SAP's Transformation: A Work-in-Progress - Part One
By Bill McBeath
on Dec 14, 2010
SAP has had a reputation (especially as painted by their competitors) of being monolithic, painful to implement, difficult to use, hard to upgrade, and just not all that innovative. While some of that perception was valid in the past, that storyline is largely out of date.
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When I was an engineering manager at NEC (early 90s), our company implemented SAP R/3 in 9 months, which I was told at the time was the fastest implementation ever of R/3. As soon as they turned the system on, I immediately stopped receiving my monthly departmental budget reports. It took another 9 months before those started showing up, during which time I was‘flying blind,’ not knowing my spend. And that was just one little corner of the chaos across the company. I also remember being very disappointed in the user interface, which was essentially a graphical version of a command line interface.
That was almost two decades ago, and SAP has come a long, long way since then. However, along the way we’ve seen our share of stories of incredibly expensive, long drawn out implementations, tremendous change management challenges, and expensive difficult upgrades. SAP’s competitors use that image of SAP to position themselves as a nimbler, easier-to-deal with, easier-to-implement, and more affordable alternative. The truth is, SAP has changed a lot, especially in the last half decade or so. This was driven home to me during SAP’s ‘Influencer Summit’ which I attended last week.
The SaaS delivery model has been a challenge for SAP, as we have been writing about for many years. SAP’s Business Suite is architected as an On Premise system, not a multi-tenant single-instance architecture; and trying to convert that code base to a true SaaS architecture would be one of the largest software development efforts ever undertaken. For that reason, it is very unlikely SAP will convert the Business Suite to an On Demand system in the foreseeable future, if ever. That said, SAP has stated that they are committed to having an On Demand offering and hence they launched Business ByDesign solution (a true SaaS platform). CEO Jim Hagemann Snabe said that they are competing head-to-head against other SaaS solutions and winning deals with Business ByDesign.
After many delays, Business ByDesign seems to be making headway. One presentation at the summit was by Greg Dunn, the CFO of Sambazon a $30M company that makes Acai juice. They have 60 US employees, and they outsource their production, warehouse/3PL and other functions. Not having an IT staff, they knew they wanted a SaaS system. Dunn said that they evaluated a number of systems and selected SAP ByDesign because it “. . . did what we needed without customization,” and because SAP was the most forthcoming about what system could and could not do, they helped with workarounds, and “. . . in the end, what they said is what I got.” When asked how long it takes to train a new salesperson on the system, Dunn said, “I set them up, give them access to this report, and walk them through it for 10 minutes or so, and they are ready. They just start using it and don’t call me back.” That doesn’t sound like the old SAP to me.
‘Nimble SAP’ . . . An Oxymoron, or Not?
No doubt SAP is a massive company, with a huge, entrenched installed base and enormous codebase. So there’s no getting around the fact that size makes it hard to turn on a dime and hard to implement things quickly. However, SAP is no longer the monolithic company it once was. The acquisitions in recent years, in particular of BusinessObjects and Sybase, have changed the nature of the company. Teams within Sybase are using agile development techniques. They have 6-8 week development timeframes. Instead of a long roadmap with 18 month release cycles, they are developing in small chunks and getting feedback. They have realized, especially in the world of mobile, that the old model doesn’t work.
Cap-Gemini built a SharePoint-based hiring portal based on Duet (the Microsoft/SAP integrated platform). They said that it took one sixth the normal time to implement this end-to-end lifecycle management application, integrated all the way from the MS Office screens into SharePoint and SAP and back, providing the familiar Office interface integrated with SAP Enterprise core. So, long drawn out development cycles are no longer the norm, at least for parts of the SAP portfolio.
SAP has recently developed ‘Rapid Deployment Solutions’ which provide a predefined scope and set of services at a fixed price, ‘ready to run’ out of the box, often in less than 90 days. They used their experiences with many customers to define and pre-configure the software, with pre-configured content, and step-by-step deployment methodology. For example, the methodology includes a kickoff meeting which comes with a pre-built Microsoft Project plan. And the sandbox deployment process automatically checks whether release requirements are met, and then automatically configures the sandbox—saving a lot of manual labor. The idea is to start fast with a standardized fixed-scope configuration. Then after the customer has gained some value out of the system, they can customize, grow and integrate with other systems as needed.
SAP Rapid Deployment Solutions were launched in September and already have over 50 new customers. Currently there are 15 Rapid Deployment Solutions available; about eight in CRM where time to value is key, as well as SAP in SRM and BCM, including self service procurement, EHS, treasury and risk, spend analytics for suppliers, and a number of others. About twice as many new Rapid Deployment Solutions are planned for release in Q1 to Q3 of 2011.
Openness and Extensibility
An SAP spokesperson at the conference said, “The more open we are, the better it is for our customer. It is about giving customers real choice.” Five years ago, that would have been a hard statement to swallow. But both Sybase and BusinessObjects were designed to work with heterogeneous backend systems (i.e. non-SAP). That is still a key part of their strategy now that they are part of SAP.
SAP’s approach, exemplified by their delivery tag line ‘On Premise, On Demand, On Device,’ is to deliver SAP in a wide variety of formats and platforms—different models for different customers, and make it all work together. For example, the new HANA platform (see below) can be used with R/3.
Vishal Sikka, SAP’s CTO, said that SAP is “. . . at heart a platform company,” with three dimensions of the platform being NetWeaver, BusinessObjects and Sybase. The integration of these is a work in progress that is well under way, but will take more time to complete. Currently there are over 100,000 NetWeaver Platform deployments. The platform is what enables innovation and extension of the core platform—simultaneously being the core of the business and at the same time allowing extensions, to permit unique requirements of customers to be met.
Innovative New Platform Provides Lightening Fast, Highly Scalable Analytics
SAP announced HANA (High-Performance Analytic Appliance), which shipped the week before the summit. SAP collaborated closely with architects at Intel for the past several years, as well as with HP and IBM. This effort required architecting a solution that could split up the queries to run in parallel on multiple processors—a fundamentally different architecture from SAP’s existing applications.
HANA is an in-memory analytic solution running on Intel’s multi-core servers. A single server blade can have up to 2TB of main memory (4TB coming soon) and up to 64 processor cores. The in-memory architecture allows extremely fast queries and analytics. SAP claims that they beat the current benchmark by factor of 20, on hardware that was several dozens of times cheaper for a 200X price performance improvement. They also said that HANA reduces or eliminates the need for many layers of software such as datamarts.
In July, one of SAP’s largest customers said, “We love the idea of HANA,” but let’s try connecting our existing database. They had Retail POS data from about 70 major retailers, such as Walmart, Target, and others, totaling 460 billion records (that’s right, nearly half a trillion records, a staggeringly large database). The test system had 10 Intel blades (HANA only works on Intel processors). Each of the 10 blades had 32 cores, and 512GB of memory—that's a total of 5TB of memory and 320 cores. That system cost $532K. The most complex query the customer could come up with took about 60 seconds to run through all records—most queries took much less time. SAP claims that the technology scales linearly with the number of cores you add (which is not true of all multi-processor-based solutions)—so you can throw more hardware at a problem to run it faster.
At the summit, they did a demo with a 3.2 billion record database. A typical, reasonably complex ‘slice and dice’ query took about 1/100th of a second to complete and the simpler queries were even faster. This is one fast system.
SAP Now Into ‘Real Time Computing’
Once you have enough memory to hold the data, processing can be increased by adding cores (processors). This allows rethinking the design of enterprise applications. In September, SAP challenged a small team to build a new strategic workforce planning application on the HANA platform. It is an HR function with very complicated calculations factoring in the cost of the workforce, location, distribution of skills, organization, etc. This new application was built by the team in 75 days. Now with HANA they are able to do ‘what-if’ planning simulations that were not possible before—like how to redistribute workforces for a new configuration of the business. The HANA stack coexists all the way back to R/3; works with any data. Another HANA application is a replication server which financial companies use to replicate trading data across NY, London, and Tokyo. SAP believes that entirely new applications are possible, which weren’t before, in areas like S&OP, Demand Sensing and Forecasting, Trade Promotion Management, Collaborative Rapid Response, and other areas.
The taglines that SAP used in the presentation were ‘Real Time Computing’ and ‘Why Wait?’ This reminded me of TIBCO’s tagline ‘The Two Second Advantage.’ It seems that SAP is competing more directly with TIBCO now.
Part two of this article will look at some of the other interesting things covered at SAP’s Influencer Summit, including real-time visibility, social media capabilities, mobile applications, and embedded analytics.
To view other articles from this issue of the brief, click here.