SAP claims it won't force customers to abandon Oracle now that the German firm's flagship Business Suite software runs on its own HANA database - but it has given them a big decision to make.
SAP’s flagship Business Suite software now runs on SAP's own HANA database in a move that enables customers to drop Oracle out of the picture.
“We’re dramatically challenging the database market with a new value proposition and a next-generation technology,” said Jim Hagemann Snabe, co-CEO calling the new Business Suite the biggest breakthrough in applications since SAP released the R/3 software in 1992.
"Our target for this year is a high three-digit number of customers, but there is the potential for 40,000 Business Suite users," Snabe added.
Around 40,000 SAP customers run the firm’s applications on Oracle or IBM databases. But SAP co-founder and chairman Hasso Plattner insisted SAP customers don't have to switch to HANA and that SAP will not force anyone to move.
"We do not abandon the database vendors who carry us to success," he said. "Customers have a choice."
Nonetheless the announcement is a throwing down of a gauntlet to Oracle. “With this move SAP is extending its revenue potential by making an assault on the database market,” commented Angela Eager of research firm Techmarketview. “It is not disruptive but will make waves. It certainly raises the intensity in the long-running Oracle-SAP confrontation because customers will no longer have to look to Oracle (and other providers) for the database on which to run Business Suite.”
But he insisted that HANA offered a new model for business applications. “This will change how our customers do business and they are very excited,” he said. “We are even winning over start-ups, they are saying that they never thought they would be working with SAP.”
The need for speed
According to analysts, the HANA-enabled approach has appeal. "With the ever-increasing pace of business and ever shorter decision cycles, there is a growing need to reduce the time needed to capture, analyse and act on information," said Henry Morris, senior vice-president for IDC's Worldwide Software, Services, Big Data as well as Sales and Marketing Executive Advisory research groups.
"SAP Business Suite running on SAP HANA is a response to this need. By combining both transaction processing and analytics on a single platform, SAP HANA supports a blended system of record and of decisions. The integration of transaction management with real-time decision management eliminates the delays and inefficiencies inherent in parallel operational and business intelligence systems. This enables employees to make better tactical, operational and strategic decisions based on relevant, granular, up-to-the-moment data."
Fellow research firm Ovum also declared the move to be a potential game changer. “Potential benefits of SAP Business suite on HANA are numerous. Obviously, HANA’s in-memory architecture accelerates routine reporting functions, such as the ability to run end of period reports in seconds or minutes instead of tying a database with a batch run for hours,” noted Analyst Tony Baer.
“But processing speed is the least of HANA’s potential benefits. The in-memory architecture allows data views to be generated on-the-fly, a benefit that not only reduces database footprint and storage requirements, but also potentially simplifies the modeling and deployment of data and the design of analytics or other complementary applications that run atop Business Suite.
“HANA’s in-memory architecture also allows analytics to be embedded with transaction processing, enabling companies to become more agile. For instance, SAP customer John Deere achieved positive ROI on its HANA investment based solely on the benefits of implementing it for pricing optimisation.”
A difficult sell?
But while there are technology selling points, SAP will need to work on its communications around HANA, warned Ovum. “SAP’s challenge is brand and messaging,” noted Baer. “HANA has evolved over the last two years from a database to an analytics platform to simply a "platform." How SAP avoids confusing the market will be a key factor in driving competitive advantage.”
The strategy is unlikely to convince many existing SAP users to make a change in the near future, the firm argued. “SAP Business Suite on HANA has the potential to be a game changer by making SAP much more relevant to its customers. But in the near term, SAP Business Suite on HANA should be seen as opportunistic upgrade for existing customers or greenfield opportunity for new ones,” suggested Baer.
“Few if any enterprises currently rank replacement of enterprise systems as top priority. Convincing customers that the "transformative" benefits of Suite on HANA will be non-disruptive technically is the challenge SAP faces with an entrenched Business Suite customer base. Companies don't swap out their database and ERP investments overnight.”
HANA is set to be the eventual convergence point for all SAP offerings and an alternative to existing architectures. SAP is also building out a set of Platform as a Service (PaaS) capabilities for the database. Over the next few months, SAP’s SuccessFactors and Ariba Cloud offerings will also run on HANA.