A No-brainer: the TCO of HANA Cloud Platform vs On-premise

John Appleby

Posted by John Appleby on March 6, 2014

Global Head Of DDM/HANA COEs

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I was fascinated by an article I read earlier this year about UK retailer Marks & Spencer. CIO Darrell Stein claimed that “M&S had wanted to carry out the project within SAP’s much touted Enterprise Cloud for HANA, but found it too expensive”.

Now, SAP has released public pricing for HANA Cloud. So far, it appears to be limited to 1TB in size, Analytic Workloads and doesn’t support mission critical scenarios, but it’s fair to assume that SAP are working on extending this. What fascinated me is just how impressive the TCO is for the HANA Cloud. It’s a no brainer. I took the on-premise pricing from this publicly available presentation.

Let’s look at a simple customer scenario. They have a data mart that they would like to build, and let’s say they need 256GB of HANA per year, growing linearly over 4 years. Let’s assume they can do HANA Platform Edition, or HANA Base Edition in the cloud, because they don’t need advanced engines.

Year HANA Cloud Base HANA Platform
Year 1 $100,740 (256GB) $2,901,150 (1TB)
Year 2 $187,140 (512GB) $638,253 (1TB)
Year 3 $365,940 (1TB) $638,253 (1TB)
Year 4 $365,940 (1TB) $638,253 (1TB)
Total $1,019,760 $4,815,909

This is an extremely simplistic TCO and it doesn’t take into account the operational costs of running HANA on-premise, just the hardware and software cost for a productive system (not including Dev/Test). Those will skew running HANA on-premise even further. It’s also slightly unfair to HANA Platform, because the HANA Cloud has some limitations, but for many scenarios, the customer doesn’t care.

Year HANA Cloud Platform HANA Enterprise
Year 1 $259,140 (256GB) $3,572,784 (1TB)
Year 2 $503,940 (512GB) $786,012 (1TB)
Year 3 $999,540 (1TB) $786,012 (1TB)
Year 4 $999,540 (1TB) $786,012 (1TB)
Total $2,762,160 $5,930,820

This is a very fair comparison and both products have similar capabilities, thought HANA Enterprise includes Data Services and SLT, whilst HANA Cloud Platform includes just Data Services Cloud . And still, HANA in the Cloud is at least half the price of on-premise, not taking into account the cost of supporting the environment.

Final Words

I think there are some questions that remain around how to use HANA Cloud Platform for backup/recovery, how to do High Availability or Disaster Recovery and how to support additional services like BI, Replication. And more importantly how to support more complex systems like SAP BW and Business Suite. This would dramatically increase the applicability of the HANA Cloud.

Two things are important.

First, the entry point for SAP HANA, for complex scenarios, is now just $5k/month for 128GB. This dramatically reduces the entry point, especially for start-ups and business units that don’t have a big budget to get a project started.

And second, the TCO for the HANA Cloud is a no-brainer.

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