SAP’s False Claim About HANA’s Improvement for Supply Chain Planning

ByShaun Snapp

Executive Summary

  • SAP provides case studies claiming their applications will improve if the customer uses HANA.
  • We review one of these claims.

Video Introduction: How to Evaluate the Proposed Benefits of SAP HANA

Text Introduction (Skip if You Watched the Video)

As anyone in SAP knows, HANA has been the most significant SAP marketing point of emphasis for several years. However, much of the information comes from a one-dimensional perspective that is more promotional than focused on enhancing the understanding of how and when HANA is appropriate to be deployed. We have performed the most independent research into HANA and evaluated nearly all of the areas that SAP has proposed about HANA. You will learn how to apply a framework for asking the right questions about HANA.

Notice of Lack of Financial Bias: We have no financial ties to SAP or any other entity mentioned in this article.

  • This is published by a research entity, not some lowbrow entity that is part of the SAP ecosystem. 
  • Second, no one paid for this article to be written, and it is not pretending to inform you while being rigged to sell you software or consulting services. Unlike nearly every other article you will find from Google on this topic, it has had no input from any company's marketing or sales department. As you are reading this article, consider how rare this is. The vast majority of information on the Internet on SAP is provided by SAP, which is filled with false claims and sleazy consulting companies and SAP consultants who will tell any lie for personal benefit. Furthermore, SAP pays off all IT analysts -- who have the same concern for accuracy as SAP. Not one of these entities will disclose their pro-SAP financial bias to their readers. 

A Specific Example of a Claim About HANA for Supply Chain Planning

In addition to providing false information about HANA’s technology capabilities, SAP and SAP consulting companies have provided incorrect information about business benefits. This example will demonstrate how SAP’s claims can be deconstructed.

Here is the quotation from an SAP-sourced blog article:

“Our customers adopted HANA for its ability to deliver significant net new business value.  For example, a customer used HANA as an agile datamart to predict potential out of stock situations during promotional periods by analyzing several millions of rows of point of sale data.  The business benefit of this use case is improved forecast accuracy and more precise replenishment.  For this customer, the POS analysis helped them successfully predict potential out of stock situations thereby, increasing customer satisfaction and revenue.  More importantly they were also able to reduce their replenishment lead time from 5 days to 2 days resulting in lowering inventory levels in their supply chain.  What is it worth to you if you can remove a day’s worth of inventory from your supply chain?  What is the impact on your working capital?  There are numerous examples like the one above across our customer base where HANA was able to unlock significant net new business value.”

This story does not hold up to scrutiny, but let us break it down into specific points:

  • Promotion Planning
  • Promotions Come from Sales/Marketing
  • What Happened to Replenishment Lead Times Again?
  • What Benefits Accrued?

Promotion Planning

The data mart that was created is referred to as promotional forecasting.

Most companies perform promotional forecasting very poorly, but there is little reason to create a data mart to do this because promotion forecasting functionality exists in forecasting applications. I have done significant work in forecasting promotions, and I have a book written on the subject. However, if someone were to propose creating a data mart to perform promotions forecasting, the first question I would as is, “Why.” Applications already exist to manage upgrades, although it is true that neither ECC nor DP is the right tool for the task.

No law states that a company must use SAP applications where there are more suitable applications. Why was this company creating a data mart to review data that is not useful for promotional forecasting when there are so many other tools for the job designed to do this?

Secondly, this type of analysis is not very processing intensive. Even if the company wanted to build a data mart, it would not need an analytical database like HANA.

This is an abysmal example of how to leverage an analytical database.

Promotions Come from Sales/Marketing

Promotions are known within the company — as they are creating the rise (unless the intent here was to determine the promotional effect of competitor promotions — which is unlikely). Previous promotions’ promotional result, which can then be used to create uplifts, is already in the demand history.

How analyzing POS data helped this company determine stock-out likelihoods is extremely difficult to understand.

What Happened to Replenishment Lead Times Again?

Lowering inventory levels in the supply chain does not reduce replenishment lead times. The two don’t have very much to do with one another.

Suppose the supply chain was so filled with inventory, requiring extra trucks to be kept in the warehouse yard such that it interfered with getting product through the supply network, or material was stacked in aisles so that workers could not get through the aisles. In that case, that is a broader issue of incompetence in supply chain operations. This is an SAP resource that is guessing on topics that they don’t understand.

This SAP article has a Brightwork Accuracy Score of 2 out of 10.

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Conclusion

The case studies provided by SAP to show the superiors outcomes of using HANA with SAP applications are normally written by SAP’s marketing department, which has no real authentic understanding of what they are writing about. This case study is another example of this.