SAP launches software in challenging times

By Jim Finkle

NEW YORK (Reuters) - German technology giant SAP AG will unveil the biggest upgrade to its business software line in almost three years on Wednesday, hoping customers will upgrade their systems even as technology budgets shrink.

Analysts say it will be tough for SAP's new Business Suite 7 product line -- which helps businesses manage areas including accounting, sales, manufacturing, human resources and dealings with suppliers -- to quickly gain traction in the midst of the worst economic crisis since the Great Depression.

It is unclear how much existing customers will be required to pay for the software itself because some of the costs will likely be covered by existing maintenance contracts.

Even if the cost of the software is low, SAP -- which last week announced 3,000 job cuts as it reduces spending -- will still need to convince businesses to invest time and money to implement it.

About 35 percent of companies are delaying or canceling software upgrades originally planned for this year, according to market research firm Information Technology Intelligence Corp.

"Anything in this market is a tough sell. They have to convince customers why they need to buy it now," said ITIC analyst Laura DiDio.

Customers of SAP will expect discounts on software, training and consulting if they buy the new suite, she said.

That is because it can cost corporations millions of dollars in extra fees on major upgrades as they pay technicians and consultants for help integrating it with existing systems. Businesses also proceed cautiously with upgrades out of fear glitches could interfere with their regular operations.