SAP Business Suite On HANA – The Shift To Real-Time ERP

Business Suite On HANA Highlights

• SAP Business Suite on HANA launched
• Has 24 ‘business value scenarios’ across 23 industry sectors
• 18 Proof of Concept customers (Vodafone, Ferrero, John Deere, Würth, HSE24 and others)
• HANA itself – launched in 2011 – has more than 1,000 customers to date
• In-memory databases will take time to prove they can protect key corporate data
• SAP is growing its Cloud business by acquiring SuccessFactors and Ariba
• Real-time ERP offers advantages of agility and automation of processes, but will take some time to gain acceptance
• Accenture and IBM are strong partners in the UK

SAP is the world’s 4^th largest software supplier if we count license and maintenance revenues (see Figure 1) – it is the clear leader of the ERP market. You’ll want to learn more about how it is building out its in-memory solutions to support real-time business processes.

Business Suite On HANA – The SAP And Partner Views

We attended an event in London last week led by SAP’s Tim Noble (MD of UK and Ireland) and Jeff Woods (Head of Product Evangelism) and supported by IBM’s Partha Chakraborty, Accenture’s Scot Clark, Ignacio Garcia from Vodafone, and Philip Adams from the SAP User Group in the UK and Ireland. They each had their own views on the new Business Suite on HANA offerings:

• Tim believes HANA is as big a change as the introduction of R3 20 years ago – beyond technology innovation itself, it will change the way businesses are run; he indicated that HANA itself more than 1000 customers worldwide, that Business Suite on HANA ECC6 currently has 18 customers at a Proof of Concept stage
• Jeff demonstrated how Business Suite on HANA extends the use of SAP beyond real-time transactions to real-time inventory and order requisitions; he ran a demo to show how information on Days Sales Outstanding (DSO) could be automated and accelerated beyond the typical HQ/branch interactions we see today; he also briefly introduced 23 ‘business value scenarios’ in 24 different industry sectors related to the new software
• IBM has worked with SAP to demonstrate the world’s largest 100TB HANA database ; it believes that successful enterprises are those which take advantage of the 4 ‘technology pillars’ of mobility, analytics, Cloud and social business and that the current revolution taking place in the front needs to spread to the back office, where HANA is well positioned to help; IBM has its own Industry Solutions Centers (in La Gaude near Nice for instance) in which it demonstrates potential vertical market solutions; it is realistic in its view of developments, pointing to the potential for in-memory databases to expose Enterprises to data loss and suggesting that HANA systems it will take ‘til the end of 2013 for it to stretch to 8TB sizes, by which stage it will become a ‘necessary issue’
• Accenture’s sees in-memory databases as game-changing technology; its customers are moving beyond Proof of Concept work towards pilots, broad-scale adoption and implementation; it admits its Sales Leads are not themselves technologists but ’get what HANA is’; it noted that the advantages came in improving the agility of processes; like IBM it also has a solution center in Nice among a total of 12 worldwide
• Philip is the new head of the SAP User Group in the UK and Ireland which has some 6.7k members from 540 customers; he noted that SAP has a strong collaboration model, engaging with its customers on how to move from current to future databases; their issues often concern the agility of processes rather than the size of databases; he noted that budgets are currently tight, with customers wanting to spend wisely – he thinks SAP will find it hard to win business from those who have recently invested in databases; he confirmed that HANA is a widely discussed subject among users and is currently executing a survey which will tell more about their current thinking

The 5 Reference Customers Business Suite On HANA Customers

There are already a number of interesting references for HANA itself, such as HSE24 (a home shopping channel Germany), which uses it to adjust TV coverage of ‘hot products’ in line with current sales enquiries and Bayer, which is using it to give its salesforce a full view of each customers interactions. Amongst the customers are:

• Vodafone’s Ignacio spoke to us at the event; its CIO started a journey some 6 years ago to move away from its silo-ed systems to adopt a common operating model, shared service center, single purchasing and ERP systems; it has implemented HANA in its Luxembourg-based shared service center, which collects and reports financial results from its 23 countries; previously the overall serial process would need to be run completely 3 or 4 times for individual adjustments to be accommodated before closing the books; the new real-time system completes in 3 hours (rather than a day) and the improved job satisfaction has been measure in before and after surveys; the introduction of HANA at Vodafone began with a Proof of Concept trial from Accenture; Ignacio noted that there were technical challenges due to the newness of the system (‘we had to keep going back to the labs’) and business ones in persuading the organisation to adopt and fund the solution
• Ferrero Group – the chocolateer is one of the first customers to introduce Business Suite on HANA to link all of its offices and production centers together; see CIO Enzo Bertolini video endorsement
• John Deere, which is using Business Suite on HANA to move beyond its traditional global farm equipment manufacturing to offer new types of services linked to its offerings

SAP HANA From A Hardware Perspective

SAP has defined HANA in a very precise way as an in-memory platform based exclusively on Intel Xeon E7 chips (either 4- or 8-core versions) and the SUSE Linux Enterprise Server 11 (SLES) operating system, although the appliance vendors[1] have choices of Flash memory – typically Fusion-IO up until now -, file systems and physical storage systems they use underneath.
Introduced in 2011 HANA is a strong contender in the Analytics market against the likes of Oracle Exadata, IBM Netazza, Microsoft’s Parallel Data Warehouse, HP Vertica and the like – and part of the Big Data/Agile Data phenomenon. SAP is not a hardware vendor itself – it’s interesting that both IBM and HP are HANA appliance suppliers and competitors.
HANA changes the way SAP engages with its Independent Hardware Vendors, as it now certifies each appliance individually, rather than addressing the market in a broadly horizontal way: if they wanted to sell HANA appliances Acer or Lenovo, for instance, would have to work much more close with SAP than they did in the past. We think HANA is important in demonstrating the development of converged infrastructure and integrated systems from a software angle, as opposed to the hardware versions we have discussed at length before.

Some Conclusions – Expect A Slow, But Positive Momentum

SAP’s success overall is such that it is harder to find large organisations which don’t use its software than do. In our industry, for instance, Dell was famous for running its own ERP solution for many years – but we don’t suspect it does now.
It has broken its reputation as a conservative vendor through acquiring Cloud suppliers SuccessFactors (€3.4 billion in 2011) and Ariba (€4.3 Billion in 2012), allowing it to build out its SaaS offerings[2]: as it has by insisting on a specific processor platform for HANA, moving beyond its previous status as a broadly horizontal software company. However it has been careful to listen to its customers in introducing its new solutions – it’s also great to hear that both the user group and Vodafone do surveys to test reactions and opinions.
HANA is in its infancy, while Business Suite on HANA is just now being born. We see a strong rationale to move to real-time ERP back office processes for making businesses more agile – as Vodafone attests, but it will take time for the resilience of in-memory techniques to prove themselves. In addition SAP will not have the market to itself, as IBM, Microsoft, Oracle, HP and others launch their own solutions – but it does have the advantage of a mature business with a full set of industry sector solutions and strong partners such as Accenture and IBM itself.
It will need to prove an easier migration for its customers than in past changes and weather the dearth of investment by Enterprises in the current recession. Tim indicated that its initial priority was customers looking for new databases, followed by SAP customers looking to upgrade and finally users of other databases looking to change.
We expect a slow, but positive momentum for Business Suite on HANA. Time will tell if Tim is right in predicting it will prove as important as the introduction of S3, which is universally used by large organisations and has genuinely helped to transform the way business processes are run.