform Multi-Channel Access SAP NetWeaver DB and OS Abstraction Master Data Management The Vision: Single Architecture Java commitment Integrates APS and SES Composite Application Framework Web services pioneer Bus Apps Differentiator Enabler of xApps agility Source: SAP AG The Reality (Aug 2003): Many separate components Big variation in component maturity and time lines SAP now competing head on with IBM, MS, Oracle, BEA

11. DB and OS Abstraction.NET WebSphere … People Integration Composite Application Framework Process Integration Integration Broker Business Process Management Information Integration Business Intelligence Knowledge Management Life Cycle Management PortalCollaboration J2EEABAP Application Platform Multi-Channel Access SAP NetWeaver DB and OS Abstraction Master Data Management SAP NetWeaver - Vision vs Reality The Reality (Aug 2003): Many separate components Big variation in component maturity XI: SAP/ non-SAP XI: SAP/ SAP Source: SAP AG EP MI BW MDM Web AS KM

12. The Challenge: When to Upgrade, Not “IF” SAP R/3 Release Types mySAP Business Suite Contract mySAP ERP Contract SAP R/3 Contract License Types SAP R/3 SAP R/3 SAP R/3 Release 4.6B Release 4.6C Enterprise and below SAP R/3 Release 4.6C > Maintenance: Until Q1/2006< SAP R/3 Release 4.6B and below > Maintenance: Until end of 2003< ! Risk for customer to go out of maintenance ! SAP R/3 Enterprise Latest release of SAP R/3 > Maintenance: Until Q1/2009<

13. Measuring Upgrade Business Benefits and ROI is Tough Hard Business Benefits ($) must be tied to real Key Performance Indicators (KPI’s) Difficult to Justify Technology only Upgrade Witchcraft needed because everything changes simultaneously during the SAP project: Industries, Enterprise economics, technology, other Projects,... KPI’s must be measured before and after any SAP project or improvement BUT: Smart Enterprises can still do it In tough times we have to try harder THE RESULT IF YOU DON’T: Potentially more expensive upgrade later Inventory level On time delivery KPI’s

14. SAP Customer Dilemma: Lack of Best/Next Practice Resources Implementation C O S T T I M E Production Go-Live Current System Upgrade Best Practices Production ESP SAP PSO ESP SAP PSO Customer Choices: 1) Build Internal through Competency Center 2) Develop Relationship with Regional ESP Next Practices

15. License Model Choice of e-business platform or component strategy. Fee for three role-based, named users. Automated B2B transactions charged via software engines based on sales and purchase orders. Maintenance: 17 - 23 percent Top Five Terms to Negotiate:  Full 100 percent credit for R3 investment, and for future conversion from mySAP ERP to mySAP Business Suite if required.  On larger deals, minimize uplifts outside Euro-zone countries  Understand ‘indirect access’: Specify exactly when licenses for external systems accessing SAP software are required, be particularly careful with BW (OpenHub)  Right to outsource  Rights to custom-developed code SAP License Terms to Negotiate:

16. SAP Licensing: ‘This Is Getting Harder…’ Business Suite LicensingAccess to Everything Shelfware Solution Licensing Pay as required Higher Overall Cost Maintenance No Option Maint for Shelfware New functionality Next/Best Practices SAP Option to Charge Engines Industry Functionality Separate Pricing Data Extraction (BW, XI) Pay as required Not Included in Suite International Transl/Local. Price Uplift Pricing Type Strengths Challenges

17. mySAP Business Suite Pricing Model: nmySAP CRM nmySAP SCM nmySAP ERP nmySAP FIN nmySAP HR nmySAP PLM nmySAP SRM e.g Purchase Order/ Sales Order Software Engine fees: (e.g Purchase Order/ Sales Order Industry Solutions based on industry metrics) Professional E3800 Limited Prof. E1600 (mobile E800) Employee E400 Functionality / Price Named User fees (4 categories ) Developer ? Up to E5700

18. SAP Maintenance Standard offering (17%) –Technical Support and Rights to New Versions –2 Early Watch checks and either SAP GoingLive Check, SAP GoingLive Functional Upgrade Check, or SAP OS/DB Migration Check. Max-Attention Service Level offering (20%) –Guaranteed response time for very high priority incidents –Safeguarding for up to 2 mission critical projects and named contact in SAP support services Max-Attention OnSite offering (23%) –Above plus two full-time on-site consultants

19. License Model Choice of business suite platform = all SAP applications or solutions = mySAP ERP, or other single application. Fee for three role-based, named users. Automated B2B transactions charged via software engines based on sales and purchase orders. Maintenance: 17 - 23 percent Top Five Terms to Negotiate:  Full 100 percent credit for R3 investment, and for future conversion from mySAP ERP to mySAP Business Suite if required.  On larger deals, minimize uplifts outside Euro-zone countries  Understand ‘indirect access’: Specify exactly when licenses for external systems accessing SAP software are required, be particularly careful with BW (OpenHub)  Right to outsource  Rights to custom-developed code SAP License Terms to Negotiate:

20. Six Steps of Preparation for mySAP Licensing: 1.Establish a negotiating team with representation from all participating business units. 2. Define requirements (technology and functionality) over two to three years with focus on funded projects. 3.Perform a physical inventory of SAP licenses and existing contract terms; understand new models and terms. Compare with new proposal. 4.Determine whether purchase can be made under existing agreement (mySAP Business Suite -.com). Weigh re-licensing benefits against loss of favorable terms. 5.Balance additional discount with potential shelfware.