- Data Center Knowledge provided coverage of HANA Cloud making SAP simpler.
- We analyze the accuracy of this article.
On June 3, 2014 Data Center Knowledge wrote the article McDermott Bets on HANA-Powered Cloud to Make SAP Simpler.
In this article with the benefit of three years of hindsight, we will evaluate the accuracy of this article.
Is SAP too complex? The CEO keynote message at SAP’s Sapphire Now conference this morning was that the German business software giant was focused on running simple.
The company has been criticized in the past for being too complex. In his keynote, CEO Bill McDermott committed to simplifying the way SAP does things. “There’s a huge chip on my shoulder,” he said. “We chose to fight complexity because no company understands the problem [of] complexity like SAP.”
Cloud is the path SAP has chosen to address the problem of complexity, and the cornerstone of its cloud strategy is HANA, the company’s in-memory computing system.
SAP is Simplifying Things?
This entire setup seems to be to set forth the proposal that SAP is going to simplify things for its customers. However, as a long time SAP consultant with many thousands of hours in SAP over a 20 year period, I can say that SAP develops very difficult software to use. This leads to the highest TCO in each of the categories that SAP offers products. At Brightwork we have the only online TCO calculators in enterprise software, and for each of SAP’s products we have them placed as the highest TCO.
Therefore, SAP may choose to “fight complexity” but they are a strange company to do this, as they are a major source of complexity at their customers.
Secondly, SAP is attempting to move to the cloud because Wall Street is telling them they need to go there, and like most public companies, executive compensation drives strategy at SAP. And doing what Wall Street wants is the best way for them to make the most money.
The HANA Cloud Strategy is to Reduce Complexity?
Thirdly, complexity (reduction) may be the cornerstone of its HANA cloud strategy, but three years later very few companies use HANA in the cloud. So it is not particularly relevant to what customers use.
CEOs want the integrated enterprise, McDermott said. “Eighty percent of companies that move to the cloud save money [and] 2014 is the first year the majority of new workloads will be performed in the cloud. Transition is happening rapidly and SAP is with you every step of the way.”
We don’t know where that figure came from, but companies don’t save 85% if they move to SAP cloud, because in most cases outside of the acquired applications like SuccessFactors or Ariba, SAP offers companies a private cloud, which is not actually cloud. It is hosting.
Secondly, the transition to cloud it not happening rapidly. SAP would like SAP to think this, but still, the vast majority of SAP’s revenue is the on-premises business.
HANA has Big Cloud Business?
SAP cloud powered by HANA is running in 20 data centers and now has 36 million users, running a variety of applications. “You can run your entire enterprise on HANA in the cloud,” said McDermott. HANA integrates all of SAP’s solutions in the cloud.
This sounds exaggerated. One should have to see the individual number breakdown. Bill McDermott is most comfortable operating at 30,000 feet and when questioned, either will pivot to a different (often irrelevant) topic or moves the discussion back up to something ethereal. This tendency is demonstrated in the article Inaccuracies in SAP’s 2017 Q2 Analyst Call.
HANA Removes Redundancy?
“HANA removes redundancy, reduces complexity and simplifies the IT stack,” he said. But it is about more than just a different way to deploy applications businesses have been using in the past. “This enables a new class of applications. We can use HANA to simulate and predict actions of consequence before they actually happen.”
No, this is false. HANA in the cloud or on-premises is one of the major magnifiers of complexity and missed deadlines because it is still an immature database which has compatibility issues and even indirect access liabilities, making it consume a great deal of time in overhead and in IT management. By our estimates, HANA is the highest maintenance database one can purchase (of those available for the same purpose).
Many of those applications are developed by companies other than SAP that use HANA. There are more than 1,500 companies in the HANA startup program, McDermott said. Synerscope, for example, has an application that analyzes transactions looking for fraud and does so on HANA.
This is most likely exaggerated. HANA was sold into companies which were “SAP shops” and HANA has no real footprint outside of gullible SAP customers.
Unverifiable Internal Information from SAP
SAP itself is a 70,000-person company running its entire business on its enterprise cloud. It has reduced its data consumption from 11 terabytes to two in the transition, which McDermott largely attributed to HANA.
There is now away to verify this. SAP is its own customers in this case. Bill McDermott has shown in the past that he will say anything to make an impression, so unverifiable statements should not be listened to.
Free Fiori Apps?
The CEO dedicated some time in his keynote to announce that Fiori, SAP’s collection of about 300 role-based applications for user productivity and personalization, was included for free in maintenance contracts now. If you previously paid, you’ll get a credit (not money back). Fiori apps are for customers using SAP Business Suite on any database and SAP Business Suite powered by SAP HANA.
Fiori has been a major disappointment as is covered in the article What is Actually in the Fiori Box? SAP has habitually exaggerated the uptake on the part of Fiori, and 3 years after this article was written, there are few signs of Fiori on SAP projects.
Also, while Fiori is free, SAP now only develops Fiori apps for HANA. Therefore, it is used as an enticement to get HANA. But HANA is a terrible value, so the fact that apps are free should not motivate companies to dabble in HANA.
It is not a good idea for people that know nothing about SAP to write on SAP because it means the author cannot validate what the proponent (in this case the ever unreliable Bill McDermott) who has a strong motivation to lie about SAP for stock appreciation. Articles like this actually decrease the knowledge on the internet because they communicate false information.
The article receives a 2 out of 10 for accuracy.
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This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.
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How This Book is Structured
This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.
ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.
Break the Bank for ERP?
Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.
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- Chapter 1: Introduction to ERP Software
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- Chapter 7: The High TCO and Low ROI of ERP
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- Chapter 9: How ERP Creates Redundant Systems
- Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
- Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
- Chapter 12: Conclusion