I would not say that SAP Web AS 6.40 replaces ITS, but
it now comes with a integrated ITS functionality which comprises SAP GUI for HTML and Web Transactions (IAC). You will not be able to run any Flow Logic, WebReporting or WebRFC applications with this new integrated ITS. For these types of applications you still have to use a standalone ITS (which will therefore be long-term supported as well).
Furthermore, SAP GUI for HTML and ITS services of the integrated ITS can only be used with applications that run directly on the SAP Web AS 6.40. That means, you can't use SAP Web AS 6.40 with Integrated ITS against R/3 Enterprise 4.7.
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