SUSE Linux Enterprise Server 9 SP4 update
 

I want to update our SLES9 SP3 machines to SLES9 SP4, but since these machines are in production I don't want to reboot the machine so I would like skip kernel update and apply rest of the recommended & security updates -- Could some one let me know if this is a recommended practice

You quite possibly fine that it is not possible to install all the other stuff without also installing the kernel update as some of it will probably have a dependency on the newer kernel. If you install the new kernel it doesn't mean you have to reboot. However if you're installing something as large as a service pack then I would advise a reboot.
Sometimes production systems have to be taken down the maintenance reasons. All you can do is ensure you cause minimal disruption to your users by doing it. Test installation of the service pack on a non-production server and check that everything still works as expected afterwards. Make sure you have a back up plan to get your service(s) up and running again quickly in the event that your updating of the production servers goes horribly wrong.