The Problems with Diginomica on Steve Lucas on HANA, Oracle, IBM, AWS, and Microsoft

Executive Summary

  • Watch Steve Lucas of SAP confuse the meaning of “magnanimous,” and call out other vendors for greedy.
  • Steve Lucas also states that SAP is all about hosting its applications and even has the broadest cloud portfolio offering.

Introduction

In this article, we will review both an article by Diginomica as well as comments made by Steve Lucas of SAP. This article in Diginomica is a real test of manhood or one’s patience. Steve Lucas repeatedly lies in the article and Diginomica demonstrates its subordination to SAP by allowing him to say anything he likes unchallenged.

Join us on this journey as we analyze this delectable article from Diginomica.

Let the Misleading Quotations Begin!

“Lucas’ vision for SAP centres around two different proposals. Firstly, that SAP’s technology offering is now completely modular (although there are exceptions to this). This means that customers no longer have to buy into a full ‘suite’, they can pick and choose elements of the SAP platform they wish to make use of – whether that’s the new SAP Cloud for Analytics, the HANA Cloud Platform, Vora or SuccessFactors.”

Diginomica simply accepts this but without observing that this is not the way that SAP works on accounts. SAP uses the initial sale of a product to push more and more SAP into an account. In fact, the number of companies that SAP products that do not use the ERP system are small. For example, the companies that use HANA but don’t have SAP’s ERP system is non-existent. SAP is an oligopolistic software company that competes through account control. SAP is as closed a system as there is in enterprise software.

Diginomica just allows this statement from Steve Lucas to slide right by them.

Secondly, the products mentioned by Steve Lucas, SAP Cloud for Analytics, HANA Cloud Platform or Vora are very lightly implemented products with weak futures. HANA Cloud Platform is not particularly useful and is designed by SAP marketing to both cloud wash, and HANA wash other products.

Was HANA Designed for Cloud Washing?

Was HANA Designed for HANA Washing?

Vora is a product that has no reason to exist. It was designed to get HANA to piggyback on the success of Hadoop by co-opting it. This is covered in the article How Accurate is SAP on Vora?

SuccessFactors is also misleading. SuccessFactors stands “alone” because SuccessFactors was an acquisition, and still after over five years after the acquisition, there are many complaints about SuccessFactors’ integration to the rest of ERP.

Overall, this sounds like a line by Steve Lucas is quite deceptive.

A Brave New World of Modular SAP?

“This makes sense in world where buyers are less and less seeing the benefit of going ‘all in’ with one vendor to solve their problems. We see more and more companies picking and choosing cloud products, with lower entry points, that they then themselves attempt to tie together. This is something that Lucas was keen to highlight that SAP recognises. He said:

The pricing for [Cloud for Analytics] in US dollars, starts at $25 per user, per month. That’s incredibly accessible. If you think about the pricing for the HANA Cloud Platform, it starts at a couple hundred dollars per month, for a site. This is achievable, accessible technology.”

This is because Cloud for Analytics is so unsuccessful that SAP is willing to give it away for free virtually. SAP’s software is the most expensive on a TCO basis in every category that Brightwork has calculated. Our online TCO estimators are available in this article.

SAP is Giving Up on Account Control?

“This is a fully modular architecture; you can use any part of this. If all I want to use is Cloud for Analytics and nothing else from SAP, that’s perfectly fine. And it just works. If all I want to use is HANA, that’s fine.”

No that is not fine.

Steve Lucas may want to explain (or Diginomica might want to) that SAP does not work that way. There is no one using Cloud for Analytics and nothing else, or HANA and nothing else. Also, if a customer connects a non-SAP application to HANA, would that be indirect access? How “fine” is SAP with joining non-SAP systems to SAP without asking for more money?

Secondly, SAP is not a modular architecture. SAP offers the most demanding applications to integrate with other applications. In fact, it has been part of SAP’s long-term strategy. SAP first sold companies their ERP system. Then, as they began to develop other products that both connected to the ERP system and could not compete against vendors’ applications, they along with their coalition of the billing promoted the concept that other applications were so difficult to integrate to SAP that the only safe choice was to select SAP to connect to the ERP system. This is why it is ludicrous and entirely dishonest for Steve Lucas to talk about some modular architecture. Steve Lucas is frustrating because is so lacking in knowledge about SAP that its difficult to tell if he is completely ignorant on subjects that he covers or if he is merely lying.

On S/4HANA

“However, he notes that this isn’t entirely true for S/4 (the big gambit). He said:

There’s technically one caveat, the one technology that does not work without HANA is S/4. This is the only interdependency in the architecture.

So in other words, to take advantage of S/4, you need to be running on the HANA platform already. Or to get to S/4, you need to roll out HANA. Or be going in all in with cloud.”

Brightwork Research & Analysis has analyzed and published HANA and S/4HANA in more dimensions than any other entity. We conclude that there is no reason to exclude other database vendors from running under S/4HANA. Both Oracle and IBM and most likely Microsoft have databases ready to be certified by SAP. SAP refuses to certify them to promote the sales of HANA.

The last part of the quote also makes no sense, as SAP has almost no S/4HANA customers in the cloud. Furthermore, there is not much of anything in S/4HANA to take advantage of. Analysis by Paul Coetser has shown that S/4HANA is 95% identical to ECC.

HANA as a Singular Technology Architecture?

“But alongside Lucas’ modular pitch, he also took time to explain the importance of HANA underpinning everything and being a singular technology architecture. He explained that this is important to the future of SAP and its customers because in the past it had wasted time trying to integrate.”

HANA is not a singular technology architecture, and we have spent enough time reading comments from Steve Lucas to know that he would have no way of knowing if it were or were not true. Steve Lucas lacks technical credentials or a technical understanding of databases; we found this in a previous article from Steve Lucas that we analyzed called Analysis of Steve Lucas’ Article on What Oracle Does Not Want You to Know About HANA. In fact, he had not even been with SAP for very long when he made these statements.

Steve came over from an SAP acquisition that had nothing to do with HANA. HANA is made up of many areas that it relies upon to function. It is far more complicated to maintain than Oracle, IBM or Microsoft databases.

“Why HANA? Four or five years ago, the first thought that went through my head was, why does the world need another database?”

It didn’t (still doesn’t). It certainly doesn’t need databases that don’t add anything advantageous to the mix as we covered in the article What is HANA’s Actual Performance? Oracle and IBM and MS have spent a lot of resources emulating SAP and putting column store capabilities into their relational databases, however, at Brightwork Research & Analysis we question how necessary dual table type databases are as we cover in the article How Accurate Was the Bloor Research Article on Oracle?

“We had been building business applications for the past 35 years on other people’s technology stacks. It’s not a secret, we were using IBM’s, we were using Oracle’s, we were using Microsoft’s.”

That is true; it is not a secret.

Steve Lucas is Confused as to the Meaning of the Word Magnanimous

“We came to one magnanimous conclusion: it was too hard, it was too complicated, almost to the point of absurdity, to build a simple business application to create an outcome. It was too hard. We were spending all of our time integrating these various components instead of innovating our customers.”

This is a strange use of the word “magnanimous.” Magnanimous means charitable or altruistic.

Steve appeared to mean “grand,” or “profound.” What could be charitable or altruistic about coming to the conclusion that supporting multiple databases is too hard?

We find it amusing that a top executive at SAP does not know how to use the word magnanimous.

Moving Away from Database Neutrality

SAP only recently moved towards offering HANA, and they only were able to grow the way they did because they offered database platform independence. Furthermore, SAP has revenues of over $20 billion per year. It is difficult to see how continuing to provide support for multiple databases was just too much work for SAP.

“We were confusing horizontal integration, with forward momentum. It’s not the same thing. Integration or tying components together is not the same thing as business innovation. This platform, the HANA platform, really dramatically simplifies that.”

No, it doesn’t simplify anything. HANA is reported as the most complex database to maintain that exists in the relational database space.

Furthermore, SAP had great success while being platform independent. So it was a winning strategy for many years. SAP had plenty of momentum while supporting multiple databases.

“And this singular approach to designing technology (combined with the modular approach to buying in most of the stack) enables customers to run a simpler environment, according to Lucas. Way more so than the likes of IBM or Oracle, he said.”

The evidence is that HANA is higher in maintenance than either IBM or Oracle. We cover this in A Study into SAP HANA’s TCO.

HANA as a Singular Technology Platform

“The HANA platform is a singular technology.”

Again, no it isn’t!

“Whether I’m using Oracle, IBM or Microsoft, I can think of four or five or six technologies that I would need to purchase from them to integrate in order to be able to do the same thing that HANA can do with one product and one copy of the data. That’s a nuance, but a huge difference in terms of your enterprise architecture.”

Once again, HANA has more components than any of these databases. Steve’s argument is shown to be ridiculous particularly when applied to Microsoft SQL Server, which is known as being so low in maintenance that it is often explicitly selected for this reason.

SAP Calls Out Other Vendors for Being Greedy?

“Microsoft, IBM and Oracle, while great companies, with really smart technologies, have every incentive not simplify your architecture. Why would they? Why would Oracle simplify their $10 billion database business into a $2 billion database business? That would be stupid for them to do. But we started out the way you should, which is a singular platform providing a radically different approach to how you build business applications.”

This quote is an absolute hoot, and it is delivered without a trace of irony.

SAP, the vendor with the highest TCO in software and with the most complex software in software — and very well known for having the most complex software — is the company that will reduce costs and simplify? This is covered in the article How to Understand the Declining Upgradeability of SAP Products.

Steve Lucas seems to lack the introspection not to be the pot calling the kettle black.

Ariba Ariba!

“However, Lucas was also keen to highlight the benefits that owning Ariba’s network has on application design for S/4 and the fact that SAP has built out its own data centre infrastructure.”

Ariba has virtually nothing to do with S/4HANA. At the time of Steve’s statements, S/4HANA had almost no go-lives that ran the business. That is SAP was able to trick companies into going live with S/4HANA, but it was an offline system.

Several years later (today) that has not changed much as is covered in the A Study into S/4HANA Implementations.

The number of companies integrating Ariba with S/4HANA in a live environment would be categorized as “the empty set.”

SAP is Really All About Hosting its Own Cloud Applications?

“Lucas said that SAP had no interest in building on the likes of Amazon Web Services (which the likes of Infor have done) because it doesn’t believe that this will cater to people’s data protection requirements.”

If Infor has anything like AWS, that is the first we have heard of it. Most likely Infor can host applications effectively, which SAP (outside of acquired products) does not have.

“There is no enterprise software company that has a business network like Ariba. Oracle, IBM and Microsoft do not have a network where a trillion dollars worth of trade happens on an annual basis. Or a billion dollars worth of trade, frankly. Who has a network like Ariba?”

Yes, that is true.

SAP Has the Broadest Cloud Portfolio Offering?

“None of them. We’re integrating that with our logistics applications, our inventory applications. The nuances are that we have the broadest cloud portfolio offering.”

But Ariba was acquired three years before this quotation was given. Why wasn’t Ariba already integrated into its logistics applications? Is it integrated now?

SAP has some cloud applications, but it’s difficult to see how they have the “broadest cloud portfolio offerings.” That prize would have to go to Salesforce. Although if we are talking about IaaS and PaaS, then the award would go to AWS. If we look by sales, SAP does not make that much revenue off of all of its cloud offerings. So by revenue, SAP is not anywhere close to Salesforce or AWS.

“We could have also said a long time ago that we were going to build this on AWS. It’s cheap. Why not? The reason why not is because of the healthcare laws and the data privacy laws, which are so different country by country. For us really we want to be able to deliver a consistent, safe and secure offering.

We built our own data centres for the HANA Cloud Platform, this is really important. The reason that we have not put the HANA Cloud Platform on something like AWS, is because AWS doesn’t adhere to all the global privacy laws where we operate. We actually own and operate our own data centres. That’s incredibly critical.”

This is……curious because several years later SAP “gave up the ghost” and promoted its multicloud policy, which is where it will promote its products being hosted on AWS and Azure. This is covered in the article How to best Understand SAP’s Multicloud Announcement.

..and then announced a further partnership with Microsoft and Azure which is covered in the article How to Interpret SAP and Microsoft’s 2017 Partnership Agreement.

These announcements contradict everything that Steve Lucas said.

Tapdancing Around On HANA Implementation Numbers

“During a Q&A with Lucas, I also got the opportunity to ask him about how many customers were live on the SAP HANA platform – where I asked for specifics with regard to the individual modules. Here’s what I got told:

First of all I will give you the aggregate number. Across this entire picture, we have 291,000 customers [this includes everything from Ariba, to HCP, to SuccessFactors, to Cloud for Analytics – everything].

In terms of how many are live, we are in the thousands of live HANA customers. It’s an interesting question. We are in a world now where we are approaching 10,000 customers on HANA and thousands of them are live. I almost view the number of live customers for any of these things as irrelevant. Cloud for Analytics we just introduced eight weeks ago and we have 1,200 customers signed up for the trial – are they all live? No they aren’t all live, but this is the kind of demand signal that says to me that says it’s pretty good. The HANA Cloud Platform we have around 2,000 live customers. We introduced the HANA Cloud Platform 18 months ago. I remember when we had 30 developers on the HANA Cloud Platform. We have over 1,000 developers focused on the HANA Cloud Platform. Our customers are doing a variety of things from medical scenarios, to customers that call us up and say they are an auto-manufacturer and they want to give their dealers a simple inventory website.”

How Full of it is Steve Lucas?

Steve Lucas being full of BS comes across in these types of answers. Steve Lucas’ response brings up no less than six questions on our part.

  1. Why would he say that “its an interesting question?”
  2. Why does he start off with the total number of customers that SAP has when the questions are how many HANA customers are live on HANA?
  3. Why does Steve Lucas mention the number of customers of HANA, when the question is how many customers are live on HANA?
  4. Why does Steve Lucas bring up the number of customers who have signed up for a free trial of Cloud for Analytics when the question is how many customers are live on HANA?
  5. The HANA Cloud Platform has nothing to do with HANA, except the name was incorrectly in the product’s name (which now is no longer the case as it has been renamed SAP Cloud Platform).
  6. Why is what scenarios SAP customers are performing being given as an answer to how many customers SAP has live on HANA?

Overall why does Steve Lucas take so many lines of text to answer a simple question? Here is the issue.

  1. Step One: Diginomica: How customers are live on HANA?
  2. Step Two: Steve Lucas: (Insert number)

Diginomica’s Serious Math Issues

“Based on these numbers, by estimates we are then looking at around 4-6% of the current SAP customer base that are currently in a position to move to S/4 (have bought into the HANA platform already).”

Where does Diginomica get that math? SAP claims 291,000 customers. Steve Lucas claimed thousands of customers live on HANA. We can assume this number is in the low thousands (or Steve Lucas would have stated 7000, 8000, etc..). Let us be charitable and set HANA to 3000 live customers. 3000/291,000 is 1%. But are all of these live HANA customers ready to use S/4HANA or is HANA installed below say BW? We ask because the most common applications that are used with HANA is BW.

We could get into more detail, but Diginomica’s math is quite ill-informed. A customer that has purchased merely HANA, but not done anything with it is not “in a position” to move to S/4HANA.

  • There was more from Steve Lucas in this article, but we ran out of patience.
  • Steve Lucas lies a lot and SAP has no consideration for whether its executives either continually lie, or have any idea what they are talking about.

But of course Diginomica finally, after dutifully repeating everything Steve Lucas had to say, with Steve Lucas only himself probably even knowing what he was talking about, gave their conclusion.

The way I see it, there’s nothing wrong with HANA or SAP’s pitch. It makes sense in isolation. But in the context of wider market changes, will buyers agree? I’m not entirely sure.

Wow… is all we can say to that analysis.

Conclusion

Diginomica does not have authors who have an authentic experience in SAP. This, combined with SAP paying Diginomica is why they are such reliable repeaters of SAP’s messaging. This is a perfect example of them serving as a tool of SAP. There was no analysis provided in this article by Diginomica.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

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References

*https://diginomica.com/2015/12/09/saps-steve-lucas-on-why-hana-beats-oracle-ibm-microsoft-and-aws/

https://www.wsj.com/articles/SB10001424052702304019404577420511203619228