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esterday, I got the SAP HANA certification, so I thought it would be a good time to talk about SAP HANA and capital optimization.
In my opinion SAP HANA is a paradigm change in information technology and, if smartly used, a very powerful tool for efficient capital management.
Most of you have heard that in-memory computing is about fast reporting, and this is true, but it also offers less intuitive opportunities which make SAP HANA very powerful, for instance:
From an architecture perspective SAP HANA provides near real-time analytical reporting without requiring aggregates, by accessing the same persistent database used by the transactional system.
One of the main difficulties of the banking information systems is the lack of integration, which makes it nearly impossible to track detailed information from the analytical level to the operational level.
As a result it’s not feasible to analyze in detail risk/profit and liquidity by micro-portfolios and nearly impossible to drill down from the micro-portfolio to the business transactions and financial transactions in the operating system.
With SAP Banking business suite it is feasible to jump from the integrated vision of the portfolio in the financial database to the contracts and business transactions in the operating system. But this integration can be lost in the reporting data-warehouse, as referential integrity is not granted in data-warehouses (in practical terms not even feasible).
With the fast reporting capabilities of SAP HANA, we can eliminate the data-warehouse layer simplifying dramatically the landscape (I’m sure that we’ll see many more examples of landscape simplifications as this technology becomes massively used).
A more simplified architecture will facilitate easier audit, analytical and operational reconciliation and with it, much more effective capital consumption, liquidity and profit measurement.The real advantage of a new technology never comes by doing the same things faster, but by doing new things which are not feasible with the old technology.
Financial crisis is coming with new regulations for the financial system. The new regulation is driving a systemic change, from a business model based in volume to a model based in efficient management of capital and liquidity (very expensive resources from now on).
Efficient capital and liquidity management require new and more detailed models for planning and simulation of banks portfolios. A particular case in which I’ve been working for a while is translating Goldratt’s theory of constraints to portfolio management, by including regulatory capital and liquidity as planning constraints. These simulations require intensive calculations which can be achieved by the fast calculation capabilities of in-memory computing.
hi there,
are you using ECC as your transactional database or something else?
thx, greg
Hi Greg,
1st point of my post refers to building a Banking Information systems powered by SAP HANA which is something not available yet (we’re at the beginning of the industry). In my opinion when it is available the building blocks will be SAP-Banking Services and SAP-ECC or an evolution of them.
2nd point of my post is a methodology in which I’ve worked and presented to heads of Analytical Banking architecture in SAP last year. How to build a Capital Optimizer for Banks by translating Goldratt’s theory of constraints to portfolio management?
This post is about architecture and business competitive advantages leveraged by SAP HANA. But we’re at the very beginning of a paradigm change and it will take a while before they’re mature software components. Both are still in the business case phase.
My feeling is that they will be important with the systemic change driven but the Financial Crisis but again, we’re not there yet.
Regards.
Ferran.
Ferran,
thank you for your extensive reply. i like paradigm changes, but i also like leveraging existing investments made in IT by the banking industry. i see some of the existing SAP’s product portfolio is already being offered on the HANA platform (per Note 1648413), so it’s clearly beyond the business case stage. it would be nice to have some reference clients show case an actual implementation that leverages the existing transactional and analytical landscapes.
Regards,
greg
PS for some reason i couldn’t access the banking blog, so i’m really happy to see it back on line.
Hi Ferran, yeah, i completely agree & share the same ideas about a new product of so called ‘Capital optimizer’ needed to be developed on HANA platform for Banking industry (Capital markets sector), i’m also evaluating & researching around this product environment; so we can synergize if co-operate, right?
Hi Ferran,
very interesting post, How many years do you think that SAP HANA will be expanded enough to be used reliably on SAP Banking? And in other industries ?
Thanks,
Best Regards,
Jordi Villacampa
Hi Jordi,
Thanks for your comment.
SAP Hana is already a reliable option in many industries and particularly in analytical banking “Liquidity Risk Management 1.0, powered by SAP HANA” will be available in the next month’s
Liquidity Risk Management 1.0, powered by SAP HANA offers (amongst other functionalities):
• Real-time, high-speed liquidity risk management and reporting
• Compliance with regulatory requirements introduced with Basel III
Similar situation is applicable for other industries. You can find some examples in the following presentation
http://www.sap.com/latinamerica/files/LAC_Partner_Summit_2011_SAP_HANA_M_Dominguez.pdf
K. Regards.
Ferran Frances.
Hi Ferran,
Very interesting!
Especially the part about “The real advantage of a new technology never comes by doing the same things faster, but by doing new things which are not feasible with the old technology.” and “fast reporting capabilities” I think with this technology we will drive a step change in the way banks can quickly revalue their portfolio based on global and regional events. By quickly processing complex events, risk and position calulation will see agility first as a competitive advantage but eventually essntial for survival.