SAP's cloud and big data race against time

SAP's cloud and big data race against time

Summary: It may make more money from business apps than any other vendor but customers say they aren't clear about SAP's future strategy.

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SAP is hoping HANA in-memory technology and software as a service will make up for declining licensing revenue but its customers seem to have only a hazy idea of SAP's SaaS strategy and one in two has no plans to move to HANA, according to a study from research firm Forrester.

Persuading customers to run core ERP applications on HANA is a key strategy for SAP, yet 52 percent of survey respondents say they're not planning to use it, with 54 percent of them citing high costs and 37 percent saying they can't see the benefit.

The HANA in-memory computing product consists of real-time analytics, middleware, database services and transaction processing.

A director of IT architecture and service delivery for a comms company, quoted anonymously in the Forrester research, said the HANA strategy is understandable but not appealing.

"It looks like it's very expensive, and the overall business benefit is not clear to me. It doesn't seem to have the big value proposition that SAP claims," the director said.

"If it's about speeding up reporting of what's just happened, I've got you, that's all cool, but it's not helping me process more widgets faster."

The picture on SAP's SaaS strategy is equally mixed, according to Forrester, with 26 percent saying they lack a clear sense of the company's plans in this area and nearly 42 percent indicating they have yet to see a credible path for migrating from packaged SAP apps to the cloud.

A director of applications delivery for a global manufacturer, also quoted anonymously in the study, said SAP had tried to explain its SaaS strategy but confusions persist.

"Is SAP's SaaS strategy clear? The box for 'Hell, no' would be the one I checked," the director said.

"For example, we use on-premise HR. Now SAP is really pitching SuccessFactors. They're totally different products. Where does that leave us as a customer - are those products going to come together or go apart?"

With revenues growing 14 percent to $20.9bn in 2012, SAP's position as the world's leading vendor of business applications faces no immediate threat but its core software licensing business declined by 3.4 percent in the first half of this year.

The authors of the Forrester report, SAP bets its future on HANA and SaaS, said what is working in SAP's favour for the moment is the high level of commitment among existing customers to on-premise software.

That loyalty may be down to the high numbers of European customers, who tend to be more resistant to a move to SaaS than their North American counterparts.

"In many ways, SAP is in a race against time, not against Oracle," the report's authors said.

To avoid falling behind in SaaS, SAP will need to develop its products or acquire SaaS vendors, they said. The first option takes time and the second is not infallible, which is why HANA is so important in providing revenue in this transitional phase.

"On balance, we think HANA will be a partial success, delivering enough incremental growth to SAP from falling into the stagnant revenue mode where Oracle seems to be headed," the report concludes.

"But it will not be successful enough to push SAP into a fast-growth mode like the pure SaaS vendors, Salesforce.com or Workday."

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Topics: Cloud, Big Data, Enterprise Software, SAP, Business Intelligence

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3 comments
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  • I'm baffled...

    How did SAP get the entire tech media industry to drink their kool-aid?

    HANA is simply an in memory relational database. It does what any other RDBMS can but faster because it doesn't have to read from disk. That's great and useful but it is not going to change the world.

    Oracle also sell an in memory version of their database, IBM sell two!! But they don't make a great fuss about it.... because it's really not that revolutionary or ground breaking!
    adamopolis
    • What rarely any other RDBMS can do

      – Single store of data which can support OLTP and OLAP workloads, useful for high performance mixed-workloads.
      – HANA includes application server components (therefore a platform), which "relieves some of the latency and bandwidth bottleneck between the database and the application server", as Ethan Jewett wrote.
      – Processing closer to data which reduces the number of physical layers in an application. Fewer administration and plumbing.
      – HANA is designed to take advantage of power of multi core processor. More complicated queries are automatically paralleled.
      Welju Grouv
  • The problem with Hana is

    Its just too bloody expensive! So much so that most multinationals will think 3 times before opting for it. If SAP wants to increase sales of Hana all they need to do is make the pricing more realistic, currently they are milking the early adopters and then wondering why its not taking off as fast as they'd hoped.
    Julian Phillips