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My Converting my lessons learned from Sapphire into compelling future architectures  described a very broad architecture that emerged out of my experience at the  Sapphire and included a variety of ideas – many of which were just examined in  passing. There was one idea, however, that was so intriguing that I wasn’t  really satisfied with just a single paragraph.  I wanted to scrutinize it in  more detail – I wanted to follow the rabbit hole and see where it took me.   The  idea in question concerned the potential of selling data via HANA in the Cloud.

Here’s how I described it in my last blog. 

Just because a corporation is using  HANA in the Cloud to store its data doesn’t necessarily mean that the  corporation in question must develop its own applications that use this data. It  is now common knowledge that SAP is creating a new store for its OnDemand offerings.   Usually, this store is seen as selling applications in a variety of forms for a  variety of platforms. What if this store also offered data that was stored in  HANA in the Cloud.  

At first, I thought that no one else had a similar idea –  selling data via OnDemand platforms. Then, I started researching and found that  there are actually a number of companies (usually called “data markets”) already  active in this area. As a result, my focus changed from defining something  non-existent to examining the competitors and learning from their  offers.  This comparison also allowed me to better understand how SAP fits into  the broader OnDemand space and the impact that changes in this area might have  on SAP’s brand image.

HANA in the Cloud

A definition

Note: In my quest to find an understandable  definition of HANA in the Cloud, I’ve discovered a bit of confusion  between the terms HANA in the Cloud and HANA AppCloud that appear  to be used interchangeably by some in the ecosystem.  In this blog, I’ve decided  to use the term HANA AppCloud, because it more closely fits my focus. I’d  recommend that SAP work to clear up this confusion in terminology before  customers and influencers start making unfortunate assumptions regarding SAP’s  future intentions in this area. 

What is the HANA AppCloud

Like other cloud platforms, the  AppCloud will involve server farms coupled with a software fabric for elastic  resource provisioning. HANA will run on top, allowing customers and ISVs to run  analytics or build applications. [SOURCE]

It will allow customers to upload  data to the vendor’s own cloud setup for processing, rather than deploy related  infrastructure in-house” [SOURCE].

Although the quotes above focus on providing this platform  for SAP customers and ISVs to create applications, it largely ignores the  potential of SAP itself to offer applications in this environment.  SAP already  has experience providing such OnDemand applications (for example, SalesOnDemand)  although these apps run in different environments (for example SAP’s Core  Platform as a Service (PaaS) rather than the HANA AppCloud. 

The two quotes also demonstrate that the environment includes  more than just In-Memory technology but also includes more BI-related  functionality (“run analytics”)” and also PaaS-related functions (“build  applications”). 

Note: This blog doesn’t look into the possible  performance problems associated with certain use cases in this environment. See  fellow SAP Mentor Vijay Vijayasankar’s blog  regarding his concerns in this area (for example, the possible limitations  associated with hosting Sales and Operations Planning activities on the HANA  AppCloud).

It is also an assumption that existing applications can not  and should not be moved 1:1 from OnPremise environments to the HANA AppCloud. In  a recent blog,  analyst Dennis Moore describes a similar perspective regarding HANA: “The longer  term benefits of HANA will require new software to be written – software that  takes advantage of objects managed in main memory, and with logic pushed down  into the HANA layer”. Dennis’ comments concerning the necessity of changing apps  are also relevant for transitions to this new OnDemand platform.

There is obviously a variety of applications that could be  hosted by SAP in this new environment and one necessary requirement on the part  of SAP is to identify those use cases that exploit the unique characteristics of  this new platform.  The identification and publication of such use cases are of  value to SAP as well as to customers and partners trying to understand the  potential of this new environment.  Such descriptions should also be based on  the realization that the HANA AppCloud is not perfect for every use case.

The data market described in this blog is one example of a  SAP-created application that runs on the HANA AppCloud. This data market will,  thus, be a Software as a Service (SaaS) offering albeit one that is based on the  HANA AppCloud.

The role of the HANA AppCloud in SAP’s OnDemand Strategy

There are other similar SAP OnDemand offerings (Core PaaS,  Edge PaaS) that are either present in the marketplace or currently being  developed. What is the distinction between the HANA AppCloud and these other  offerings? 

Note: I’m on very shaky ground here, because  current information about the HANA AppCloud is very limited.

I’m assuming that the architecture for the HANA AppCloud will  based on the HANA architecture with support for multi-tenancy and usage  monitoring.   To learn more about the details of the offering, we’ll just have  to wait until September when more information is expected.

Until September, however, the absence of concrete information  regarding the HANA AppCloud is dangerous and threatens to disturb the crisp  lines of SAP’s OnDemand strategy / architecture.  Since many customers and  influencers are still struggling to understand this strategy, smudges in the  form of uncertainty and unclear marketing messages are unfortunate.  

If you look at SAP’s architecture for these other PaaS  offerings, InMemory technology is usually the foundation and described as the  data storage layer. Where does the HANA AppCloud fit into this architecture? Is  it a separate offering or just a new flavor of the existing offerings?

 

Figure 1 Integrated  HANA AppCloud

 

Figure 2: Separate  HANA AppCloud

 

Indeed, I find the use of the name “HANA AppCloud” dangerous,  because it cuts into the “territory/functionality” provided by the other SAP  PaaS offerings.  Indeed, if you look at the one example of the a customer using  the platform shown at the Sapphire – Medidata – [SOURCE]  – you will see that Medidata has a SaaS application that is “built on” the HANA  AppCloud. Since I have no idea if the application itself is deployed on the HANA  AppCloud or just the involved data storage, it is difficult to make a concrete  analysis of the role of the HANA AppCloud in this particular application. This  confusion is indicative of the unclear messages surrounding the HANA AppCloud.   

In my opinion, the HANA AppCloud should have restricted  functionality and a focus on analytics rather than the broader focus of the  other PaaS platforms. The resulting question concerning future distinctions  between BIOnDemand and the HANA AppCloud is, at the current time, also  unanswerable.

Since SAP’s other PaaS environments might also provide an  excellent hosting environment for our data market, why is the HANA AppCloud the  preferred option? For example, hosting the data in River would allow for the  REST APIs to be created automatically.   The particular characteristics of the  data market lead to the conclusion that the HANA AppCloud would be optimal  choice – the other potential candidates include a much wider functional  foundation – our focus is on data and analytics and thus the fact that the HANA  AppCloud concentrates on this same functionality suggests an ideal marriage –  one that meets the requirements of our use case simply without complicating the  required PaaS with unrelated and unnecessary features.   

Background on Data Markets 

Before we examine data markets in the context of the HANA  AppCloud, we need some background information first. 

Definition:

The increasing accessibility and  speed of Internet has enabled emergence of an online market where data providers  publish their valuable information and from which customers subscribe and query  data of all types. This virtual space in which the supply-demand forces exist  and the exchange of information is incentivized by monetary gain is referred to  as the data market

What motivates companies to contribute their data to such  environments? The following quote focuses on geo-companies but is relevant for a  variety of other companies as well.  

The problem I see is the data  market place concept is growing like wildfire as the go-to business model –  especially for geo companies. The result is a proliferation of data silos that  are increasingly proprietary and closed because that is where companies hope to  extract payment. As we lock down data we are going against the grain of the Web  itself. Data is a commodity and creates the greatest economic multiplier when we  treat it as a public good.

This does not mean all data should  be without cost, but it should be free to flow across the Web [SOURCE]

Note: The nature of data markets and the  manner in which users interact with these information sources is very relevant  to Gateway and the manner  in which this offering from SAP evolves in the future. Since the Go-To-Market  strategy for Gateway is still relatively immature, the lessons learned /  experience from data markets should be used to jump start such efforts.

The presence of a large  number of companies offering services in this area shows the value in  participating in such arenas. The market contains a wide variety of players –  more traditional companies such as Reuters and a number of start-ups (for  example, Timetric and Kasabi) – that are active.

Of those companies that are presently in the marketplace, the  one I find the most interesting is Microsoft with Windows Azure Marketplace  DataMarket.

Windows Azure Marketplace features  DataMarket, a new cloud-based service that provides a global marketplace for  information including data, web services, and analytics. With DataMarket,  content providers can make their datasets available to a wide audience around  the world, subscribers can locate a dataset that addresses their needs through  rich discovery, and developers can write code to consume the datasets on any  platform. [SOURCE]

When I discovered this offering from Microsoft, I was  immediately intrigued.  An examination of why Microsoft had invested heavily in  their data market (not only in terms of marketing but infrastructure as well)  might provide interesting insights into the market for data services as well as  the general market for OnDemand services

Microsoft uses the Windows Azure Marketplace  DataMarket.as a way to promote their Azure platform. The data market  demonstrates the potential of their OnDemand platform.  This is also evident by  the fact that “Windows Azure” is included the product name. 

Furthermore, because DataMarket is  built on Microsoft Azure® and runs in  industry-leading data centers, you won’t need to make heavy investments in  hardware. The service provides almost unlimited scalability and can guarantee  high availability. And when you need to increase the size of your dataset,  DataMarket scales smoothly with your requirements. [SOURCE]

The fact that vendors use vendor-developed SaaS applications  to prove the worth of their PaaS environments is also one motivation in SAP’s  activities as well. For example, the fact that CarbonImpact is based on River / the  Edge PaaS as well as the creation of the LoB OnDemand applications on the Core  PaaS platform allows SAP to demonstrate the value of these PaaS platforms.  The  Data Market from SAP could fulfill a similar function for the HANA AppCloud.

An apology: Some of this blog focuses on  this Microsoft offering and I use it as an example that should be followed.  I’m  looking at this Microsoft technology in a general fashion. I’m definitely not a  Microsoft Azure expert. Some may question whether a detailed analysis of a  Microsoft offering is really appropriatein a blog focused on SAP but emulation  is always the best example of flattery.

What are some of the characteristics of this platform that I  found the most interesting?

The use of oData as a common interface for their  data

The DataMarket from Microsoft uses consistent REST-based  OData APIs across all datasets. Thus, developers can use one set of tools to  access data from a variety of sources. This is similar to the concept behind  Gateway.

There are other approaches to data market APIs – for example,  community-developed APIs – that are also fascinating.

Each of those datasets has a  minimum of 5 APIs. I say “minimum” because one of the core features of Kasabi is  that we’re allowing the community to create their own APIs over datasets. In  Kasabi the community can curate their own APIs onto the data we’re hosting. This  means you can use an existing off-the-shelf stock API auto-deployed by the  system itself, an API created by another community member, or create your own  pathway into the data which can then be shared with others. [SOURCE]

A unified billing infrastructure

There are different billing options – subscribers choose  pay-as-they go transactions, monthly subscriptions, or even enterprise volume  licensing –  in Microsoft’s offering that enable a wide variety of individuals  to use the data market services on their own terms.

Here are some details of such possibilities:

[The data market] provides all the  facilities a data provider needs to monetize the intrinsic value of carefully  created datasets, which are subscribed by customers.

The dataset are priced as monthly  subscriptions which are of two types. In the unlimited subscription type, the  consumer is charged monthly for access to dataset and the transactions on the  dataset are unlimited. For the limited subscription type, each month there is a  pre-defined number of transactions that can be executed on the dataset. Each  page of results returned from a query uses a single transaction and will count  toward the transaction limit. [SOURCE]

I find the transaction-based billing especially interesting  in that it is a relatively modern way of looking at such services and represents  a break from typical licensing structures so often present in enterprise  software.   Such functionality might not only be relevant for our data market  but for other applications based on the HANA AppCloud.

Integration into existing Information Worker tools

There are various Microsoft DataMarket add-ons for Microsoft  Office products that enable normal Information Workers – not just developers –  to easily access these services.

You can even use the DataMarket  Add-in for Excel to discover, purchase, and use DataMarket datasets without ever  leaving the familiar Excel environment—and then integrate your data with  PowerPivot for Excel for rich, self-service business intelligence and Bing™ maps  to use spatial datasets for quick, visual instant answers. [SOURCE]

Imagine the potential of users being able to integrate data  from a HANA AppCloud-based data market into their daily work environment – it  would democratize HANA data.    

OnPremise HANA installations could provide this as well but  with the restriction that employees are usually restricted to only analyzing the  data of their own company. The potential of the HANA AppCloud would be the  ability to access data from a variety of sources – many of them external.

What could motivate SAP to move into data markets

Increasing ROI for existing customers

As I mentioned in my last blog, one necessity of SAP’s  strategy is to increase the ROI of the SAP installations in the landscapes of  existing customers. One manner to do this is to find innovative ways to re-use  existing data in such environments

One of the best descriptions of the potential of data markets  for such customers companies is from Roger Mall of the Windows Azure Marketplace  DataMarket product team.

 

 

New revenue streams

How does SAP earn its money from a data market? SAP earns  money by taking a cut from the subscription fees earned by content providers. 

I like the strategy of one data market called  InfoChimps: “Posting data for sale on Infochimps is free! We only make money if  your data is for sale and if it is purchased. Our standard commission rate is  30%”.

Indeed, today’s focus on open government with the need to  publish data publically from government sources would be perfect set of  customers for such environments (A fact that  has not gone unnoticed by Microsoft). 

Thus, there are a wide variety of potential content providers  whose sale of data in the SAP data market could earn a great deal of money.

Providing data as part of Corporate Social Responsibility  (CSR) activities

If you look at many of the other data market offerings, there  is often a certain amount of data that is available free of charge. This is  often data from the United Nations or other NGOs. SAP could promote its data  market and offer participation in the data market to such entities at a  negligible or no fee as part of its CSR activities.

What is SAP’s competitive advantages in this area

Existing user base

Many of the data market start-ups must identify and acquire  new customers in a timely and lengthy process.  As SAP often says, its software  is in place of many of the world’s largest companies. If just a small percentage  of these customers provide data for the data market, SAP would have a dominant  role in the data market marketplace.  

Challenges

Developing methodologies to discover the appropriate data  to put in the data market

Many of the data markets present in the marketplace (with  this exception of Microsoft) don’t really have many content providers in their  individual marketplaces. One problem that causes this dilemma is the difficulty  in identifying which data would be successful in such environments.  Therefore,  SAP must develop methodologies (using market analysis and the industry-specific  experience of SAP consultants) to discover which data would sell well in such a  data market. Indeed, SAP might use the marketing muscle of its own sales  organization as well as that of the associated partners to make sure that such  offerings are successful.

 

Appropriate pricing structure for the data

Data markets are still a relatively young and dynamic market;  therefore, the appropriate pricing of such data services is still open to much  debate.  There is a interesting article  entitled “Pricing for Data Markets” from Avanish Kushal, Sharmadha Moorthy and Vikash Kumar which shows the difficulty  in setting the right price for the data being offered.  

 

Discovering technologies to effectively move data into the  HANA AppCloud

Once the customer data has been identified that should be  placed in SAP’s data market, there must be secure and efficient ways to move  this data from the OnPremise SAP systems into the HANA AppCloud. Since  mechanisms already exist to move the data from existing OnPremise systems into  OnPremise HANA installations, I’m assuming that such tools (Sybase  Synchronization tools?) should be able to be reused to some degree for our  scenario.

Conclusion

What happens if SAP doesn’t decide to offer its own data  market based on the HANA AppCloud.  The architecture of the Microsoft Azure Data  Market also permits the inclusion of 3rd party clouds. As the picture  below demonstrates, this feature would allow that data from Gateway and the HANA  AppCloud could still be sold via this platform. 

 

[SOURCE]

Such an integration would mean a duplication of functionality  between the SAP and Microsoft-based environments but would still permit the data  to be sold in this environment.

Other Interesting Possibilities for Using InMemory  Technology in OnDemand Offerings

This blog has focused on one particular use case that is  based on one usage pattern of InMemory technology in OnDemand settings. There  are, however, other ways that the resulting new features will impact SAP’s  OnDemand offerings.

During a recent conversation between Vishal Sikka (CTO SAP)  and bloggers where we discussed HANA, one topic was the general relevance of  InMemory technology for cloud computing. I always focus on the impact of this  technology on OnDemand applications. Vishal, however, focused more on the  resulting revolution at the underlying infrastructure level– a shift away from  the multitude of small servers in existing data centers to fewer larger servers  based on in-memory technology.  

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