Bluefin on SAP HANA Enterprise Cloud
- Summary:
- SAP HANA Enterprise Cloud has many implications for both customers and the broader SAP ecosystem. Making sense of them all in what will be a complex world is not straightforward and we anticipate many twists and turns.
I spent the beginning of my week at the SAP HANA Enterprise Cloud launch; here are my thoughts on the big questions that customers will be asking.
What is the HANA Enterprise Cloud?
Put simply, it is a flexible cloud of in-memory database. You could take anything from a simple analytic application, through to your whole SAP ERP estate, and move it in there. In doing this, you get rid of your existing legacy [Oracle/Microsoft/IBM/
SAP take care of the hardware, provisioning, support and business continuity, and you pay according to how much you consume.
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Why would you want to use HANA Enterprise Cloud?
The average delivery time for a HANA appliance is 6 weeks, which is a lifetime in the fast-paced world we live in. What's more, especially if you need a volume of HANA to prove a test case, this is a lot of equipment to move around and provision. To add to that, in-memory databases require specialist skills to setup the systems and networks to make them run at their best.
SAP believe their customers want to buy HANA as a Service (HaaS) and to let go of all the stuff which SAP will become really good at.
What are the business use cases?
SAP has not majored on this yet and we expect this to become clearer at the business-focused SAPPHIRE event on 14th May. But for me, the obvious use case is to put a business network in the HANA Enterprise Cloud.
For instance, General Mills, Kraft Foods and Target are all well-publicized SAP customers.Suppose they supply each other and they run their supply chains on the SAP HANA Enterprise Cloud, and suppose they are connected with the Ariba business network. This means that a demand signal can pass from me, buying a box of Mac and Cheese, right the way down the supply chain, within the blink of an eye. Suppose there is a run on Mac and Cheese. General Mills can increase its production to fix this – meaning they can all hold lower stocks and increase working capital, and reduce stock-outs, increasing sales, and reduce waste, increasing margin.These are all solid use cases that should demonstrate high value
I asked SAP whether they were building out solid use cases of this kind, and whilst I didn’t get a clear response, I firmly believe that they are doing just that.
How many customers are using HANA Enterprise Cloud?
We have been told that there are 60 customers working "with" SAP on the cloud so far ranging from analytic and BI use cases through to SAP's NetWeaver Data Warehouse (BW) and transactional systems like SAP CRM and ERP. It's not entirely clear what this means and how many are live - I'd expect that a lot of these are using it for trials and tests today, but that's to be expected.
My personal sense is that if SAP make this easy to buy and use, a lot of customers will want to use this to test out HANA before making a purchase. When it comes to delivering SAP HANA projects, customers will have HEC as an option for deployment. The uptake will vary by industry, with the consumer industries leading the charge, and more regulated industries like Utilities and Financial Services following later.
What industries does the HANA Enterprise work for?
My sense is that this there will be rapid take-up in the consumer business industries including Manufacturing, Consumer Products and Retail. This isn’t coincidental because SAP has sold most HANA to these industries. The regulated industries like Pharmaceuticals, Utilities, Oil & Gas and Financial Services will be slower to follow because they are risk-averse. But if SAP had a HANA Enterprise Cloud, why wouldn’t Financial Services companies buy it if they had a datacenter 100 yards away from NYSE?
How is HANA Enterprise Cloud licensed?
Details still haven't been published, but it is a Bring Your Own License (BYOL) model. So you pay for your existing HANA license - either per GB, or by paying a % of Software Application Value (the total cost of your SAP purchases) per annum. And then you have a subscription license for HANA Enterprise Cloud based on how many GB of HANA database you need.
I am supposing that this is a flexible contract that allows customers to easily flex up and down the amount of HANA they need, so they can do hardcore analysis for a short period of time, or whatever. I'm not sure how the HANA software license would work in that respect and this is something SAP will need to make clear to customers.
For now at least, we won't see a true PaaS model for HANA and license cannot be bought as a subscription yet. I wonder if SAP are working on attractive finance models for this that allows customers to operationalize the cost?
For now, if you want to buy HEC, you need to contact your SAP account team.
How big is the HANA Enterprise Cloud?
Today we're told there is a total of 750TB of HANA. We get compression between 5:1 and 10:1 depending on workload so that's the equivalent of 4-8PB of regular database. SAP expect to double this by year's end. With the new Intel Ivy Bridge systems that are coming later in the year, the power will double and prices of RAM will continue to slide and so it will really cut the cost for SAP to build out the platform.
For an individual HANA system, the maximum size was unclear. SAP built out a 5TB system in a few minutes during the event, and most high-value HANA scenarios are around this size or less so "big enough" would be my answer.
But really, given the cost of building a farm of this size, the rate of growth will be dictated by customer demand.
Why didn’t SAP acquire a datacenter company like Rackspace?
I asked chairman Hasso Plattner why this was, and he explained that SAP had very large datacenters already – much bigger than a small datacenter company that they might acquire. If they did acquire, he explained, it would be to gain intellectual property and expertise.
SAP outsources a good piece of their hosting to companies like T-Systems. Hosting requires a specific set of skills around systems management, risk and compliance and this currently seems to be missing from SAP’s culture.
Have SAP thought about business continuity, security and scalability?
The short answer is that yes, they have though this out really well. They have software called CloudFrame, which allows virtual provisioning of bare-metal HANA systems which are separate from other customers' systems. High availability, Disaster Recovery and Backups have all been considered. The plan is to make the CIO believe that your in-Memory database is safer with SAP than in his/her own Data Center.
Details on availability of Service Level Agreements have not been made public yet, but I'm going to assume that is a given.
What about all my other non-HANA systems?
The detail of this has yet to be fleshed out, but I was told unequivocally by one marketer that "this is a HANA-only cloud". CTO Vishal Sikka said "other legacy databases are not welcome". I'm personally interested to see how this works out in reality because there are a lot of fringe cases. For instance:
- What about SAP systems that require databases other than HANA? The number of these will reduce over time but are they completely excluded?
- What about peripheral systems like analytics, virtual desktops, services buses, ETL?
- What about my cold store? What if I want to integrate Sybase IQ for cooler data? Or Hadoop?
- What about NLS and Archiving?
- How do Service Level Agreements work when infrastructure is provided by multiple suppliers?
I can only think that SAP has no choice but to embrace some of these if they really want to go big with the HANA Enterprise Cloud. Many customers will want to outsource their landscape, lock stock and barrel. If those deals, when they include HANA, are lucrative, then SAP will go where the money is.
What does this mean to SAP's relationship with other cloud providers?
Someone said to me that they can imagine Jeff Bezos quietly laughing at SAP, thinking they can break into his market with a few HANA servers.
I don't think that in the short term, Amazon will be too upset with SAP, because I'm sure that their existing HANA One system they provide is just a rounding error in their Amazon Web Services revenue. We should also assume that SAP spends millions a month with Amazon for their own services and that they will move this all locally.
But the fact is, no one else has an in-memory database platform that can scale past 64GB so far, so SAP has something which clearly differentiates against the market.
What does this meant to SAP's relationship with its hardware partners?
We could see that there were IBM and HP systems in the HANA cloud. I asked Vishal Sikka, SAP executive board member as to when SAP planned to produce its own yellow/blue HANA systems and his response was intriguing but non-committal - he said he had a vision to build out a system based upon the principles embodies in the 1980s Connection Machine.
My personal opinion is that IBM and HP don't make HANA-optimized systems, but rather they make general-purpose systems which run HANA. If you want to build out a peta-scale farm of in-memory database, then you need every percent of margin you can get and this must mean building dedicated appliances which are designed to be space, heat and power-efficient for HANA. That's what Google, Apple and Facebook do.
What does this mean to SAP's relationship with its Services Partners?
I work for a services partner and what I found most interesting was that on my first day in a customer after the launch. I immediately positioned this as an option for them: they needed to get up and running fast with HANA, they wanted to do a pilot which would be used immediately by the business and they didn’t have the skills or infrastructure in-house to support HANA.
If SAP will allow the Services Partners to play in the HANA Enterprise Cloud – and this remains to be seen – then it can be a great way for customers to get up and running quickly.
Conclusions
SAP has learnt how to run a very high-power press event and they certainly caught Oracle on their toes. The New York Times blogged about this and managed to secure a response from Oracle (which has since been deleted), citing that HANA was “complicated and proprietary and requires hardware shipped from the factory”.
The HANA Enterprise Cloud requires fleshing out, with pricing and more detail. But because HANA is an appliance that requires shipping, making it available on the cloud is at the very least a powerful tool to get customers up and running fast. This is material, because anything that gets in the way of deployments reduces the time-to-value.
At the other end of the spectrum, the Consumer Business use case I described above might just disrupt an industry.
Disclosure: SAP paid my travel and expenses to the event.
Featured image courtesy of ASUGNews
