Do In-Memory Databases Deliver?
A recent study by IDC on Innovating with Real-Time Data and Insights with SAP HANA delivered some surprising results. IDC investigated the impact to 10 large organizations who had installed SAP’s in-memory database.
The investigation was authored by two of the world’s top database analysts, IDC’s Carl Olofson and Matthew Marden. As more and more organizations adopt in-memory databases to overcome the performance limitations of disk-based solutions, stories about the real value to organizations over multiple years are starting to appear. IDC wanted to see the impact over five years by looking at some of the earliest adopters of in-memory— long enough for the new technology to settle into an organization, and for reliable financial data to be analyzed.
The organizations from around the world (average size over 30,000 employees) were asked what they were doing with their in-memory database (the study was focused on the SAP HANA in-memory data platform):
“With SAP HANA, we have a single source of truth for sales that’s tied to our annual operating plan. We’re getting smarter every day we use it, and I think the innovation to come will be how we look at our business differently because of transparency and visibility for our sales staff. I think we’ll become more predictive around the KPIs, so we’ll be smarter and make better decisions.”
Evaluating the Impact
The key was to measure the business impact of transformative technology. Unlike a study that compares two versions of similar solutions, like a Mercedes S550 and a BMW 750i, this is like comparing the Tesla S to gas powered cars.
IDC looked at three areas: business productivity, it staff productivity, and cost reductions.
The big winner was business productivity. While IT staff productivity and cost reductions were positive, saving companies about $1.5M per year, the improvement to the overall business outcomes delivered a whopping $17.8M per year of improvement – and this was at an initial cost of about $10.0M, leading to a payback time of nine months.
Since the majority of the return came from business productivity, it is valuable to look into where these gains came from, and unsurprisingly, the biggest gains came from new business processes that were not possible with low power infrastructure. This is similar to the history of flight—the power/weight ratio of a whole new type of engine (internal combustion) opened up possibilities to build aircraft not possible with steam engine technology.
Innovating with In-Memory Technology
Here are three examples from the IDC paper —it is really worth reading it and seeing some other ways SAP HANA customers are changing their businesses:
- Enablement of core customer-facing services: “SAP HANA is part of a greenfield buildout of an entirely new capability that didn’t exist anywhere, and no one else is doing this with a completely new use of technology. We didn’t have an existing service that SAP HANA snapped into; we built it from the ground up.”
- Understanding and responding to business patterns. One retail organization is achieving better business results because its stores “now have better and precise knowledge of consumption and because we can keep inventory up to date with SAP HANA.”
- Customer support teams. Granular and more robust insights about customer behavior enabled more effective support of customers for the 50-person team at one organization. It noted: “We’re using a tool driven by SAP HANA that allows us to be ahead of our customers so that we’ve already spotted anything that they see. So we’ll have already found that little nugget of information and have come up with ways to address their issue.”
The last example, from customer support, resonates with my experience. In 1995, a small startup was going nowhere with their product. They had a few customers and a one-man support group (the low man on the totem pole). However, this wasn’t just any junior employee—this chap, Caleb Entrekin, was one of the smartest people I worked with.
He spotted a recurring problem that all the customers calling about were using his software to monitor. He had a $42M idea— why not build a solution to address the problem?! The startup spun up the idea, got a new CTO to build the product, and four years later the small company was bought for $42M.
You can’t all have a smart entrepreneur like Caleb to identify patterns nobody else can see, but if you have SAP HANA instead, you have a way to find patterns in your business that could be your $42M idea as well – and even if you don’t, you’ll be saving $17M/year anyway!
Explore more SAP HANA innovation stories.