The other shoe drops: SAP puts ERP on HANA

This guest post comes courtesy of Tony Baer's OnStrategies blog. Tony is senior analyst at Ovum.

By Tony Baer

It was never a question of whether SAP would bring it flagship product, Business Suite to HANA, but when. And when I saw this while parking the car at my physical therapist over the holidays, I should’ve suspected that something was up: SAP at long last was about to announce … this.

From the start, SAP has made clear that its vision for HANA was not a technical curiosity, positioned as some high-end niche product or sideshow. In the long run, SAP was going to take HANA to Broadway.

Baer

SAP product rollouts on HANA have proceeded in logical, deliberate fashion. Start with the lowest hanging fruit, analytics, because that is the sweet spot of the embryonic market for in-memory data platforms. Then work up the food chain, with the CRM introduction in the middle of last year – there’s an implicit value proposition for having a customer database on a real-time system, especially while your call-center reps are on the phone and would like to either soothe, cross-sell, or upsell the prospect. Get some initial customer references with a special purpose transactional product in preparation for taking it to the big time.

There’s no question that in-memory can have real impact, from simplifying deployment to speeding up processes and enabling more real-time agility. Your data integration architecture is much simpler and the amount of data you physically must store is smaller. SAP provides a cute video that shows how HANA cuts through the clutter.

For starters, when data is in memory, you don’t have to denormalize or resort to tricks like sharding or striping of data to enhance access to “hot” data. You also don’t have to create staging servers to perform ETL of you want to load transaction data into a data warehouse. Instead, you submit commands or routines that, thanks to processing speeds that are up to what SAP claims to be 1000x faster than disk, convert the data almost instantly to the form in which you need to consume it. And when you have data in memory, you can now perform more ad hoc analyses. In the case of production and inventory planning (a.k.a., the MRP portion of ERP), you could run simulations when weighing the impact of changing or submitting new customer orders, or judging the impact of changing sourcing strategies when commodity process fluctuate. For beta customer John Deere, they achieved positive ROI based solely on the benefits of implementing it for pricing optimization (SAP has roughly a dozen customers in ramp up for Business Suite on HANA).

Supply chain lag time

It’s not a question of whether you can run ERP in real time. No matter how fast you construct or deconstruct your business planning, there is still a supply chain that introduces its own lag time. Instead, the focus is how to make enterprise planning more flexible, enhanced with built-in analytics.
But how hungry are enterprises for such improvements? To date, SAP has roughly 500 HANA installs, primarily for Business Warehouse (BW) where the in-memory data store was a logical upgrade for analytics, where demand for in-memory is more established. But on the transactional side, it’s a more uphill battle as enterprises are not clamoring to conduct forklift replacements of their ERP systems, not to mention their databases as well. Changing both is no trivial matter, and in fact, changing databases is even rarer because of the specialized knowledge that is required. Swap out your database, and you might as well swap out your DBAs.

There’s no question that in-memory can have real impact, from simplifying deployment to speeding up processes and enabling more real-time agility.

The best precedent is Oracle, which introduced Fusion Applications two years ago. Oracle didn’t necessarily see Fusion as replacement for E-Business Suite, JD Edwards, or PeopleSoft. Instead it viewed Fusion Apps as a gap filler for new opportunities among its installed base or the rare case of greenfield enterprise install. We’d expect no less from SAP.

Yet in the exuberance of rollout day, SAP was speaking of the transformative nature of HANA, claiming it “Reinvents the Real-Time Enterprise.” It’s not the first time that SAP has positioned HANA in such terms.

Yes, HANA is transformative when it comes to how you manage data and run applications, but let’s not get caught down another path to enterprise transformation. We’ve seen that movie before, and few of us want to sit through it again.

This guest post comes courtesy of Tony Baer's OnStrategies blog. Tony is senior analyst at Ovum.

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