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."