SAP HANA Enterprise Cloud: early thoughts

Profile picture for user gonzodaddy By Den Howlett May 7, 2013
Summary:
Grab a coffee. There's a lot to digest. Vishal Sikka, executive board member SAP's infectious enthusiasm for SAP HANA - his little girl - is palpable.

saphana_ent cloud
Grab a coffee. There's a lot to digest.

Vishal Sikka, executive board member SAP's infectious enthusiasm for SAP HANA - his little girl - is palpable. Even when he's suffering from sleep deprivation as he was the other night in a pre-briefing session, conversations are peppered with 'incredible' 'unbelievable' and 'amazing.' I sometimes wonder if even he is astounded by what HANA can do. That kind of enthusiasm and passion is essential for any business. It would not surprise me if Sikka turns out to be SAP's most important sales asset going forward. This from his post on the topic:

I have the privilege to work with an unbelievable team that has worked *tirelessly* to get us to this point.  They are the ones who’ve made this happen, the harbingers of change, the bringers of sunshine, on a cloudy day. J  And as my little girl gets her wings and soars to the clouds and beyond, I want to take a moment to thank them, you know who you are, and to the incomparable HANA team, for making all this happen!  A heartfelt thank you.

So what's all the excitement about?

The announcement

In short, the announcement is the start of a journey that that will see SAP eventually offering a series of deployment options for its whole applications portfolio. Today, the announcement concentrates on SAP's BusinessSuite (ERP and CRM), custom HANA apps and BusinessWarehouse on NetWeaver in a private cloud environment. This is good news for customers who have been wooed by Oracle's promise of Fusion applications deployed any way they choose.

This addresses SAP's need to get its applications operating in real time rather than the batch processes upon which its applications rely. In remarks, Hasso Plattner, co-founder SAP said that SAP HANA Enterprise Cloud allows SAP to get from underneath the tyranny of batch and address the user interface (UI)  topic. This is a telling admission and very good news for users.

Anyone who has worked with SAP applications already knows that UIs have long been a sore point. In some deals, modern UIs win deals, even when functionality is inferior to SAP's offering. How SAP addresses this will be telling. My hope is that SAP drafts in designers who 'get' what modern apps need to look like.

This new offering should mean customers enjoy a lower cost of ownership and much faster time to benefit. Having said that, details are a bit thin on the ground and there are a few disappointments. Despite I attended a private briefing, tapped into the virtual event and also attended another virtual meeting on the day of the announcement, I was left with important unanswered questions.

Four big questions

These were the questions I put to SAP at the time of the event:

  • If SAP doesn't own the data centers then what assurances around the topics of security and governance will SAP provide to customers? If SAP does own data centers then what is the forward investment program?

SAP talked about having seven data centers available to it around the world. It is still not clear who owns what but we have to assume that at an absolute minimum, SAP will be using facilities it acquired when it bought Ariba and SuccessFactors. Even so, customers will want assurances on this point because SAP is effectively asking customers to further lock themselves into the SAP brand. 

  • If Amazon remains a complementary partner then how will pricing work out? Redshift is going up market and Infor already has plans in place.

SAP offers Amazon Web Services as a platform upon which customers and developers can spin up test and development instances. Cusomters and developers I have spoken with like this model. My guess is that SAP is thinking its largest customers will want something SAP assures as part of its contract and so opt for a private cloud option. That has a cost. The question then is to what extent will SAP share its economies of scale with customers?

  • While the vision is clearly expansive, how will SAP solve the integration problems that will allow for frictionless business in and around an SAP world where as much as 60% of apps will be non SAP?

SAP is talking about a truly expansive vision where any apps you care to name will run on the HANA Cloud and database. Sikka went as far as to say he would welcome competitors running their apps on HANA. Magnanimous and audacious for sure. I don't see too many takers any time soon when those same competitors already have long term commitments to existing databases and in-memory technology. Having said that, it will be fun to get reactions from CEOs at NetSuite, Salesforce.com and Workday. The more important question - what will SAP do about integration? Past efforts for some of its own applications have hardly proven successful. If the vision is to be realized then SAP must address this in a way that doesn't impact the performance improvements that SAP is promising. 

  • SAP mentioned a 180 hours transition time. How will SAP persuade partners that this is a fast track solution instead of feeding their addiction to billable hours?

Here, I was thinking about the long standing systems integrator problem that SAP implementation push onto customers. In on-premise deployments, customers are effectively writing blank checks to their implementer. SI's argue that projects start out one way but often end up as something very different. It is no surprise then that, depending on who you believe, time and budget over-runs occur in 50-70 percent of implementations. And guess what? Customers are always at the bad end of it.

Fast track transitions of the kind SAP is offering will make customers sit up but how will SIs react? Looking at the announcement on its face, SAP will take a lucrative part of data center operator/SI revenue. If successful, then IBM and Accenture could easily end up the biggest losers. Bet that these co-opetition partners will be whispering in customers' ears. That's a pinch point that injects disruption into the SAP partner ecosystem that also triggers negotiation.

The multi-tenancy topic

Right now, SAP is not saying too much about how they will manage the cloud environment or whether they will offer some form of multi-tenancy. They are clear however that each instance will be separate. For those not familiar, most SaaS vendors consider multi-tenancy as table stakes. This is because this kind of deployment achieves two important benefits:

  1. Vendors are able to keep operational costs very low.
  2. All customers are upgraded at the same time.

I have heard Plattner make impassioned statements about myths surrounding multi-tenancy but it has never been entirely clear to me what SAP's alternative position looks like and how that stacks up with competitive offerings.

All this might be moot. SAP's real problem is that all its large customers customize their applications rather than configure. In other words they make very deep changes that impact the running code. Attempting to put those customers into a multi-tenant environment is nigh on impossible. It therefore remains an open question as to what happens next.

Final questions

Expectations are high and I can understand if Sikka feels as though the gloss is being tarnished by relentless questions. But when SAP makes these kinds of announcement, there are always many more questions. For example,

  1. When will SAP get its HCM apps into the cloud such that they can co-exist with SuccessFactors?
  2. What are SAP's expectations around numbers of customer moving to SAP HANA Enterprise Cloud?
  3. Beyond the high level announcement, how will SAP articulate benefit to customers - will it only be the hosting element or will it include apps patching (for instance)?
  4. More broadly, what will the economics look like? SAP has said that the more customers use HANA, the more cost effective it becomes. OK - so what does that mean in a managed service center?
  5. Does SAP expect customers to sign up for long term subscriptions or will it offer flexible plans?

SAPPHIRE Now starts next week and it is a sure fire thing that this topic will dominate parts of the conversation among colleagues. Hopefully, SAP will address these and many more questions.

There is a comprehensive FAQ available here (PDF view/download)

Image at top from SAPHANA, featured image from Vishal Sikka post