Wednesday, December 21, 2011

Can SAP be the #2 database vendor by 2015? [Guest Post]

Note: This is a guest post by John Appleby (@applebyj) of BlueFin Solutions. Opinions are his (but I value his opinions!).

Last week 150 people travelled to Boston to listen to SAP talk about their future focus. There was a lot of talk about cloud, muted by the fact that SAP have just acquired HCM cloud vendor SuccessFactors and therefore are unable to talk about the acquisition until it is completed. But their in-memory technology, HANA, was also in centre frame.

And during the conference, SAP senior executive Steve Lucas announced that he intends SAP to be the #2 database vendor by 2015. It wasn't a throwaway comment and hyperbole is not Steve's way. He was clear on who this meant overtaking and clear on this difficulty of this journey. But is this realistic, or just pie in the sky?

For those who don't completely understand: SAP HANA is a next-generation database. At a 30,000ft level it can do anything that Oracle, IBM or Microsoft can do, but hundreds or thousands of times faster, because it runs in the main memory of a computer system rather than on slow spinning disks. I've used it and it does exactly what it says on the tin.

Why doesn't SAP HANA have deeper market penetration?

Put simply it is because SAP wanted it this way. Whilst HANA truly is a general-purpose database, SAP first announced it as an analystics appliance for the 1.0 release. They also priced it really high and didn’t' offer a discount – list pricing can be as high as €180,000 for a 64GB HANA "unit", depending on which version you require.

And what's more, SAP sells solutions and HANA is a platform, so the global salesforce doesn't quite know how to sell it in volume - yet. They didn't want to sell it in volume in any case because they wanted to introduce it slowly to market – building stability, references along the way and avoiding expensive and embarrassing global escalations.

So by the end of 2011 we should expect $100-150m of HANA sales, which is 3-5% of SAP's total revenue. Not particularly significant, right? Well in September they released HANA as being supported for SAP's Business Warehouse software, which allows large-scale data warehouses. And this is where it gets interesting: there are 17,000 existing BW customers, and HANA would provide business benefit to all of them.

What is the wider market opportunity for SAP HANA?

It starts with the SAP BW product, which has 17,000 customers. HANA can replace the database that BW runs on – which is typically from Oracle, IBM or Microsoft. The benefits of this are huge – much faster reporting, data loads, far better agility and a better business experience overall. HANA literally transforms SAP BW.

But that is just the start because the fact that BW runs on HANA means that SAP can allow any of its software to run with HANA – replacing the existing database. And how quickly it chooses to allow this is a factor of how quickly it decides that HANA is mature enough to do this. Larry Ellison from Oracle claimed that there is no in-memory database anywhere near to being able to run as the database for a transactional system at the beginning of 2011. HANA has not yet proven that it is ready yet, but this is exactly what SAP intends.

And even that is just the tip of the iceberg. Because let's be clear: HANA can be used for anything. It supports industry standard connections like ODBC and JDBC and anything that runs a database can be run on HANA – just much faster than ever before. Other vendors have in-memory technologies but the way HANA is designed means it is much more general-purpose than what Oracle and IBM have to offer.

So what is possible by 2015?

Well this is the billion dollar question. From a personal perspective I am deeply impressed with what SAP have done with HANA in 2011. It has gone from being vapourware (January) to being a real product on the price list (July) - albeit immature. And by September a second – much more mature – release was released to market that supports BW. That's an enormous amount of progress in 12 short months.

And I already have projects underway that use HANA as a general purpose database for things like the Sybase Unwired Platform – enabling real-time enterprises with iPads, providing decision making on the move based on events that happened seconds before. There's no doubt that the technology has huge potential. The question is – what happens next, and how fast?

It also depends what you mean by #2 database vendor. For example Oracle say they are the #1 SAP database vendor. Yes – they have the most large systems. Microsoft claim the same, because they have the most customers (a lot of smaller customers run Microsoft). And guess what, IBM claim the same – because IBM have the biggest SAP databases. SAP are going to have to be clear when they explain what they mean by #2.

But based on what I've seen – expect early ERPs to be supported by SAP in 2012 – including the BusinessOne ERP suite – ERP lite, if you like, designed for organisations with 1-100 employees. Expect SAP's SME (10-1000 employee) ByDesign cloud suite to run on HANA and also expect HANA to support standards: because today whilst HANA supports ODBC and JDBC, it does not support 3rd party systems to connect directly into this.

In 2012 we should also expect to see proper support for larger (>1TB databases). HANA compresses around 10:1 to 5:1 compared to other databases so 1TB is 5-10TB of standard database, but it hasn't really been proven to scale properly yet. Expect to see this happen in 2012, as well as scenarios that require disaster recovery and other technical stuff like integration with enterprise monitoring suites like Tivoli.

Why is SAP taking its sweet time?

It seems to be that the answer is pretty simple. The last major database to go to market was Microsoft in the mid-90s with SQL Server. They made an acquisition and it was still awful until the release in 2000. SAP doesn't want this stigma and is therefore phasing the rollout, making the software expensive and thereby limiting the number of customers.

For example there was no shortage of customers out of the 17,000 to join the NetWeaver BW early adoption program that SAP calls Ramp-Up. But there were 50 slots and those were easily filled with customers who had realistic projects that would go live. Little by little they build references, quality software and trust within the customer base – but not growing so fast that there are major project failures. There have been a few instances where HANA was oversold in the early days and those projects were managed carefully – directly by the SAP leadership team.

Projects that use HANA as an ERP database have been deliberately avoided, as SAP Chief Technology Officer Vishal Sikka told me. He described how if Porsche's BW data warehouse were to stop working, they would raise a priority support call and SAP would sort it out. However if their ERP system stopped working and production of cars ceased, he would get a personal phone call from a board member.

So in 2013 expect support for the ERP suite to start to come. And by then, HANA will be sold for every conceivable scenario through 2014 and 2015. And the interesting thing is I don't believe that a killer scenario exists for HANA yet, because all the scenarios right now are really about doing what you do today, but faster. Let's start thinking about what you can't do today – and might give you a huge competitive advantage.

And can SAP be the #2 database vendor by 2015? Really?

Honestly I'm not sure, but it is definitely the right goal. HANA isn't about high-performance analytics – it's about changing the way that customers do business, with a technology enabler. For this reason, SAP have to be looking at going after the database market – and helping customers get a huge competitive advantage along the way.

I honestly suspect that the biggest challenge that SAP have along this way is enabling the salesforce to educate customers on how beneficial it would be – because the SAP salesforce is aligned around industry verticals and Lines of Business. A global reorganisation is underway to change this, and the way that HANA is explained and sold is at the core of this, but HANA is a platform and will need to be sold as such. That is a serious piece of organisational change for SAP and shouldn't be underestimated.

Regardless of whether Steve's goal is met or not, SAP HANA is perhaps one of the most interesting technologies I have seen in my 14 years of working in Enterprise IT, and well worth serious consideration, whatever business you run. If you are a SAP customer I would go a step further and say that you should look at building your HANA roadmap, based on your business imperatives compared to the product maturity and availability roadmap.

Disclosure: SAP paid for John's travel and expenses to the Influencer Summit in Boston. Mine, too, btw, and SAP is a client of mine (Dennis).

Tuesday, December 13, 2011

My favorite SAP HANA blogs

Here are the "must read" blogs for those who wish to understand SAP HANA.

Jon Reed:

Podcast - Debating the Value of SAP HANA -

Vitaliy Rudnytskiy:Link

Is SAP HANA about the “in-memory database”? -
SAP HANA: Opening New Frontiers -

John Appleby:

Updated: The SAP HANA FAQ - answering key SAP In-Memory questions -
First Impressions on SAP NetWeaver BW 7.3, powered by SAP HANA - amazing -
Why SAP HANA 1.0 SP03 - Project Orange - will be a runaway success -

Vijay Vijayasankar:

Redbull migrates BW to HANA – I am suitably impressed -


What Are the Killer Apps for SAP HANA and Other In-Memory Computing Systems? - and
The Real (Potential) Impact of SAP HANA -
Is SAP HANA Right For You (Now) -
SAP HANA - The Strategic Context -


Friday, December 9, 2011

What Are the Killer Apps for SAP HANA and Other In-Memory Computing Systems?

In a previous blog, I argued that SAP HANA (and in-memory computing) had the potential to bring a number of benefits to enterprises in the short term, including:
  • elimination of lag time between data capture in the operational system and its availability in analytical systems,
  • greatly increased query performance, and
  • simplification of the IT landscape.
A second blog discussed scenarios in which HANA could be transformative to customers today. In summary, customers running SAP BW may find substantial benefits to moving to SAP HANA in the short term - read the blog for more details. It's my opinion that SAP BW is the "killer app" for HANA. However, this is only a part of the answer, since BW is a platform on which customers run many different apps.

"Timeful" software

Why is HANA so interesting? In a sense, what the HANA team did is to look at all the assumptions underlying applications today. Given the enormous changes in the price of high-speed memory, it is now possible and economical to handle essentially all of our typical transactional applications - and a very large fraction of our analytical applications - on a data set in fast RAM, rather than on a slow disk.
As I was discussing SAP HANA with Vishal Sikka (SAP Chief Technology Officer and Executive Board member) and his team over the past months, I came to the conclusion that the software architecture embodied in HANA is a radical re-thinking of the assumptions underlying the enterprise software industry - and this could be transformative for the enterprise software industry and every industry it supports. Disruptive changes in speed and cost have always held the potential for transformations of industries, whether in transportation (from sailboats to airplanes), farming (from ox-driven plows to today's automated equipment), or mining (workers with pick axes to earthmovers and dynamite). As these industries transformed, they also led to transformations in the industries around them, and society as a whole. For example, fast, cheap, reliable transportation led to transformations of every industry from agriculture to energy to trade to government and even to war.
Vishal recently discussed a concept he calls "Timeless Software" (blog, video). Timeless Software embodies the notion that software must evolve as customer needs - and technologies available to satisfy them - change. Business processes and data need to survive even as the technologies around them get invented, flourish, and eventually passed by with new and (usually!) better successors. But what about the situation where the business needs change extremely rapidly, and the business can flourish or perish based on its ability to respond in real-time?
You could think of this scenario, where time is of the essence, as "timeful software" - scenarios in which you could transform an industry by eliminating latency - or lack - of information. HANA's speed allows batch processes to be performed more frequently, continuously, or transmuted into continuous processes. Can such speed - delivering information and insight into the hands of those who need it instantly when it is needed, or re-planning on an "as needed" basis rather than periodically - can such speed really transform an industry? Can moving information and deriving information in real-time make such a difference?
In many business processes, the answer is already, resoundingly "yes." Hotels check availability before confirming your reservation. Banks check for sufficient funds before cashing a check at the teller. Airplanes get rerouted and rescheduled when a volcano erupts in Iceland. But there are many other business processes which are executed periodically, in batches, today due to the cost and disruption to production systems. If the cost (performance) and disruption (latency, system unavailability windows) could be eliminated - as they can be with in-memory computing systems like SAP HANA - then the economics of businesses and industries could be substantially improved.
These "timeful" scenarios listed below are illustrative of those which I think will be enabled by SAP HANA, and which will lead to dramatic efficiencies, competitive shifts, and improved service, creating value for customers in such a way as to transform an industry.
Killer App
A killer app is a typically thought of as an application that is so beneficial that it drives widespread adoption of a new type of platform. This term was invented for the computer industry, with VisiCalc (driving the adoption of personal computers) being a canonical example. Once individuals, and businesses, adopted personal computers to run VisiCalc (or Lotus 1-2-3 for MS-DOS, or Excel and Word on Windows), users started using those same computers for many other applications, ranging from word processing to e-mail to web browsing. The impact of these second set of applications is more profound than was the impact of the spreadsheet, but it was the spreadsheet that paved the way for these applications by bringing PCs into mainstream adoption.
VisiCalc, Lotus, and Excel were really just containers that held data and applications ("macros"), and it was those applications that made the tools into killer apps, used for everything from budgeting to tax preparation to production planning to homework. In many ways, SAP BW is exactly analogous to a spreadsheet like VisiCalc or Lotus. BW is a container that can hold data and applications - applications including the lists of processes above. BW, with scenarios like the long lists above, will drive widespread adoption of in-memory computing (and SAP HANA, more specifically). Once HANA is in place as the database under SAP BW, customers will find many more ways to use HANA to transform their enterprises to much higher levels of performance, much as word processors, e-mail, and browsers are transforming business and society.
Will SAP HANA have the same impact as the PC? Will HANA be VisiCalc or Excel in my analogy? Time will tell, but time is exactly what SAP HANA gives you. And, perhaps in the end, time is the real "killer app."
Do you have additional scenarios to suggest for "timeful" transformations? Share them here!
Note: SAP is a former employer, and current client, of the author.