E-Commentary -- Move Over Dodo, Here Comes R/2

Dec. 21, 2004
Most -- but not all -- manufacturers have upgraded to R/3.

Once the backbone enterprise information system that more than 2,500 of the world's largest companies depended on to manage their businesses each day, SAP R/2 will be retired on Dec. 31. Starting Jan. 1, 2005, SAP AG will stop providing any kind of support, maintenance or upgrades for companies still using R/2. Fact is, R/2 is a quarter-century old. In the software biosphere, R/2 is the equivalent of the prehistoric coelacanth fish that fishermen in the Indian Ocean haul up in their nets once every purple moon. The vast majority of manufacturers and other businesses using R/2 have long since upgraded to newer versions of SAP, mostly R/3, although some have switched to packages from other software companies. While R/2 is mainframe-based, R/3 runs on smaller server computers connected to armadas of personal computers. A final batch of about 80 companies are in the process of converting from R/2 to R/3 and expect to be done by December, or at the latest, by next spring, SAP reports. Six years ago, when I first revealed SAP's plan to kill off R/2 in these pages (see "IT Nightmare Comes True"), there were 1,250 companies still using R/2. By July 2003, there were 246 companies on R/2. A few manufacturers, though, are what you'd call atypical. They've grown comfortable with R/2 and plan to keep it a while longer. "A few customers will try to keep using R/2 another two or three years," says Michael Roth, R/2 customer manager at SAP headquarters in Waldorf, Germany. It's understandable. Some of these companies just finished installing R/2 in the mid- to late-1990s. Hey, if a guy went out and spent $200,000 on a fine Rolls Royce Corniche, had the exterior painted a special color and had the interior customized, wouldn't he want to drive it a few years? On the other hand, trying to keep old software running without any support from the manufacturer is sort of like the Cubans keeping all those old '56 Chevys and '47 Oldsmobiles running. Sure, they can rebuild a starter motor or fashion a new fender out of sheet metal, but they're out of luck when it comes to enjoying goodies like a satellite-based GPS, antilock brakes or airbags. One of the biggest manufacturers that's sticking with R/2 is Dow Chemical. Starting back in 1991, the chemical giant sank more than $100 million into R/2 and its installation, putting in all of the R/2 modules to help manage its global business. For Dow to migrate all its enterprise systems to R/3 would be especially troublesome, given that the company heavily modified R/2 to suit its particular business processes. "Dow is on R/2, and we do not have any short-term plans to change," says a Dow IS staffer, who declined further comment. SAP frowns upon those few customers who insist on continuing to run R/2. "There are a handful who will just go on with R/2 on their own plan, and no one can forbid it," SAP's Roth says. "We believe this is an irresponsible business practice." The downside of a manufacturer not upgrading from R/2, with its 20 million lines of code written in SAP's proprietary ABAP software language, stems from technology and other changes. "I do see a lot of really heavy risks," Roth says. "When there is a new version of an operating system, who will apply the software to it? This is nothing any other company [than SAP] could cover. We are happy we could convince more than 90% of our R/2 customers to avoid these risks and upgrade." Doug Bartholomew is a former IndustryWeek Senior Technology Editor. He is based in San Francisco.

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