Quite often, I wonder why there aren’t more people using SAP HANA. Don’t get me wrong, it’s SAP’s fastest ever growing product, it has a run rate of $1bn, there are a ton of developers, partners and appliances, and products and customers. I’ve been asked to do a webinar on why SAP HANA is different and it got me thinking.
Do you think that when Henry Ford created Tin Lizzie, he was thinking “great now people will be able to drop down to the Jersey Shore for the weekend”? I suspect that he may have been that forward thinking. He certainly understood the impact of his innovation:
“If I had asked people what they wanted, they would have said faster horses.”
And this is certainly the case with databases. Oracle asked their customers what they wanted, and they built a faster horse, with Exadata. SAP founder Hasso Plattner took a different approach, and built a car, with SAP HANA. This is the problem: there are many barriers to getting mass adoption of a transformational innovation.
Stables, Stableboys, Ironmongers and Coachmen
There are entire industries that the car industry destroyed, whilst creating an entire new industry. The same is true with the database industry. There is a whole industry of disk storage, database administrators and performance experts, all keeping traditional RDBMS running. SAP HANA doesn’t need expensive high-end disks, DBAs or tuning.
It does however create industries of high-end RAM production and the build of a whole new collection of business applications, which has the capability stimulate a much bigger growth than the industries which will be cannibalized.
Can you imagine driving your 2013 Ford Focus on the roads of the early 1900s? It wouldn’t last long!
The parallel is true with SAP HANA: despite what some people say, SAP HANA is only OK at running existing applications. You can move your existing large-scale ERP onto SAP HANA, but it will only deliver modest benefits out the box. But just like when the roads started to improve in the 1920s and 1930s, you get massive improvements when you start to optimize your application for SAP HANA.
SAP has a “100,000x” club, for customers who have improved process efficiency by at least 100,000x, which I’ve always felt was somewhat missing the point. Put in business terms: you can reduce stock-outs, improve predictions of customer demand, reduce the time to close the books and reduce debtor days. And that’s just the start.
The Horse itself
There are now around 100m horses in the world, with around 27m in Africa alone, which has far fewer cars per capita. There are now far fewer horses in the western world than there were a century ago, and this no doubt slowed the adoption of cars. A typical horse would last 10-12 years of working life, so why buy a car when you have a perfectly well working horse?
Once again the same applies to the database. There are hundreds of thousands of Oracle, IBM DB2 and Microsoft SQL systems out there, all doing their thing. Why would you want to replace them with SAP HANA, when they work – at least until the infrastructure they are on needs replacing.
The opportunity of new industries
We don’t think anything of going to the shopping mall, filling the car full of shopping, going to the movies and filling up with gas on the way home. All of these industries were created by the car, including motels, drive-thrus, Formula-1, and a hundred other industries.
And this is the tough thing – how do you imagine up a new industry? This is known as the second-order effects of technology, which most often happens by accident. Certainly this is true of my experience with SAP HANA – you have to drive the road and take a leap of faith, to see the value. For instance in Capital Markets, you can run an Order Management System which also provides real-time P&L and Risk Management, on SAP HANA. These are the new industries made possible by technology.
Why is SAP HANA the car rather than a faster horse?
This is the hardest question to answer, and it’s one that I feel technology leaders like Vishal Sikka also struggle with. I know that I do, and it is extremely difficult to explain new paradigms in a clear and consistent way. I believe there are three important dimensions: and
First, SAP HANA is an application platform and not a database. It contains a database, and a number of additional engines including text, sentiment and search, mathematics and predictives, spatial and graph, ETL and streaming, plus application and integration services. You can build everything in one place where other platforms would need 10-15 different components and systems.
Second, SAP HANA is very fast, and this means you only need to store information once and then you can present it in any format or aggregation on demand. Because of this, you can use all of the functions above, on the same data set. This causes a dramatic simplification.
Third, because SAP HANA is a very fast platform with a lot of functionality, you build business applications that you couldn’t imagine. As a retailer you can predict product demand based on social sentiment, and automate distribution to reduce stock-outs, based on what is selling right this second and weather data. This is the second-order effect of technology.
I have a genuine sense that like the car, everyone will be using SAP HANA, or a similar in-memory application platform. The simplification that it provides will mean that everyone will have to follow. Right now this is in its infancy and most people using SAP HANA are just accelerating their existing information assets. What will follow in 2014 and 2015 as the roads get built will be incredibly interesting.
I’m not sure that I can claim to explain this perfectly either. I’d love your feedback – I can learn from it.
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