Thursday 22 December 2011

The Law of the Handicap of a Headstart

In discussions about SAP's new stealth weapon, HANA, I have come to become a wee weary. At SAP Inside Track NL we joked about it:

@jonerp @dahowlett @ragtag @applebyj like we said at #sitNL "When lost for words, just end your sentence with HANA and you'll be fine"

What is HANA? In short, it uses SSD storage combined with a lot of in-memory to speed up results. SAP's claim is 3600 times faster results achieved with SAP HANA 1.0 with one 4-way, 8 core server (2.27 GHz clock speed) with 0.5 TB of Main Memory, 2 TB of SSD storage, 1Gb Ethernet running on an open source operating system.

Ain't that nice? It really is. But - at the moment all talk is about HANA, and not much else (well there was this minor acquisition of some HR software maker). Is it so new then? No, absolutely not. Oracle used shared memory in the last decade, and Sybase - the company SAP acquired in 2010) supported Gigabytes of memory back in 2001 with their ASE 12.5 release and theoretical Exabytes on their 64-bit version:

So, what's the big deal? Well maybe there is no big deal, or it only exists in the eyes of SAP people?

Regardless of opinions on that, let me make one point in this post: if SAP uses HANA to HANA-ise the vast majority of its on-premise stuff, it will be digging its own grave

I can see how dramatically increasing existing performance can offer a competitive advantage over the threat that Cloud forms (when I say Cloud, I always mean SaaS, given my background in Information Systems) but Cloud is more about speedy delivery of new functionality that SAP is certainly not capable of.
I can see how dramatically increasing existing performance can offer a competitive advantage to clients, over their competitors, but then there's still that ability to execute that's needed - but there will be plenty of business cases for superfast BI

But supersizing SAP all across the lines, or even a minor majority, will make them fat and lazy and seriously put them in a backwards position. If HANA is indeed this marvellous superb invention that no one can compete with, then they can - and will feel a great urge to - lay back in the next 5 years, casually raking in the money by the billions. Work hard on Cloud? Meh. Mobile? Pah - too complicated to fit onto SAP.
And why work hard when the sun is shining and everyone is smiling?

SAP doesn't need a homecoming queen at this moment, it needs a firm kick in the butt: their world is dramatically going to change and their on-premise will be 25% less what it is now, in 2020. The monolith days are over, the Borg have been stopped, and there is one thing that is apparent: after trying for a decade, SAP will never be able to replace all or even the majority of IT in an enterprise

So, it needs to work hard at integration - very, very hard, given its current state. SAP Netweaver gateway? Slightly better but so very complicated, limited, and hard-coupled. Based on REST and Open Data? here we go again, reinventing the wheels, making bilateral point-to-point interfaces.
Rumour has it every 2 years or so that SAP will buy TIBCO, but what it really should do is pay them a visit and open their ears. SAP should stop reinventing new ways to integrate every few months, and start writing down a strategy and live up to it

Also, SAP needs to work hard at Cloud. Every next new functionality customers want and ask for, will be developed in the Cloud - simply because that takes a few weeks or months, and not years. SAP is looking at a future where they stand in the corner while everybody else is invited to dance.
Please explain to me how it is not a solid possibility that SAP will not sell any new functionality starting from now, simply because others will have offered it to clients way earlier, oh and cheaper?

Talk about cheap: mobile applications are created on the fly, and also threatening to take a piece of the pie. Not saying that clients will choose between ERP and mobile, but being able to "mobilise" an app will also increasingly weigh in decision-making.
And in the meantime, SAP has SuccessFactors and that will pose new problems as well

So, SAP's ways are being threatened from various sides. Back home, state of affairs is still being measured by revenue, profit and earnings per share - basically. But, if you look at revenue and profit per employee for SAP, revenue is exactly the same as it was 7 years ago, while profit declined with 20%

In the light of all this, SAP will be tempted to use HANA to keep up their figures, and steal a base for the coming years. But if they ignore and don't work on their real problems in the meantime, one day they'll wake up and realise they've lost

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