While SAP executives portrayed the move as a purely altruistic one, intended to help customers through the tough economy, there are also ways the approach could boost revenue.
For one, it could encourage companies still on ERP R/3 to make the upgrade to ERP 6.0, which already uses the enhancement approach and is compatible with Business Suite 7, while R/3 isn't.
And with synced application improvements offered in one enhancement package, SAP is taking a more harmonious approach to its application business. SAP can bring this vision to new customers and sees Business Suite 7.0 as upstaging Oracle Fusion.
With the new approach, the biggest investment in customer time and possibly money would be the upgrade to Business Suite 7.0. "It's about getting on the train, and getting that train in motion," explained executive VP Peter Graf.
"Customers can get on that train at any point in time. But once they're on that train, they won't consume upgrades; they'll just consume enhancement packages." Graf likened it to being able to check off a list of functionalities when the enhancement package becomes available.
But it may not be that easy. Stuart Williams, an analyst with Technology Business Research, notes that many customers have modified their SAP apps, and it's unclear how they'll be able to reuse or reapply those modifications if they jump on that train.
"Keeping it simple may help SAP, but partners and customers will have to evaluate the cost of making the modifications or the opportunity cost of adopting the unmodified SAP code in the name of efficiency," Johnston said. "For new deployments, Business Suite 7 provides a clear lower-cost route to value then previous versions of SAP applications."
Longtime SAP customer Ed Tobin, senior VP of global IT at Colgate-Palmolive, applauded the development. "This will allow us to use less of our resources on upgrades, and more on new capabilities for business purposes," Tobin said. He also sees Business Suite 7 as providing better access to the Business Objects technologies and letting Colgate "get better access to a lot of information we have."