Last week, I was lucky enough to experience in-person the press conference in Palo Alto officially announcing the Business Suite on HANA. In the meantime, there have been countless blogs, articles and discussions regarding the announcement. What is missing, however, is any analysis of what SAP is planning next for HANA. Instead of resting on their laurels, the strategists at SAP are rapidly moving forward and, based on my understanding of the available clues, the future focus is on HANA-related activities in the Cloud. I’d like to “connect the dots” and suggest what I think SAP is planning.
The clues
In an interview with jon.reed, SAP CTO Vishal Sikka provided a few interesting tidbits regarding cloud-related activities.
The important talking cloud-related points from the interview are:
- we already run on Amazon / Korea Telecom Cloud / Portugal Telekom Cloud
- B1 on HANA runs on the Cloud
- 250 Terabyte Cluster that runs down here in Santa Clara where we already support workloads from customers
- SuccessFactors applications are all moving to HANA
Sikka also wrote an interesting blog regarding Business Suite on HANA and the short final paragraph vaguely describes “what is next”:
The next step for SAP is re-inventing business networks with the transformative capabilities of the SAP HANA platform. Cloud is a natural place for real-time information to be shared at scale, collaboration to arrive at decisions, instant connectivity of mobile to reach everyone. With the cloud platform, we can re-invent application delivery and infrastructure in way that have not been thought of before. On this new platform we can bring startups, customers and partners to power a new real-time economy with a world-wide network of real-time businesses.
One slide that Vishal presented at the press conference also referenced “World-wide Networks of Real-time Businesses” as the next direction for SAP’s HANA-related activities.
Next step 1: Business Suite on HANA in the Cloud
Based on the material available, one possibility is the ability of customers to run Business Suite on HANA in the Cloud.
In a comment on a HANA-related blog from thorstenster, blogger Dennis Howlet also describes this prospect:
But...I'd encourage folk to get out of the weeds and get into the sunshine - start thinking about the NEW apps that can be built where there is serious value rather than refactoring for something that is not yet complete.
That's because this is only a stepping stone to SAP offering BusinessSuite on HANA in the cloud...at some point in the not too distant future. (cough)
Customers already have the ability to run BusinesSuite productively on AWS and customers are also able to run HANA productively in the Cloud – either on AWS via the HANA One offering or on other platforms such as Portugal Telekom . An initial step of migrating the underlying traditional database for such Business Suite installations to HANA should be expected.
Howlett’s blog on the announcement also describes other cloud-based hosting options:
It is also clear that this represents a stepping stone for SAP that is similar to the manner in which Oracle is offering Fusion only in a fraction of the time Oracle took. Customers have choice, most (of the largest customers) will want to continue operating on premises for some years to come and with their existing database but when they do move to the cloud, it will be a private cloud or one managed by SAP.
I found Howlett’s comment especially intriguing combined with Sikka’s reference to SAP’s 250 Terabyte HANA Cluster. I could imagine SAP also moving more aggressively into the cloud hosting business. SAP has also built a 1 Petabye HANA cluster and I assume that these assets aren’t being built only for test purposes. As Sikka states these clusters are already supporting workloads from customers, is it farfetched that such clusters could also be used for cloud-based Business Suite installations? You could imagine intriguing architectural models if you follow this train of thought – for example, what about OnPremise BusinessSuite installations connected with SAP’s HANA Cluster?
Note: The SAP HANA clusters are still small in comparison to other Internet giants but still could represent an option for some use cases.
Note: I also have only heard of the one HANA cluster in California. Multiple clusters located globally would be necessary if SAP was going to actively pursue this endeavor.
The ability of HANA-based Business Suite installations to run on private clouds is also an interesting approach and one that might be an option for partners providing SAP hosting for customers. The lack of the necessary HANA experience, however, might make it difficult for such partners to take advantage of this opportunity.
Such cloud-based environments might have other advantages – for example, it would be perfect for companies wishing to test HANA-based Business Suite migrations.
Next step 2: Business Suite on HANA in the Cloud: Multi-tenant version
The current configuration of HANA-enabled cloud-based Business Suite installations would probably be single-tenant applications. Each installation would have its own cloud-based HANA database. I really wouldn’t call this configuration a SaaS – unless you are using Oracle’s definition.
The ability of HANA to support multi-tenancy in the Cloud is still not really clear, so this possibility is still rather difficult to imagine.
If HANA in the Cloud was able to support multi-tenancy, however, the impact on BusinessByDesign and SAP’s Cloud strategy in general would be palpable. Although BusinessByDesign is focused on the SME market, a cloud-based HANA-enabled Business Suite might be a threat. Such configuration would also have an impact on SAP’s focus on hybrid (OnPremise/OnDemand) scenarios.
The use of a multi-tenant database isn’t the only prerequisite for a successful SaaS application – other capabilities such as subscription-based pricing – would still be missing but this configuration for BusinessSuite installations would definitely muddy the waters.
Next step 3: World-wide Networks of Real-time Businesses
As Sikka described in his blog, SAP has been talking about HANA-enhanced Business Suite since January 2012. Thus, the announcement last week was expected. To be taken seriously, SAP had to prove that HANA was real and was capable of being the foundation for SAP’s most complex application. As bloggers Ray Wang and Brian Sommer suggest in their interview with Howlett, however, the more interesting question is what comes next. As I suggested above, Sikka provided a few hints of what the future might hold. He kept referring to “World-wide Networks of Real-time Businesses” in particular he said “re-inventing business networks with the transformative capabilities of the SAP HANA platform”.
My assumption is that Vishal is describing something quite different from a single HANA-enhanced Business Suite. He is referring to how businesses interact with each other. Such relationships are multi-faceted and take place on different levels (between suppliers, customers, etc). With its focus of business networks, SAP’s recent acquisition of Ariba now takes on more relevance. The Ariba network is the largest and most global trading network with over 730,000 companies. Combine this size with the ability of HANA to support real-time applications and you have an interesting potential to disrupt the enterprise software space
The HANA Cloud becomes the hub in these networks and will be supported by various applications – focusing on real-time interactions - that will run in this environment. SAP customers that have HANA-enhanced Business Suite installations will have an advantage over competitors in such interactions. With the speed boost provided by HANA, such companies can respond quicker and with greater accuracy.
Although providing no details, a tweet from aiaz.kazi (SVP of Technology & Innovation Platform Market Strategy) suggests that the HANA Cloud will indeed play an important role in future HANA-related activities.
We are not talking about a single application but rather a type of application that has particular features and runs on the HANA Cloud.
The networks on which Ariba primarily focuses are suppliers. These new applications might deal with other types of networks as well. My blog about SAP’s involvement with “the business web” and the Internet of Things reveals one potential focus. Other potential networks for such real-time scenarios focus on end-users are displayed by SAP’s Precision Retailing solution and SAP’s sports-related activities.
Conclusion
I often had the feeling that SAP’s Cloud and HANA activities were distinct and independent of one another. Slowly, the two areas are coalescing and the result is a move away from traditional cloud / SaaS areas. The existing cloud offerings (SuccessFactors, Financials OnDemand, Business By Design, etc) will continue to be promoted but my assumption is that the cloud-related activities – with the accompanying tail of more resources, etc- will increasingly be focused on different scenarios that exploit HANA in the Cloud. This strategy is a shift away from direct competition with other Cloud players like SalesForce and Workday - that just reproduce existing OnPremise enterprise applications (HCM, CRM, ERP, etc) - in a new direction that promises dangers but also great rewards.
The challenge for SAP will be motivating existing customers – from which SAP still gets the lion’s share of its revenue – to take this journey with them. The migration of a customer’s Business Suite to HANA is the first step on this path – I will be closing tracking how many customers are willing to make this transition.
Disclosure: SAP paid my T&E for attending the Palo Alto event
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