The real SAP / Sapphire story

Whether you attended last week's Sapphire event or not, you might have missed the real story there - the story SAP should have communicated. There was lots of talk about HANA, analytics and the cloud but why should customers care and care now? Here's the rest of the story you should have heard.....
Written by Brian Sommer, Contributor

Last week, SAP made a number of technology announcements; rebutted rumors and competitive disinformation; and, threw a pretty good party for thousands of customers and partners.

When vendors craft the messages they wish to impart to attendees at user conferences it is not something taken lightly. There are basically four kinds of conference tones that can be taken by the vendors:

  1. celebratory self-promotion re: past product introductions with no real net new news (50% of events)
  2. lots of hype regarding several incremental enhancements to the product line (30% of events)
  3. big technical changes to the product line (10% of events)
  4. painting a vision of where they will take their customers into the future (10% of events)
SAP 2013 Sapphire 1
All rights reserved - Copyright 2013 - TechVentive, Inc.


Frankly, I really try to avoid conferences of the backslapping, self-congratulatory tone of the first type. All that rah-rah with no additional substance is a waste of time for me.  I really don't care much for conferences that dwell on lots of minor incrementalism either (the second type). Spending a couple of days to learn about some new user interface improvement to a Fixed Asset application is, well, kind of boring.  Sometimes the big technical changes to the product line (the third type) get my attention as I often wonder how the vendor is going to bring the installed base along for the ride.  I sometimes enjoy those conferences as the technology leaders in that firm often share fascinating perspectives about where they see the future of the technology market moving.  But, this third type of event is very technology (not business) focused and, sometimes their “big” changes get lost on the business users in attendance.

The conference you really want to attend is one where a vendor is painting a very fascinating vision of where they are taking clients into the future (the fourth type). The keynote speakers will describe “the afterlife” for those customers who join them on this adventure. These speakers are often passionate about the power of the new technologies that their firm and other technology firms are introducing. They can articulate realities that will soon be visited upon businesses across the globe. And they will challenge you to challenge your firm's leadership into preparing for an amazing and, hopefully, profitable change.

In the very best conferences there is a sequence to how this afterlife story is revealed. A visionary will describe what the future of business will look like. They will explain the different forces converging simultaneously on your firm, the technology space and competition that will predicate a significant change in the business technology ecosystem. The second speaker will describe both the opportunities available to those early adopters of the technology and the consequences to the laggards who refuse to adopt them or delay the adoption beyond a reasonable timeframe. This speaker creates a burning platform for change and puts hard economic consequences in front of the attendees so that they can more clearly understand the implications for their firm. The third speaker will layout the glide path which companies must follow to rapidly and fully take advantage of the new technology and the business results that it will help deliver.

This week, SAP had a fourth type of opportunity but, in my opinion, kind of flubbed the delivery of the message. They wanted to communicate a fourth level story to attendees but seemed to fall into a third level type of delivery. That is, they got all too excited about their new technology and forgot to explain the destination, journey and burning platform parts of the story.

SAP 2013 Sapphire 2
All rights reserved - Copyright 2013 - TechVentive, Inc.


So, I will attempt to fill in the gaps with what you should have heard there. Here goes:

The real story should have been around how different competition will be for SAP’s customers now and going forward. Businesses, large and small, will want to tap into vast amounts of internal and externally produced information to create competitive insights never possible with the mostly internally focused ERP data that predominates the contents of the corporate data centers today. SAP offered up several examples at the event showing how customers and others are capable of processing hundreds of millions of point-of-sale transactions in sub-second time. They showed how it is possible for small startup companies, small to midsize businesses and large enterprises to utilize new tools like its HANA analytics capabilities. This aspect of HANA is cloud based and uses massively parallel, in-memory computing.  

It is the power of analytics, specifically analytic applications that use BOTH internal and external data, which permits companies to gain insights into product usage, customer consumption data, competitor activity, social sentiment, etc. The insights into these kinds of questions give businesses outsized opportunities to widen their profit margins, extend their market share and otherwise disrupt the economic stability and underpinnings of their competitors. It is for this powerful, economic and timely reason that customers of SAP must change to a more analytic driven business model. ERP data alone will not be the catalyst for the second generation of business and process excellence. Rather, as computing has evolved to a utility computing model, internally based transaction systems such as ERP software are also becoming utility-like in their scope and purpose. The future of application software has moved to the analytics world and SAP's customers must make that move and move quickly.

It is this sense of urgency and focus around a different business decision-making model that is the burning platform SAP should have discussed more completely at Sapphire 2013. Second, SAP should have laid out a clear roadmap on how businesses will make this transition to a more analytically driven firm. I believe that roadmap would've included significant discussion around rapid change in the IT organization and how software is deployed for many organizations.

SAP has been working on a strategy for several years now to enable all of their customers to move to cloud computing platforms. Through a variety of initiatives, they have attempted to make the transition from on-premises applications and solutions to cloud-based products as painless as possible for their installed base. This part of the story though is merely an aspect of the journey for SAP's customers yet it was a considerable part of the conversation at this year's conference.

SAP 2013 Sapphire 3
All rights reserved - Copyright 2013 - TechVentive, Inc.


To this point, SAP’s  ECC product line (the Enterprise suite of products nee R/3) can now run on cloud environments. The transport mechanism for this is a HANA cloud platform that allows the software’s data calls to go through HANA instead of a relational data base. RDBMS ((Correction - it's SSD (solid state drives) are used instead of RDBMS - see picture I added to bottom of post)) technology will still be used as a persistent store for data but the real power of in-memory processing, particularly for I/O intensive functions (e.g., optimization and algorithmic programs), will supercharge the software ownership experience for these customers.

Copyright 2013 - TechVentive, Inc. - All Rights Reserved


This ECC product can now be moved, relatively painlessly, to a private cloud system, a public cloud like Amazon’s AWS or to SAP’s HANA cloud center.

The SAP center, the subject of a press conference two weeks ago, contains servers, configuration tools, etc. to run essentially all of SAP’s current ECC customer base. Known internally as the petabyte farm, this center has rows of server racks that permit massively parallel computing via 200+ servers and (corrected) 600+ terabyte memory access. Sub-second speed for analytics, financial statement generation, optimization programs, etc. is now possible.

So, for ECC customers, there are fast, low cost options to get your traditional ERP solution into the cloud and to take advantage of the cloud analytics your company will need so that it can maintain competitive parity or gain competitive advantage.  Don’t move and your firm will still be trying to milk a few insights, slowly, from its ERP-only data. Laggards won’t win this scenario.

Copyright 2013 - TechVentive, Inc. - All Rights Reserved


Other SAP customers include acquired SuccessFactors and Ariba customers as well as SAP product lines of BusinessOne, All-in-One and Business ByDesign. SuccessFactors, Ariba and Business ByDesign have been cloud solutions for a long time and support multi-tenancy. These products will now run on the HANA cloud hardware and may see additional architectural changes to bring them more in line with the HANA cloud platform. The remaining products (All-in-One, BusinessOne) can also run in the HANA cloud environment.  Hosted cloud (single-tenant) solutions of these products have existed for years.

Copyright 2013 - TechVentive, Inc. - All Rights Reserved


In effect, all of the SAP product lines now are cloud enabled but some differences do exist.  These include:

  • Not all product lines are multi-tenant and some may never go this way. SAP executives expressed no real product demand to make their ECC suite multi-tenant. 
  • Partners may host some solutions. Third party cloud provisioners may host the HANA cloud environment and some big systems integrators may do so while also creating additional cloud add-on applications for this new environment. SAP is, obviously, offering their HANA environment, too.
  • A number of new, small, entrepreneurs (approx. 400) have built applications on HANA cloud platform technology. Many of these firms created entire solutions in under 3 weeks and have never had an alternate platform.

The bottom line in all of this is:

  • SAP customers need to get off the non-cloud, on-premises versions of their ERP software soon.  The cost to maintain this bygone computing model has reached the end of its useful life for many firms.
  • These customers need to have their ERP data AND third party data accessible via in-memory analytic tools to gain the operational insights that will help them remain competitively relevant and vibrant. Keeping ERP data on fixed disk systems does not provide the speed and reaction that a modern business needs.
  • Business insights gleaned from internal ERP data are facing a diminishing benefits curve. Better, more impactful insights can originate from marrying internal with external data.
  • Traditional ERP reporting tools and architectures were appropriate for smaller volumes of data. To manage the data from machines, video, social networks, etc. a different technology environment is mandated.  Trying to manipulate this big data with ERP data on existing on-premises, traditional IT will not work (or work well).
  • Competition will drive all SAP customers to move to cloud and in-memory solutions relatively soon. It is better to engage in the planning process for this now than find out that a competitor is clocking your firm with fast, nimble market insights your company cannot yet see.  The planning must begin now.




Disclosure: SAP picked up some of my travel and lodging costs for Sapphire.

Editorial standards