We’ve heard a lot about the SAP HANA database platform over the last 18 months since its release, and whilst we are in the quiet period between end of year and SAP releasing earnings reports in mid-January, the investors I talk to are talking about bookings between €350m and €400m for the year (as compared to €160m in the first full year, 2011), which probably makes SAP HANA the fastest growing database of all time, if not the fastest growing enterprise software product – ever.

But despite all this, SAP HANA still has relatively small market share. That’s not to knock HANA, she’s still a youngster compared to Oracle, which is now 34 years old. Oracle claims on its (albeit hyped) company fact-sheet that it has a massive 308,000 database customers. And SAP is now the #4 database vendor, behind Oracle (49%), IBM (20%) and Microsoft (17%) – numbers as per Gartner in 2011. I believe that this is going to start changing in 2013 – here’s why:

Product Availability

First, we now have awesome Database & Technology platform availability across the existing portfolio:

– All SAP products now run on Sybase ASE – including ERP, CRM, BW, Solution Manager and the BI4 suite.

– All the Analytics Products – BI4 suite, Visual Intelligence, Predictive Analysis run on Sybase IQ and SAP HANA

– Some SAP products (SAP BW, SAP CRM and soon – SAP ERP) run on SAP HANA

– [Edit, 13 Jan 2013] Business Suite on HANA – ERP, CRM, PLM, EAM has now been released!

This means that if you want to, you can run all of your SAP apps on a SAP database. I don’t believe there is a current software revision that requires a non-SAP database. What’s on my wish-list for 2013?

– Support for some limited older SAP releases for Sybase ASE. Pick the top 5 or 10 most popular product combinations!

Pricing and Bundles

We will see what the pricing fairies have to offer when 2013 pricing is released but I’m confident SAP is going to ensure that customers can take advantage of this availability if they want to! We have some of these already:

– Aggressive price for SAP HANA scenarios: runtime licenses are 25% of an Enterprise license and BW on HANA is priced at 37%.

– Impressive Analytics bundles for new BI customers, at 20% in addition to your BI Suite license cost, including SAP Data Integrator and Sybase IQ.

– [Edit, 13 Jan 2013] Business Suite on HANA has been released and is priced by % application value! Awesome!

– [Edit, 13 Jan 2013] Business Suite on HANA customers can do partial migrations and get Sybase ASE included for the rest of the portfolio.

What’s on my pricing wish-list for 2013? Lots of things!

– Database & Technology bundles for all a customer’s needs e.g. ERP on HANA customers get Sybase ASE for the rest of the portfolio included. If SAP are clever, they will make these bundles easy to understand and buy. If they are really clever, they will make it the same price as Oracle!

– Enterprise License Agreements (ELAs) that are subscription-based for the whole D&T portfolio as a percentage of license price.

– Enterprise License Agreements for a fixed amount for unlimited usage in large customers.

– Improved mechanisms for resellers

All of this should mean that if customers want to buy SAP Database, they will be able to do so in a flexible and beneficial way that allows them to get off the 11% that they currently pay SAP for Oracle licenses.

New Features & Functions

2012 was a pretty amazing year of features and functions for SAP Databases, including:

– SAP HANA SP04 and SP05 which introduced High Availability, proper Backup & Recovery, transactional system support and Disaster Tolerance.

– SAP HANA XS Application Services and Portal with improved developer tools.

– SAP HANA Predictive Analytics Library for in-memory predictives.

– Sybase ASE 15.7 with a plethora of new features including compression and performance for SAP applications.

– Sybase IQ 15.4 with more features including improved compression.

– Improvements in portfolio TCO with Solution Manager

I hear there is a small army of developers working on this in 2013 and I’ve got a big wish-list here too!

– Aggressive new PAL functions to allow more complex modeling in SAP Predictive Analysis

– 3rd party tool certification including Informatica, SPSS, Cognos etc.

– Data Aging between SAP HANA and Sybase IQ to allow petabyte stores at a lower price point

– Single SAP Database Studio to monitor all products

– Increased SAP HANA maturity with support for larger systems and better transactional performance

– Integration of Sybase ASE, SAP HANA, Sybase IQ and Hadoop into a single RDBMS portfolio with clear delineation

– Better roadmaps – todays are just marketechture (login required).

If I’m being honest, I doubt there is anything on this list that isn’t already on the product backlog and the rate at which these guys are producing software is pretty amazing, so I expect to see this all next year!

Marketing and Awareness

The SAP marketing peeps had a lot to get on with to explain the Sybase acquisition, new SAP HANA product, availability of SAP HANA for BW and overall database portfolio in 2012. Now in 2013, there’s a lot to get on with!

– SAP ERP on HANA will be announced soon, and getting messaging by industry and by use case is incredibly important. What does it mean to customers’ businesses and where is the value?

– Increasing awareness of how SAP HANA is a mission-critical database now with all the usual features/functions like HA, DR etc.

– A lot of people don’t know the information in this blog, like how Sybase ASE runs all of the SAP portfolio including SRM, SCM etc.

– Focusing on developer awareness and user groups to get new developers on the SAP/Sybase portfolio.

– Focusing on my wish-list below too!

– Creating a really clear brand for not just HANA but also Database as a whole and making SAP a better choice than Oracle for customers.

Lots to get on with here then!

Making the Technology Easy to Adopt

When I discuss this topic, people are often dismissive because Oracle, IBM and Microsoft have such a stranglehold on DBAs and CIOs. In order to get mass-market adoption, SAP needs to make the technology easy to adopt. They’ve done some of this already:

– Free developer licensing for SAP HANA, Sybase IQ and Sybase ASE with click-through licenses.

– Free Hasso Plattner Institute learning courses.

The SAP HANA Academy – free E-Learning for SAP HANA. I was involved in this early on and I think it’s an amazing project that SAP have done a great job with.

– Migration tools for ASE and HANA. Some of these exist already, and I believe SAP are also working on an Upgrade/Unicode Conversion/Migration tool that does everything in one step – this will be a major step forward.

– Synchronized Maintenance Schedules. One of the major cost contributors for Enterprise Software is the decoupled maintenance schedule of Database and Application. With Sybase ASE, SAP HANA and SAP Business Suite, you can update the Database and Application at the same time, saving the cost of doing testing and change management twice.

It’s clear to me that SAP need to do even more in this space because adoption is by far the biggest hurdle. Here’s my wish-list for 2013:

– SAP HANA Developer downloads. Gary Elliott from my team makes a great case for this. SAP need to make HANA a 64-bit Windows 7 download for developers. It exists internally. Release it please!

– SAP HANA Developer systems. SAP needs to team up with an OEM like my SAP HANA Mac Mini that can be purchased pre-installed. Developers like real hardware.

– More migration tools and agile delivery plans. Let’s push the Systems Integrators to make it easy!

– Automated parameters for Sybase ASE – more work can be done here to configure this database automatically to reduce TCO.

– Take the HANA Academy to all D&T products including Sybase ASE and IQ.

– Create SAP Database & Technology TCO tools to help CIOs understand the cost reductions possible.

Final Words

SAP has already done an amazing job of building a database business from almost nothing in 2010, to $750m in 2011 and $1.1bn in 2012. Curiously, Sybase 2010 revenues were a total of $1.2bn, of which $880m were said to be database-related. Did they decrease in 2011 or are the numbers just counted differently?

To really punch its weight in this business (and meet its ambitions of being the #2 database vendor by 2015), it needs to grow 300% to a whopping $4bn from the 2011 number. To do this is really has to fire on all cylinders:

– Increase the overall capital database market with innovative products that add value.

– Eat market share not just from Microsoft and the smaller vendors, but also from Oracle, IBM and Teradata. The 2012 statistics will be fascinating to see, when they are available.

– Capitalise on the SAP install base to grab land from Oracle, IBM and Teradata.

– Sell into the non-SAP analytics market with HANA and Sybase IQ bundles

– Build the cloud application and HANA application portfolios

But to my mind – one thing is for sure: if SAP plays its cards right this year, 2013 will be a pivotal year for SAP Databases and they could break the $2bn barrier for license revenue. I’m looking forward to my small part in it ๐Ÿ™‚

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  1. Phil Gleadhill

    Hi John,

    Thanks for the post. Some really good thoughts and “wish list” items there. I do hope the relevant folks at SAP and SI’s are listening. The comments below are mainly relevant to the existing SAP customer base, although some aspects also apply to new customers adopting SAP.

    To me the take up of the “new” SAP database technology (be it HANA or Sybase) will depend upon many of the factors you mention, but also:

    1. The commercial reality of existing contracts that SAP customers have for their DB technology. Not all SAP customers license their SAP Databases (usually by necessity > 1) through SAP. A significant number have direct agreements with the likes of Oracle, Microsoft, IBM, etc… based on DB software usage for SAP and well as for other applications. Most of these companies will likely wait for the scheduled expiry of existing arrangements before doing due diligence about swapping DB vendors for the SAP part of their application portfolio.

    2. Most IT shops are “wedded” like it or not to a particular database direction or strategy and don’t change direction or vendor very often, and then only after seeing a (very) compelling case to do so. Risk and Cost are two big either anchors for staying as-is, or for moving. For example where I work currently, Microsoft is the DB vendor of choice outside of the SAP space, and MaxDB (yes it still does exist!) the primary DB platform for SAP applications. Larry’s mob don’t even get a look in here. Neither does Sybase (yet).

    3. It could be argued that SAP with it’s recent heavy push to HANA and Sybase (but only since the acquisition) has reversed its database technology position from previously, when they were “database vendor agnostic” and the DB under SAP was seen (and marketed) as just a “container” and not a “differentiator”. So SAP have gone from “the database doesn’t matter, use the one you want” to telling the world the exact opposite. When a vendor changes tack so strongly, it is bound to take a lot of people by surprise, and a lot of “let’s wait and see” will most probably be the result in the existing customer base.

    4. Comparative Licensing and Cost of Ownership of the new SAP DB Technology, compared to existing. SAP and its Hardware partners need to make a compeling case to move, which includes things such as HANA licensing costs, as well as costs of “SAP Certified HANA Appliances” amongst others.

    As you say, ease of migration, proven new platform maturity to run all/core SAP applications as well as real business benefits (either through cost savings and/or real additional capability) will be other key factors in take up.

    In short, for the existing SAP customer base, I would expect this to play out over the next 3 to 4 or so years, with 2013 to be an important stepping stone.

    Cheers, Phil G.

    1. John Appleby Post author

      Hi Phil,

      SAP definitely do listen and it will be interesting to look back on this post next year. I realize looking back on this blog how much I hate prediction blogs! As to the SIs, I’m not that hopeful, but we have some ideas on what to do there…

      You make some valid points here and there’s some context I am missing in my article.

      1. Yes that’s very true, although SAP have built a $1.1bn database business in 2011, which is growing at a run rate of 50-100% (we’ll see how much in a few weeks). And despite this, they have < 1% penetration in the customer base of SAP HANA. The numbers show there is an addressable market despite the challenges you cite.

      2. MaxDB isn’t as rare as you might think in the mid-market. It’s a good database and there are good reasons why companies, especially in the mid-market, focus on a single vendor for DB. However in the Fortune 500, the opposite is true: most of them have some of everything! Despite that, moving all apps to a new platform is a massive challenge and there have to be technical and monetary benefits. Unless SAP does a great job of explaining these to customers, they won’t switch.

      3. With in-memory technology, you need much deeper integration to get the benefits than you do with a disk-based RDBMS. So SAP had to flatten some of the stack to get HANA to work great with BW and ERP. This then forced them to provide an alternative database for apps that don’t support HANA, so that customers aren’t double-taxed on database licenses. All the platforms including NetWeaver, Business Suite and BI4 remain compatible with other databases for those that don’t perceive a benefit in HANA. Have you seen a backlash?

      4. I couldn’t agree more – if it’s not a no-brainer, customers won’t be interested.

      I was joking with Steve Lucas, who runs that group, last night that it’s the “decade” of SAP database and not the year. I guess what I mean is that in 2013, a database portfolio that serves all a customers needs – should they wish to avail of it – exists. I think this is a pivotal time.

      Other online comments referenced Oracle’s defensive tactics with its “in-memory” Exadata machines. How Oracle reacts will also be very interesting!


  2. Navaneetha Krishnan

    Excellent article Indeed.

    I m amazed at the depth of content this article possesses and the commitment shown in analysing the market situation.

    We have seen the evolution of SAP as an ERP market leader only to spread its wings in new dimensional products and market requirements. Now the unquenchable thirst to win the race of databases has started and as usual SAP is not lagging behind.

    As you have said, future years of SAP is going to be challenging for the competitors and extremely enriching experience for those who embrace this new divinity of Information technology.

    Navaneetha krishnan

  3. Carsten Nitschke


    very good article indeed and it will be very interesting to see all the news that 2013 will bring to us. My few cents of thought:

    – If pricing is an issue for a customer there can be several reasons (HW should never be the only one…) Probably it is also the value positioning that needs to be improved in general. There was a comment regarding HW vendors putting a very high ticket on the boxes… I still believe that this can be argued. In HW you have real per unit cost in SW you do not in any case the emphasis should be on joint !

    – mass market adoption: From the very small market that I am covering right now I can see that there are now more and more companies who feel comfortable with moving to HANA. In order to make it more mass adoption SAP need to involve even more the partners, but it will happen for sure and hopefully for all sooner than later

    – ERP on HANA will be the real “Power Shot” for the solution. I am very much looking forward to the announcements and to see the solution working.

    1. John Appleby Post author

      Well to all of your points, the price-point of ERP on HANA will be the interesting thing. Watch this space!

      On the hardware vendor point, it seems to vary by vendor. Some are very aggressive on margin, and others are not.

  4. Mark Fรถrster

    Very nice blog, John. Just two short remarks:

    “[…] the 11% that they currently pay SAP for Oracle licenses.”

    Oracle made this 15% some time ago. They can afford it.

    “ERP on HANA! Well, it’s coming very soon…”

    How do you define soon? I really like to see ERP on HANA, with the constraint that HANA is really ready for ERP environments. A premature release of HANA for ERP would be very counterproductive. I could imagine Oracle’s reaction to such a faux pas.

    1. Witalij Rudnicki

      Mark, “soon” is in the past already. If you look into PAM, then you find that “EHP6 FOR SAP ERP 6.0 ON HANA” was released to Ramp-up on December 7th last year. Cheers. -Vitaliy

    2. John Appleby Post author

      Witalij Rudnicki, you are partially right – whilst it has been released internally for Ramp-Up, ERP on HANA is not available to customers in the Ramp-Up program yet (check https://service.sap.com/rampup), so whilst there are some customers it would be premature to call it available or RTC today… watch this space ๐Ÿ™‚

      Mark Foerster – I believe HANA, as a database and platform, is really ready for ERP since SP05 in November. We have good transactional performance, exceptional reporting performance, the ability to run stored procedures that improve critical batch processes by 100-1000x. Plus, HANA is now very stable, has all the non-functional requirements for business continuity you would expect like HA, and asynchronous DR.

      As with any technology, you do need to consider its maturity, the cost of acquisition, migration and support versus the benefits and as with any technology, it won’t be for everybody today. But do bear in mind that ERP on HANA was ready some time ago and the release will be timed for the market conditions.

      But, if your industry and LoB will derive value from the benefits that come with HANA… and in many cases there are very interesting benefits… come to your own conclusion!

      1. John Appleby Post author

        That’s still true in 2013, and SAP will allow you to do partial migrations of HANA so you don’t double pay. Unfortunately Oracle do not allow this and you have to continue paying Oracle 15% until you have removed all Oracle DBs. SAP have no control over that unfortunately ๐Ÿ™

  5. Stefan Koehler

    Hi John,

    great blog about HANA and the possible future – thanks for that. My first impression of HANA was this (and there was no follow up on this NAS issue): Re: In-Memory Developer Center HANA Servers

    … and i am still scary as none of the HANA HA or backup/recovery technology is widely spread in the market and of course not that flexible and functional like the other database vendor solutions. I also think that 2013 is an important year for the market entry (proof of stability and availability), but it will take another 3 to 5 years until some large / important customers are ready for this and migrating their important systems (in my opinion).

    Mark Förster : Oracle made this 15% some time ago. They can afford it.

    Yes you are right, but this is based on the additional enterprise option licenses, that you got automatically by SAP. If you license your Oracle database by Oracle itself, you have to choose the required options, but you are flexible with the additional options (like advanced compression, etc.)



  6. Mikhail Budilov

    first – it’s price.

    Trying to calculate cost of SAP RTDP (HANA, IQ, ASE, ASA, RTL) and you will be surprised. Only very rich enterprise can buy whole  this platform.

    Also HANA cost is to much for accelerated sales.

    Also i hope SAP can doing HANA – really very-very stable and reliable  platform. Unlike SAP BusinessObjects BI.))

    1. John Appleby Post author

      Mikhail Budilov – first, the runtime pricing for HANA has changed in 2013 and that is definitely not the case any more. My org (200 consultants) is looking at the pricing for ERP on HANA and it’s the same as moving from MSSQL (which we’re on now) to Oracle.

      With Business Suite on HANA, it has now been announced that the GB pricing model is not present: you will indeed pay by % of ASV. Plus, you get ASE included in that for your other apps.

      My advice is to get up to speed with the new pricing structures, they are really great.

      1. Mikhail Budilov

        Thats good news about price for ERP on HANA, % model – just what world waiting.

        How about BW on HANA ?

        Does SAP doing the same, % model  instead of GB model ?


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