Is SAP HANA a Luxury?
TAKE NOTE(Insights into SAP solutions and EmergingTechnology)
For SAP, it may be a billion-dollar question: is HANA a luxury like a Porsche or a Dior Dress? Or is it simply a better approach that could and should be appropriate for all SAP’s customers?
Today, as SAP customer Steve Rumsby puts it:
“The problem seems to be that SAP have what they think is a great product, but their customers/potential customers don’t all see it the same way.”
What are the roots of this difference in perception?
SAP’s HANA Vision
The first versions of HANA were focused on analytics, and used for big data “edge cases” that required extreme speed. These typically involved large companies adding an additional HANA server to existing infrastructure to do things that weren’t previously feasible. These use cases can’t really be called “luxury” – they all had hard business cases behind them – but they certainly weren’t for everybody.
The natural result is that many people that don’t envisage these kinds of needs in the near future are wondering why SAP talks so much about HANA:
“Dior is a stunning work of art and such timeless beauty that almost makes you forget about the price tag. But even though I admire the design very much, somehow I just don’t feel compelled to rush and order one for myself. For the simple reason that I can neither afford it nor (more importantly) do I really need it… Where would I possibly wear it? In case you didn’t get the analogy by now, there are SAP customers that need HANA just like I need a Dior dress, at least at this time.”
From this point of view, HANA will be adopted as the “edge cases” of today become tomorrow’s normal environments, as with some other previous technologies such as mobile phones:
“…the first “bricks” that were an exotic accessory of rich and famous back in the day. But now even some elementary school kids already carry a cell phone to call mom and dad in case a stranger offers them candy. How did we get from there to here? By the means of cheaper and smaller phones, better network coverage and accessibility. Not by worrying about the adoption rates. Not every student or housewife had one of the first cell phones and not every SAP customer is Unilever or Coca Cola.”
However, SAP’s vision for HANA has always been larger than those types of use cases. From the first white papers to recent posts on the benefits of Business Suite on HANA, the ultimate goal has been to use the new opportunities of in-memory for “normal” companies and “normal” SAP applications by radically simplifying existing layers.
But even customers that fully understand the technical opportunity are wondering why SAP thinks an “expensive” product like HANA could be suitable for a wide range of customers.
Is HANA Expensive?
The two things that everybody knows about HANA is that it’s fast, and that it’s expensive. But is that true?
By all accounts, HANA is indeed fast – for example, Stanford University researchers claim that it can crunch genome data up to 600x faster than previous best-practice techniques.
But this emphasis on speed has naturally lead customers to assume that if they don’t need — or can’t use – that extra speed, they don’t need HANA. This view has been echoed by other database industry veterans like Doug Henschen:
“Speedy insights are only required when people are actually in a position to do something with them or about them in an equally speedy way. SAP is pushing ahead of the customer’s ability to execute”
In addition, the speed of HANA has been compared to a Porsche by SAP executives:
“Asking people who don’t own HANA what they think of it, is like asking people who have never driven a car what they think about the speed and handling capability of a Porsche.”
And it’s human nature to assume that something compared to a Porsche is unnecessary, expensive, and limited to a few users.
But when it comes to technology, there isn’t always a tradeoff between better performance and higher costs – especially when radically new approaches are involved. For example, I’m old enough to remember the first arrival of a microwave in our home, and how confused I was as a child who had just learned about energy at school: “wait, it’s much faster to heat food AND it uses less electricity? That can’t be right?!”
Because in-memory approaches collapse the stack of traditional IT, industry experts like Gartner’s Donald Feinberg believe that in-memory systems can be simpler, more flexible, AND cheaper to run:
“The total cost of acquisition of an in-memory system is likely higher than a storage system. There’s no question. But the total cost of TCO is lower. People cost more than hardware and software – a lot more. So the TCO is lower. Don’t let somebody say to you we can’t go in-memory because it’s so much more money. Acquisition costs may be higher. If you calculate out a TCO, it’s going to be less.”
SAP Partner and HANA Expert John Appleby explains it like this:
“Often I have a conversation early on with senior decision makers looking at use cases for SAP HANA in their business. “I hear HANA is expensive”, they say, “talk to me about the price”. Yes – with SAP HANA you store all your important information in-memory, and that’s many times faster and somewhat more expensive than traditional systems.
But there’s two important points: SAP HANA typically processes information an order of magnitude faster than a traditional system, but it is not an order of magnitude more expensive, which means it provides value for money. Second, HANA typically allows you to simplify your IT – and your business. Operational costs are reduced because there is less complexity, and this typically provides an excellent TCO.”
That’s the theory, but it’s clearly not a widespread view among SAP customers today. Might that change in the future?
SAP has published studies showing that HANA can indeed deliver lower costs: a report by Forrester indicates that HANA can save an organization 37% across hardware, software, and labor costs and an IDC study of the HANA deployment of the University of Kentucky indicated an ROI of over 500%.
In addition, many existing customers of SAP Business Warehouse have reported costs savings from moving to HANA among other business benefits:
“Molson Coors has confirmed that development times for new requirements will come in at least 50% less than under alternative configurations. This is because development of BW on HANA reports is much simpler than before… Marketing criticisms aside around ‘feeds’ and speeds,’ no-one should underestimate the value delivers to those businesses that have already invested in SAP BW and still have long life use cases and increased demand from the BW environment.”
One promising sign for SAP is that it’s not only giant companies that are planning to run their businesses on HANA. Smaller companies such as TRCC, with just 500 employees and four full time IT staff are choosing Business Suite on HANA, not because they have exotic needs, but because the system is less complex, with less infrastructure to manage. For them, the “speed increases were just a bonus”
If HANA is becoming an easy decision for greenfield SAP customers, then it can’t really be characterized as a Porsche or a Dior dress – it’s more like the next family car or a pair of jeans. But what if you already have a perfectly good family car?
Is HANA a Fit for All Customers?
Even if Business Suite on HANA becomes a no-brainer for new SAP deployments, what about existing customers?
Real-world organizations already have a lot of complex systems in place. Moving to a new technology — even if it is better and cheaper — imposes real costs. Adopting HANA could indeed be perceived as an unaffordable luxury in this case, and this seems to be the crux of the recent debates.
The company is trying to tackle this by providing ever-more industry use cases and making sure that customers can adopt HANA in steps, with “cookbooks” to help.
It’s also encouraging existing HANA customers share their experiences. The good news for the company is that the earliest adopters of SAP HANA do indeed seem to be generalizing their deployments beyond the initial “edge case” or “luxury” deployments, including Burberry:
Burberry had a positive experience with HANA, according to CTO John Douglas, so it now plans to swap out Oracle database and put the SAP Business Suite on HANA. That work will start with SAP Retail and SAP BW. “We’re now at inflection point where we need a step change to real-time applications,” said Douglas. “It started with customer one-to-one… but now we’re going to put the whole business on one platform, in memory.”
And Unilever:
“Besides the acceleration, the user experience improved significantly. We are asked by multiple users for more and more HANA-empowered solutions. It was probably the first time in my role that I really delighted the end-users and made their life easier.” – Thomas Benthien, Global IT Director at Unilever.
And other, more “normal” organizations that have moved to Business Suite on HANA, such as the University of Amsterdam, have reported a positive migration experience.
In addition, the company hopes that an upcoming wave of new “simple” applications, starting with Simple Finance which has been described as a potential “killer app” to entice existing customers to move their core systems to the new environments.
What Does The Future Hold?
It’s clear that SAP continues to believe that HANA is not an expensive luxury for the few, but an opportunity for all organizations:
“The invitation is for all customers who want to transform their business and capitalize on the opportunities that have been opened up through technology innovation, big data, IoT, cloud, and mobility…deploy HANA. Email us, tweet us, call us…we will help you find the right use case to grow your business faster than your competitors and lower your costs at the same time.”
Will customers continue to assume that HANA will always be too expensive for them to deploy? What if that weren’t true – would it make a difference, or is the real barrier the challenge of doing things in new ways? What could SAP do to persuade the skeptics?
Finally, people are justifiably fed up with analogies, but for what it’s worth, I still think the most appropriate comparison for SAP HANA vs disk-based systems — at least in terms of technology theory — is digital cameras, which are indeed faster, simpler, smarter AND cheaper than older film cameras (this post is from a few years ago — the same ideas could now be extended to include operational systems, not just analytics)
This story, “Is SAP HANA a Luxury?” was originally published atBusiness Analytics