Splunk has made the upgrade process of the app and add-on much simpler. If you're using deployment server as the origin to distribute among the clients, then there is easy way to do it.
Follow these steps
Access UI of the deployment server. In the Manage Apps window, you have an option to upgrade necessary apps and add-ons when available in the Splunkbase marketplace. Make sure if the existing Splunk version is not compatible with the Apps and Add-ons then deployment server will not give update option for those especially.
In this way, the local configuration will not be disturbed in /etc/deployment and updated content will be in /etc/apps for the updated app which you will override by moving into /etc/deployment-apps by.
In this way, you don't have to untar any file to update the apps.
I tried with this approach on Heavy Forwarder, I got an update for Splunk AWS Add-on which was not managed by Deployment server. I did have custom files inside local directory of this Add-on, I went ahead and updated the Add-on through Heavy Forwarder UI. After the updating add-on, files inside local directory are preserved, default directory is updated with configuration files.
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