Why Create Custom Software Component?

We have a software component named "SAP APPL".

Underneath it we have a software component versions SAP APPL 4.6C and SAP APPL 7.00

In the past we've been told we need to create a custom software component and software component version so that if we update the SAP APPL and SAP APPL 7.00 we won't lose custom object that have been developed in a customer namespece within the SWCV.

Is this this necessary?