Changing customer views on HANA at Controlling 2013

controllingphotoWhile the in-memory database wars flared, a gathering of SAP customers weighed in on their HANA views from Controlling 2013 San Diego. This is the conference’s second year – when it comes to HANA, the contrast between the two years was striking.

I got an earful on HANA both in formal presentations and in backchannel conversations with approximately 100 customer participants (125 attendees overall). Obviously 100 customers is not a huge sample size. It’s also important to keep in mind that these are SAP controllers we are talking about.

SAP controllers – a numbers-driven tribe

Most attendees are senior-to-expert in configuring the SAP Controlling module, which spans areas such as Profitability Analysis and Product Costing. Think budgeting, forecasting, business planning/consolidation, and yes, lots of slicing and dicing in Microsoft Excel, and you have a feeling for where this group is coming from.

Since this is the only controlling-focused SAP show, participants covered many geographies. EMEA representation was notable, including representation from SAP’s own controlling leadership in Walldorf and Newtown Square. Company size varied though this is a large enterprise (SAP ERP) dedicated conference.

It’s also good to keep in mind that controlling reporting is often tied to closing periods. Thus the controllers’ real-time reporting needs are not as pressing as you might hear from a group of sales managers. This doesn’t mean controllers can’t benefit from real time data, but if you made a list of in-memory benefits for controllers, real time reporting isn’t likely to be at the top.

On the other hand, once you start talking about being able to dispense with clumsy aggregates and drill down into line item level data to analyze profitability on a customer-by-customer basis, you have their complete attention.

During his presentation on Net Margin Analysis, Julien Delvat of Alta Via Consulting noted that the biggest returns on analytics come when analyzing revenue and cost data (Delvat sent along a PDF link to a Nucleus Research report on return on analytics). This is right in the controllers’ wheelhouse. That means SAP controllers have a continuing interest on the best analytics tools and approaches, whether it’s SAP BI or a specialized third party solution.

Affordable ways to get a better reporting result carry the most weight – though some SAP controllers are involved in complex global projects – often driven by mergers/acquisitions or process standardization – that are the exact opposite of instant gratification. Most SAP controllers support financial users who also have reporting needs but are not as sophisticated in their knowledge of SAP tools and analytics.

SAP controllers on HANA – in a nutshell

Here’s a high level view of what I learned over three days at the show:

  • HANA awareness amongst the SAP customer base is high, though some customers still have not heard of HANA (the work of marketing is never done)
  • Most customers who know about HANA understand it as an in-memory database, not as a platform for building ‘next generation applications.’
  • HANA’s ability to work with big data or pull in external data sources such as sensor data is just beginning to take hold in customers’ minds.
  • Customers understand the BW on HANA use case best. Some have experience developing proof of concepts, including custom HANA projects. All are curious about ERP on HANA but have plenty of questions on benefits and cost.
  • Customers may not be moving forward with HANA but most are moving into evaluation mode in terms of future roadmap and capabilities. Some of these evaluations are still informal tire kicking.
  • There is more interest in technical performance than I expected from this group, though interest in pure performance varies (companies with lighter planning data and less reporting data are less interested in speed increases for their own sake).
  • Customers live on HANA attract plenty of questions and interest from their peers (results/lessons learned/building a use case). There were at least two such customers present here.
  • In some companies, CIOs turn to controllers to assess HANA from a business case perspective. Unless there are critical reporting performance issues, the business case is not proving simple to build, and requires some real effort to move beyond ‘speeds and feeds’.

The backdrop of the aforementioned database wars made me wonder if the SAP customers present were paying attention to Oracle’s in-memory announcements and SAP’s reactions. I found no interest in this kind of vendor blow-by-blow, leading me to tweet: ‘SAP customers here not paying any attention to “in-memory database wars” in media. Focused on their biz problems.’

I got a reasonable response from Solution Architect @shankar1242:

twittercontrolling

I think that’s a fair point. The more in-memory database competition, the better for customer pricing. That doesn’t mean that customers want the blow-by-blow of the keynote barb soap opera, regardless of the wishful thinking of some marketeers. During a lunch conversation, I heard plenty of agreement with my contention that in-memory speeds will become a commodity sooner rather than later. The differentiators will be great apps, savvy industry partners/advisors, easy ‘build your own’ tools and cloud/mobile deployments, and all the other ingredients of a healthy apps ecosystem, complete with a thriving apps marketplace.

Advanced use cases are emerging

So where does that leave SAP controllers and HANA? Today it starts with the CO-PA Accelerator, or BW on HANA – reporting and analytics use cases. The obvious approaches, with improved reporting performance, have limited appeal given the license/hardware costs. Big shops and those with reporting bottlenecks, yes – but beyond those in major performance pain, we’re heading into nice-to-have territory rather than business urgency.

But there are more advanced use cases that resonate. One customer told me about a global rollout that started with improved COPA reporting speeds but then moved into planning, which may sound mundane but is anything but. The planning piece, now live, had good numbers: 12-14 times improved system performance times, but more importantly, a reduction of 30-40 percent in the overall planning process.

The bulk of the planning still happens in Excel, but the intention was never to eliminate the beloved spreadsheets – the goal was to reduce keystrokes and improve the user experience via an Analysis for Office front end. In addition to the hard numbers, the user experience surveys indicated not only improved satisfaction, but increased adoption of the system.

Once speeds start impacting user adoption of strategic functions like business planning, the ‘but HANA is faster’ argument gets more persuasive. But this gain is thanks to careful evaluation of an existing process flow, an out-of-the-box front end and less custom work – plus co-innovation with SAP.

More results from this use case: one region finally abandoned their massive offline spreadsheet ‘legacy’ in favor of this improved online environment. For global companies with tightly managed planning processes, these are good outcomes. But, this kind of HANA story is still on the cutting edge of where most of the customers at this conference were at.

Another popular session was Delvat’s Net Margin Analysis overview. Alta Via advised SAP on the development of this SAP-created RDS solution that is powered by SAP HANA. For those customers who are already on HANA and the CO-PA Accelerator, this is the kind of value-add app that wins handshakes and smiles?

Why? Because it provides a user-friendly way of slicing and dicing the numbers that really count. Figuring out why certain customers are profitable and others are not is a heck of a lot easier with line item access. Generally-available solutions, developed with field experts, are what grabbed the most HANA attention here. The first slide in Delvat’s presentation was revealing for its lack of tech talk:

netmargin

reprinted with express permission of Julien Delvat and Controlling 2013

Framing solutions in terms of a pressing business problem is the win here. As these types of solutions are more readily deployed on the cloud, the price points will be that much more appealing. There wasn’t much discussion of that here, but I would expect much more talk of HANA cloud options at next year’s show.

Final thoughts

For those inside SAP whose mandate is to scale HANA quickly for revenue reasons, the modest amount of live customers and thorny business case questions at events like this has to be concerning. But from a customer viewpoint, I saw a significant change in views on HANA from last year’s show. In 2012, the only customer that could speak to HANA was a customer involved in a proof of concept that was murky and confidential.

This year, we heard from live customers with tangible benefits. SAP’s own employees who attended did an exceptional job of addressing HANA questions in language controllers could understand – without the sales pitch. Though not every aspect of HANA’s potential was well understood – even the predictive capabilities were under-explored here – this was the first time I picked up on a consensus that the eventual move to ERP on HANA was inevitable.

As to the OLTP and OLAP convergence, that was another lunchtime debate without a simple answer. But the conversations reminded me that customers are going through their own business upheavals. Some of the work is mundane (e.g. combining SAP instances post-acquisition) but the Controlling 2013 attendees seemed to grasp that they were not going to get through the next five years heads down in spreadsheets. Agility doesn’t just apply to SAP.

I had a customer ask me about HANA architecture, including external sensor feed data from their wind turbines. That’s the kind of talk that makes the SAP big data evangelists smile. I emceed a pre-conference panel on real-time analytics and was hoping to dig into these issues. Instead,  most of the attendees wanted to grill the SAP panelists about the nitty gritty of HANA performance. SAP has to be happy that customers are broaching the big data issue in SAP product terms.

Finally, I continue to see an urgent need for more HANA startups and more awareness of existing third party HANA solutions. During the final day, I talked with a BW on HANA customer in the utilities industry that felt they had not derived much value from HANA yet (they didn’t have big performance issues in BW when they purchased HANA).

When I showed him the videos Den and I did with Basis Technologies (a HANA startup program member with utilities expertise with a utilities-focused solution), the customer was not only interested, his mind was opened to what HANA might be capable of in a way that he wasn’t before.

Partner-built HANA apps tailored to industries are an indispensable ingredient. SAP realizes this, but there are always questions about where development resources are best applied. I would advocate that significant resources should be invested in the HANA Cloud Platform and startups building on that platform. Now that would lead to some fascinating discussions at next year’s show.

Photo credit: Julien Delvat, Controlling 2013 attendees talking shop

Disclosure: Erp Corp, which funds the Controlling conferences, has been a client for 2.5 years. Erp Corp paid for the bulk of my travel expenses to Controlling 2013 but this blog post was not sponsored by Erp Corp or anyone else. SAP is a premier partner of diginomica as of this writing.

Jon Reed

Jon Reed

Jon Reed has been involved in enterprise communities since 1995, including time spent building ERP recruiting and training firms. These days, Jon is a roving blogger/analyst, and also counsels vendors and startups on go-to-market strategy. He is a diginomica co-founder, Enterprise Irregular, and purveyor of multi-media content. Jon is an advocate for media over marketing; he sees diginomica as a chance to disrupt tech media, with the BS-weary enterprise reader in mind.
Jon Reed

@jonerp

Enterprise Irregular, diginomica co-founder + SAP Mentor who blogs/videocasts on the enterprise, w/ dash of bootstrappin' + media hacks. OK, I rant sometimes.
Jon Reed
  • greg_not_so says:

    dahowlett: .. I live in hope” < somebody will replace it some day and give MSFT run for its money, but the day has not arrived yet

  • dahowlett says:

    greg_not_so I live in hope

  • dahowlett says:

    greg_not_so – swerving sideways, that might then represent a very good use case for some of the last mile apps I was referring to in an earlier post.

  • greg_not_so says:

    dahowlett < premature demise greatly over exaggerated?

  • greg_not_so says:

    dahowlett jonerp < i have a use case or two for spreadsheets: cloud, csv, (OLAP) pivot tables, formulas, and vba. 
    but above all it’s the independence of finance from IT. as long as finance needs to experience the IT implementation life cycles and change controls they will not surrender their autonomy even at the price of doing monthend closes and reconcilations.

  • dahowlett says:

    jonerp – If you talk to the controllers, ask them if they have reviewed this: http://panko.shidler.hawaii.edu/SSR/index.htm
    (That’s a trick question – I’ve been following this research since 1997 ;) )

  • jonerp says:

    dahowlett “in a way, you’ve done their marketing for them – probably without knowing it :)” in some sense that is definitely true. For example I was planning on pushing the pre-conference real time analytics panel well beyond HANA but the customers’ own questions were mostly about HANA. So…. :)
    “They’re called ‘controllers’ for a reason.  That changes if their role includes helping the business but month close is not it. ”
    Fair enough. Off the cuff I’d say a fair percentage have some strategic responsibilities, including global strategic business planning which is a pretty decent HANA use case from what I saw there. Also many of them are caught up in important multi-year rollouts and merger/acquisitions of SAP instances – work most of us think is going away someday but hasn’t yet. Partially because global instance standardization is such an emphasis now. And that means standardizing business process also. The best of these folks work very effectively with business users. 
    Just like anything else some seize the change opportunity and some don’t. As for the spreadsheets, I’ll try to get a controller to chime in on that.

  • dahowlett says:

    pixelbase They kinda do but don’t share

  • pixelbase says:

    dahowlett There appears to b ongoing demand for startups in this area, but why can’t Partners fill that gap. Not sure I understand.

  • dahowlett says:

    jonerp – heh – that’s even more interesting then because in a way, you’ve done their marketing for them – probably without knowing it :)
    On that spreadsheet thing – I am constantly told ‘we can never get rid of them, we have to co-exist’ and yet I have never seen a convincing argument that has any basis in logical sense for keeping them other than for small ad hoc use cases. Yes – they can now be controlled far better than in the past but they still need to be maintained and are almost never documented. Utter madness. 
    I don’t think controllers are the ones to necessarily use HANA powered stuff the way you envisage. They’re called ‘controllers’ for a reason.  That changes if their role includes helping the business but month close is not it.

  • jonerp says:

    dahowlett re: marketing – a rule of the conference is “no marketing.” Interestingly enough the content carries more weight that it essentially becomes the marketing or does the same job. Vendors are present at the conference, though customers remain the vast majority of attendees. However the vendors are challenged/encouraged to join the conversation not with product pitches but with their own subject matter expertise. The cliche about how this approach leads to “high signal conversations” has proven true to this point. And yeah, SAP marketing can learn from this example without question. I know I have. 
    As for the spreadsheet question, I will try to get an attendee to chime in on this thread. I myself was a bit surprised by the degree of acceptance of spreadshseets as status quo, though there are some tools that are making spreadsheets a bit less of a “shadow culture” outside of the system of record. In general the changes underfoot in the enterprise are impacting controllers also. Most of them are aware of it, but change is not easy and you can see disruption ahead. Just as HANA needs to become more strategic so do controllers in their ability to interpret numbers pro-actively. Predictive would be one example on the horizon.

  • jonerp says:

    cliveboulton just for clarity no one from HANA marketing was at the conference. There were service industry companies present as well as manufacturers. Controllers need to become more strategic without question, the better ones are. Better analysis tools can help them there – though that may or may not be HANA. Controlling as an area is important to SAP in terms of HANA, particularly ERP on HANA, which SAP is running internally now.

  • cliveboulton says:

    That penny pinching controllers are getting this much attention from SAP HANA marketing is sad testament to how much slack there is in factories (perhaps why so many Europeans present). When capacity finally tightens HANA will come into its own for ATP and likely catch “Palodorf” flatfooted. When capacity hits 85-90 pct, the “Andy Groves” will move the heavens to have realtime MRP and these controllers can return to their rightful position cranking out reports no one has time to look at.

  • dahowlett says:

    jonerp  – this should be taken by SAP as a masterclass in what real world marketing should be about. Forget all the social claptrap, talk to customers in their own language about their own needs. Better still – let someone else do it for them. 
    But then I do worry about controllers generally – as a past controller mysaelf, I know ‘we’ have a habit of not exactly being in front of the curve. However, the preponderance of spreadsheets in 2013 is terrifying. Have these peeps got any idea of the known error rates in business critical spreads?