Can SAP HANA bring real savings? Yes and the numbers are impressive

Den Howlett Profile picture for user gonzodaddy February 3, 2014
43 percent projected savings in one government department using SAP HANA looks impressive. But you have to look at the whole SAP estate to get there.

I don't think anyone will disagree that SAP's HANA marketing has gone stale. Speeds and feeds didn't do it. Talk of a platform hasn't done it - yet. Even having more than 1,100 startups in its HANA funnel hasn't done it. If I mention HANA in analyst company, the collective eyeballs usually roll as colleagues grumble about  HANA being a technology play with few applications behind it. Even news that SAP is putting the Business Suite on HANA draws little more than shrugs and yawns.

Some analysts regularly complain that SAP's ongoing costs are among the highest in enterprise land, that SI's continue to take huge chunks of change out of customers and after 40 years, SAP still draws a bad rap for project failure.

What has been missing is a discussion around total cost of ownership or TCO in the context of SAP HANA.

SAP itself has talked about HANA offering the opportunity to simplify the SAP landscape. In recent times, the company has obliquely referenced a reduction in footprint of 10, 20 or 30x with newer iterations leading to 50x footprint reduction. But what does this mean? Less storage - a thorny issue in its own right - less hardware resources. Another pain point...??

Part of the problem rests in the fact there is little incentive among SIs to do the math necessary to make a solid case for HANA. Why simplify when complexity is your billable hours' timesheets best friend?

One SI has bitten the bullet and undertaken a study on behalf of a large government department that has an SAP estate. They've looked at the WHOLE estate, not just one piece that can be easily picked off, and undertaken a thorough review of what is achievable.

I cannot get into the detail for reasons of confidentiality. What I can say however is that in this particular case, the planned savings are substantial. With HANA including licenses, hardware, project and support, it will cost them $17m over 5 years compared to the current 'as-is' cost of $30 million. That's a 43 percent reduction. How did they get there?

There is a combination of factors in play, not least a renegotiation around the SAP estate and the replacement of proprietary UNIX based systems with x86 boxes running HANA instead of the existing database. In other words, the SI has taken a whole world view of the situation in order to understand, cost out and assess savings well beyond a database replacement.

When viewed objectively, this is a classic case of disrupting the existing model in order to bring in a level of renewal that is being demanded by governments around the world.

Although not quantified at this stage, there should be other tangible business benefits beyond the obvious TCO arising out of this simplification project. According to my sources, the department is viewing this as a stepping stone towards re-imagining reporting requirements in what will be a real time environment. This will open the door for fresh opportunities for SAP to upsell new analytic applications at a later date.

Impressed? As far as I know, this is the first time numbers of this kind have been put into the public domain and while very much futures based, is confidently expressed in the 'stuff' I have seen. We need more cases of this kind to show how it's done and the benefits that accrue.

Endnote: EMC has recently talked about performance improvements of 400 percent in its data retrieval activities. The interesting part about the EMC case is that it makes a good marketing case for its own solutions and those of VMWare alongside HANA.

Disclosure: at time of writing, SAP is a premier partner. It had no hand in this story.

Featured image via Fasttrack

A grey colored placeholder image