Accountability

With HANA, SAP is disrupting business models -- including its own

David Essex

SAP seems so eager to prove that it's on top of the so-called third wave of computing -- big data analytics, social and mobile -- that you have to wonder if it's getting ahead of its customers. Almost all the talk at last week's Sapphire Now 2013 conference

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centered on SAP's HANA in-memory database, HANA analytics and 25 Fiori business apps (Italian for flowers) written in Web-standard HTML 5. So forgive me for asking where on-premises ERP, the technology that SAP made its name on in the early '70s, stands in the company's vision for the future. "Back end" might be taking on a whole new meaning reminiscent of the rear end of those two-person horse costumes.

David Essex

SAP insists otherwise, and I don't doubt their sincerity. At the conference, SAP co-CEO Jim Hagemann Snabe announced that the HANA version of the company's main ERP and applications package, Business Suite, was entering general availability, though actual users were scarce. (In a press release, SAP claimed 300 customer or partner shipments -- a telling choice of words.) And those user-friendly, lightweight, iPhone-ready Fiori apps have to get the information for their purchase orders and time sheets from somewhere.

But most of the airtime during the three days of morning keynotes was devoted to HANA and demos of amazing applications of super-fast, in-memory HANA analytics, such as the real-time performance data The McLaren Group, a high-tech automotive and electronics manufacturer, pulls from its Grand Prix racecars. And, in case it wasn't clear three years after HANA's debut, SAP's co-CEO Bill McDermott said this about the depth of the commitment: "HANA not only represents the intellectual renewal of SAP, it is now the platform for every single thing the SAP company will do going forward."

Where do the ERP products fit in all of this? It's a question I asked SAP officials, but some other observers were wondering, too. When founder Hasso Plattner suggested in his keynote that it would be a good idea not to port every function from R/3 -- a Business Suite predecessor and SAP flagship -- to HANA, enterprise software veteran and blogger Holger Mueller tweeted: "Scary if you own one."

If SAP is declaring HANA to be its preferred platform and making it available on the cloud, does that in any way suggest a withdrawal of attention from the on-premises Business Suite and offshoots like cloud-based Business ByDesign?

"Convincing customers that the 'transformative' benefits of [Business] Suite on HANA will be non-disruptive technically is the challenge SAP faces with an entrenched Business Suite customer base," wrote Tony Baer, principal analyst at London-based Ovum Research, when Business Suite on HANA was announced in January. "Companies don't swap out their database and ERP investments overnight."

But in private interviews at Sapphire Now 2013, other SAP executives answered by positioning HANA as both a platform -- almost an operating system, as one pundit suggested -- for a new class of analytics-based applications, and a performance-enhancing engine for running the ERP applications in their entirety, with no changes of any significance (and without having to run them on third-party relational databases -- read Oracle's and IBM's -- which they said were slower and less reliable and made SAP dependent on its enterprise software rivals). Besides Business Suite, they are rolling out special-purpose enterprise modules, such as the Customer Relationship & Billing software for utility companies that is expected to be available on HANA this year.

"In the move to HANA, the only thing that changes is calling the database in-memory instead of on disk," said Henry Bailey, the global vice president for industry business solutions who heads SAP's utilities wing. "If you want to invest in HANA, we want it to be based on a clear value proposition, with speed being that initial value proposition, but also real-time analytics." Bailey said that users with uniquely customized ERPs can also have their systems moved to HANA. "We think the advantage of HANA is going to be the speed and the total cost of ownership," he said.

Big data analytics blurring the lines of business

The impressive demonstrations of what can be done in HANA with huge amounts of meaningful real-time information and elegantly presented analytics drove home a point that's become obvious since smartphone apps became mainstream. Future success will come from identifying new relationships in data, slicing it into digestible pieces, then displaying it in an easy to use, compelling way. General ledgers, bills of materials and purchase orders are still going to be there, and they'll still be important, but they won't be where new value is created.

More on Sapphire Now 2013 and HANA analytics

View the Sapphire Now conference page

Read reports on the Sapphire Now keynotes

Learn about in-memory biometrics in sports

"What information is doing is blurring the boundaries of business models," Chakib Bouhdary, SAP's executive vice president of corporate strategy and industry business solutions, told a small group of journalists. This was certainly apparent in the panel discussion on the Internet of Things, where a business developer from the Danish pump manufacturer Grundfos explained how Web-connected sensors are turning his company into a provider of maintenance and repair services. Another conference speaker asked whether automakers are really in the business of delivering miles rather than cars.

The ability to derive value from data -- much of it the "dark data" that has always been there, or only recently collected, yet unanalyzed -- is giving birth to a new type of entrepreneurial company. It's also opening wildly new opportunities for long-established companies like John Deere, the poster child for Business Suite on HANA that, like Grundfos, sees real-time analytics of sensor data as a chance to bolster its service business and dream up new offerings. "Are you a tractor company, or are you a production-increase company?" Bouhdary asked.

This breaking down of boundaries could be pushing SAP into a period of ambiguity where new platforms will blur into old ones, and the company's priorities shift along with its business models.

Like that horse, SAP has to make sure its snazzy front ends and suddenly unglamorous back ends move in tandem if either is going to move forward.

David Essex is executive editor of TechTarget's business application websites. You can reach him at dessex@techtarget.com and on Twitter @dessexTT.

Related Topics: ERP System, VIEW ALL TOPICS

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