Robert Kugel's Analyst Perspectives

SAP Announces Business Suite on HANA

Posted by Robert Kugel on Jan 11, 2013 11:31:24 AM

For the past couple of years I’ve been pointing to the importance of in-memory computing to the future of business applications. It’s an integral part of Ventana Research’s business and finance research agenda for 2013, and it’s one of the core technologies that senior executives should have an appreciation for because it can transform all core business processes, especially those that are analytic in nature.

SAP just announced that it’s SAP Business Suite can now run on its HANA in-memory computing platform. HANA became generally available as a standalone database in mid-2011, and SAP states that it has almost a thousand customers. I have already written about how SAP has taken HANA into finance with new applications that use this technology. In-memory databases and processing use main memory rather than hard drives for data storage, which enables much faster response times. Online transaction processing systems such as Business Suite collect data about accounting entries, sales calls and inventory movements. With disk-based systems, the data created by these transactions winds up in multiple tables and databases. Getting information from these data stores often involves a delay because of the physical process of reading and writing disk-based storage and (especially in larger companies) because of the need to process data in batches. By keeping all of the data in its main, solid-state memory and applying massively parallel processing techniques, HANA can execute queries and perform analyses far faster than disk-based systems; SAP says it can be 10 to 1,000 times faster.

In-memory computing can make the analytical applications associated with Business Suite much more interactive in working with very large data sets, which in turn enables analysts in every part of the business to work faster and smarter. ERP systems in the 1990s evolved from earlier ones created to help manufacturers and other businesses that deal in physical goods to optimally manage their inventories. With disk-based databases, inventory-related calculations can take hours to complete, especially in larger companies. This may not be an issue when things are running smoothly, but it can be problematic if, say, there is a supply chain disruption. With an in-memory system it’s possible to quickly perform analyses of such an incident’s impact on future deliveries, work through alternative allocations based on customer value and calculate the financial impact of each option. Every business can benefit from in-memory computing because, for example, it can transform a monthly budget review into a more collaborative, interactive and forward-looking activity. Instead of focusing mainly on past events, organizations can make changes to forecasts, examine the impact of alternative future actions and immediately see how the changes affect revenues, expenses, cash flow and the balance sheet. Most companies don’t do that already because with systems that use disk storage, it can take minutes, hours, days or even weeks to get answers back from even a straightforward business question.

Companies can deploy HANA on premises or use SAP’s cloud platform as my colleague has already assessed. As with other platform-as-a-service offerings, the latter approach is designed to give organizations the ability to create and deploy scalable applications at a lower cost, and readily support mobile devices.

The press conference held to showcase the announcement highlighted John Deere as an early adopter. That company is considering how it can use SAP Business Suite on HANA to provide users of its farm equipment with a broader set of information-based services. The raw material for such services is the sensor-generated data that these machines routinely collect about engine performance, soil conditions and the weather, to name just three. This is a proven business strategy. Jet engines are routinely monitored in flight to detect patterns and anomalies that require attention when the plane lands. This is possible because of the relatively small number of aero engines in operation at any time, and cost-effective because of the heavy expense associated with aircraft downtime. As the cost of tracking and analyzing sensor-generated data drops and information is available in real time, it becomes increasingly feasible for machinery and device manufacturers to offer monitoring and data services to customers to generate revenue, promote customer loyalty and enhance customer satisfaction.

While highlighting all of the advantages of HANA as the computing platform for Business Suite, SAP was quick to emphasize that customers are free to keep whatever SQL database they currently use, and detailed the ways in which it is attempting to keep the choice of database a non-issue from a technical standpoint.

Applications that use in-memory storage and processing are not new, but the scope and scale of Business Suite and its centrality to running any business make this a noteworthy step in business computing. SAP is offering services that will enable customers to accelerate adoption of HANA. It will offer a rapid-deployment solution designed to enable customers to go live in less than six months, and that includes a full set of preconfigured software, implementation services, training and content for a fixed price.

For the moment, SAP is ahead of its rivals, but it is unlikely to enjoy this lead for long; other vendors have plans to offer in-memory applications. Despite the manifold benefits of in-memory systems, I don’t see these systems generating meaningful incremental demand over the next two years, as companies are risk-averse and will want to evaluate the experience of early adopters. Thereafter, I expect a renaissance in business software driven by in-memory and other technologies as well as a generational shift in the expectations and demands of software users.


Robert Kugel – SVP Research

Topics: Mobile, Predictive Analytics, Real-time, SAP, ERP, Operational Performance Management (OPM), Analytics, Business Analytics, Business Collaboration, Cloud Computing, In-memory, Business Performance Management (BPM), CRM, Customer Performance Management (CPM), finance, Financial Performance Management (FPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Workforce Performance Management (WPM), Social, Business Suite, Financial Performance Management, HANA

Robert Kugel

Written by Robert Kugel

Rob heads up the CFO and business research focusing on the intersection of information technology with the finance organization and business. The financial performance management (FPM) research agenda includes the application of IT to financial process optimization and collaborative systems; control systems and analytics; and advanced budgeting and planning. Prior to joining Ventana Research he was an equity research analyst at several firms including First Albany Corporation, Morgan Stanley, and Drexel Burnham, and a consultant with McKinsey and Company. Rob was an Institutional Investor All-American Team member and on the Wall Street Journal All-Star list. Rob has experience in aerospace and defense, banking, manufacturing and retail and consumer services. Rob earned his BA in Economics/Finance at Hampshire College, an MBA in Finance/Accounting at Columbia University, and is a CFA charter holder.