The future of SAP Business Applications

[Former Member]

A senior executive at an SAP customer asked me this week why they should choose HANA over IBM's DB2 database. I work in consulting, so I can make money implementing either solution and I don't currently resell SAP software so I gave an honest answer:

SAP is pouring development dollars into HANA, and the most fascinating innovations in business applications that SAP has to offer, run only on HANA. To name a few:

- The next-generation SAP Smart/Simple Financials and the rest of the Suite that will follow

- All the BW 7.4 Data Warehouse enhancements for logical modeling, data virtualization and simplicity

- The SAP BPC Unified Model

- HANA Live Operational Reports

- 70% of Fiori Apps that combine transactions and analytics

Is SAP a legacy application in your business?

If SAP is a legacy application in your business (or in a specific area of the business), then you would be smart not to spend money on it. I deal with customers who have business operations that are non-strategic, or geographies they look to sell or close. Those customers are often characterized because they moved to support vendors like Rimini Street to reduce the continued cost of ownership.

If this is the case, and you just want to keep the lights on for a particular business, then you would be smart not to move to HANA for this area, because there must be more pressing business concerns. In this case, you should stick on whatever database vendor offers the absolute lowest cost of ownership, which is probably the one you're on already, unless you're running your business on a Mainframe. Buy VMWare and get the cost as low as possible.

Or are you looking to innovate?

If you are looking to innovate, then you need to balance cost and benefit. For some customers, they do this in a point way and innovate in the cloud, using Workday, SuccessFactors, SalesForce, Ariba or one of many others. From the perspective of a specific business objective, the world has moved back to best of breed solutions in the cloud.

However this has not happened for the core of most businesses. Workday and Salesforce are trying to enter the financials market, but there is barely a challenger for the core of SAP's business - the business network and supply chain. When it comes to moving products around the world, between thousands of warehouses, with tens of thousands of employees and thousands of outlets.

Core ERP is alive and kicking.

What about User Experience?

Earlier in the year, I suggested that SAP should free Fiori. My argument was that SAP needed to protect innovation in the core, which was where the maintenance dollars come from. Charging customers to do this would slow adoption, and potentially increase adoption of other solutions. SAP announced this in June, so Fiori now comes without a separate license cost.

Fiori is a wonderful paradigm for end-users, because it makes interacting with a SAP system pleasant. Gone are the green SAP Gui screens, replaced by bright, easy to see tiles that work on any device and which simplify the business process from a user perspective. Fiori can't "simplify" business, but it can make the interaction easier.

Won't other databases catch up with HANA?

Oracle, IBM and Microsoft all have their own "in-memory" version of their database now, and to the onlooker, it looks like a "speeds and feeds" battle which will even out over the next few years. Certainly, for certain simple use cases, Oracle 12c in-memory runs less than one order of magnitude slower than HANA. IBM and Oracle will tell you that they are catching up and there will be parity soon.

What this doesn't explain is that HANA was built from the ground up using all the database knowledge garnered over the last 30 years, and IBM, Oracle and Microsoft are trying to retrofit this into their existing technology. Based on what they have achieved so far, this isn't about "speeds and feeds" and they are falling further behind.

And even if they do catch up from a speeds and feeds perspective, the HANA database includes geospatial, predictive, graph engines that are embedded into the database and their usage is being embedded into the next generation of business applications that, for example, will constantly predictively optimize workforces based on the geographic location of workers, parts, and work locations.

Hasn't SAP has publicly stated that it will support other databases?

Yes, but let's take the example of HANA Live (SAP's real-time operational reporting system for ERP customers). HANA Live is content that resides in the HANA Database, and is HANA-specific. It can't be ported to Oracle or IBM or Microsoft, even if they solve the speed problems that they have currently. If you don't have HANA, you can't have this.

So whilst SAP do support other databases, they aren't spending customers' maintenance dollars on innovating on them. There has been a nod to IBM with some limited support for BW on DB2 BLU, but BLU customers will get some acceleration with none of the modeling, planning, or predictive optimizations that HANA customers get.

So SAP is spending maintenance dollars on HANA, isn't that wrong?

You could view it that way if you wanted to, but I'd put it differently. SAP is in an extremely competitive software environment where customers have a lot of choices. They are at a time when they have a slight dip in core license sales, made up for by the sales of the HANA database and cloud acquisitions.

Investing in HANA provides significant benefits for customers, a lower TCO, and exciting user experience options. If they didn't change the way they operate, remove fat from the business and invest heavily in HANA, the industry would slowly gnaw away at that core license revenue. As it is, there are real reasons to do new SAP projects now, on the HANA platform, to delight users and deliver value. That's good for SAP and good for customers.

What about vendor lock-in? Will SAP squeeze me down the line?

This is a concern for customers who are considering moving their database to HANA - will SAP come and squeeze them for more dollars. My experience of SAP is that they generally have a good relationship with customers. User groups like DSAG and ASUG keep them on their toes, but the relationship is quite harmonious. Not so with other vendors, though I won't name any names.

So yes there is a risk of vendor lock-in, but I would like to point out that the alternative - not investing in HANA and getting the benefits - is much worse than the risk of vendor lock-in. I wrote to SAP this week asking for some clarification on this, and if I get a response then I'll post that here.

Final words

If you are a SAP customer, and your strategy is SAP applications, then you need to align your applications strategy with SAP's applications strategy and roadmap.

That roadmap is HANA - in the cloud, or on premise, but HANA. You don't have to move today, but you should start planning.