SAP R/3 customers face a major decision in the next few months as the extended maintenance contracts for old SAP releases end. In one scenario, many customers have customized their SAP systems extensively and therefore have not kept pace with new releases. These customers now face the frightening prospect of upgrading their instances of SAP across the entire company, which is an expensive and high-risk undertaking. The cost of such an upgrade threatens to squeeze most other important IT projects out—particularly at the divisional or subsidiary level.

Another scenario is a company that has made a few acquisitions in the past and is likely to own multiple ERP systems, some that are relatively old or even homegrown. The cost of keeping these old systems running is very high. Companies in either of these situations know they need to migrate off their old systems. One option for them is to upgrade all of their enterprise systems to the most recent version of SAP. However, such a migration is virtually akin to a full re-implementation, requiring extensive IT budget and resources, and again freezing out other key IT initiatives.

NetSuite suggests an alternative: a hybrid model, with SAP running at the corporate parent and NetSuite deployed at independent divisions or international subsidiaries. Such a hybrid model not only lowers the overall cost and resources that are required to migrate to a new version of SAP, but also reduces the ongoing annual costs of keeping the systems working, thereby freeing up the IT budget for more strategic investments. This paper will examine this model in more detail.