SAP prepares to tap SMAC opportunity
Here’s how SAP is realigning its entire product portfolio to move its customers from a “system of record” to a “system of engagement” so that they can do “business in the moment”
IT vendors have been closely monitoring business models and processes, and the way executives capture, store, analyze and apply business data. Software products are designed accordingly, strategies are aligned, billions of dollars are spent to acquire companies, and there are heavy investments in R&D. SAP, a maker of enterprise applications, has moved cautiously along the years, making a late move into areas like cloud and mobility. Unlike its competitors, who have been acquiring numerous companies of all sizes, most of SAP’s acquisitions in the mobility and cloud space were made in the last four – five years. And SAP has been picky about the companies it acquires — the major ones being Sybase (mobility), Business Objects (BI), SuccessFactors, and Ariba (cloud). Apart from this, SAP has strategic alliances with large vendors like Microsoft and smaller ones like NetBase. Now in its 40th year of operations, SAP has a huge base of ERP customers (190,000 customers worldwide including 4,900 in India). It also has a base of 2 million developers. SAP wants to move its customers from a “system of record” to a “system of engagement” so that they can do “business in the moment.” And its strategy to integrate its social, mobility, analytics, and cloud offerings (see box ‘Businesses adopt SMAC for faster and accurate decisions’) is the key to achieving this objective.
SAP has a leadership position in ERP, with a 47.20 percent share of the Indian ERP market (IDC). So when competitors like Ramco Systems and Salesforce.com came along and started offering SaaS-based enterprise software, it started thinking about cloud, and eventually brought out its Business ByDesign (on-demand) portfolio. Today, SAP has solutions for on-premise, on-demand (cloud) and on-device (mobility). In fact, SAP’s business is built on five pillars: cloud, mobility, database & technology, analytics, and core business applications. In the first 30 years it focussed only on core business applications. So, it has achieved a lot in the last 10 years. For this story, we report on SAP’s cloud, mobility, and analytics strategy (SMAC).
ANALYTICS, HANA AND ERP
SAP believes the combination of mobility and analytics will be the next killer app in the enterprise. That’s why it spent USD 5.8 billion to acquire Sybase in 2010. Core to its analytics strategy is HANA, an in-memory database appliance that processes records at incredible speed.
Atul Patel, Vice President, APJ, SAP Analytics says, “We just did a benchmark for a 100 terabyte database with 100 billion sales and distribution records — and we ran that on 16 IBM X5 servers costing USD 600,000. We achieved 20 times compression of the database in memory. It took less than a second to do a BW analytics query. Analytics slicing and dicing took less than a second to two seconds.”
Analysts believe HANA will be the game changer for SAP. It will be the centerpiece in the integration of SAP’s on-demand, on-premise, and on-device solutions. However, there was a time when SAP did not own its own database, and its customers had to integrate its ERP with solutions from Oracle. Eventually, SAP created Business Information Warehouse (BW) which combined data warehouse functionality with a business intelligence platform.
Patel informs us that BW is mainly used for reporting, and customers were looking for a solution that extracts selective data from the database (specific views) to create data marts for specific LOBs (line of business) like HR, Sales, Operations, etc.
As SAP did not have all the components in the enterprise applications stack, its customers began to use a mix of solutions from other vendors, including some of their own customized applications. And that generated a lot of non-SAP data, posing another challenge.
“There was a need to combine nonSAP data with SAP data and create an ODS (operational data store), to extract a report. It has also been a practice for businesses to separate its transactional and analytics data — and to have separate databases for each. It was perceived that mixing the two would
impact performance. All this resulted in a number of layers, and now SAP wants to replace all these layers with HANA,” says Patel.
HANA will connect directly with SAP ERP in the back-end, which will further integrate with the mobility and cloud platforms. And this combination will create what SAP calls a “system of engagement” — enabling executives to pull selective data from the transactional data base and do “business in the moment.”
According to SAP, HANA can accept data from legacy databases (non-SAP) and also offers unlimited scaling. It can process both structured and unstructured data. And it offers both OLAP and OLTP capabilities.
Mobile analytics enables one to analyze key metrics and uncover data trends, on-the-go. So, one can instantly share business insights with others. For instance, a retailer will be able to view sales of a particular product for a specific quarter, and then compare the monthly margins for various products. He can also drill down using data from the transactional system in real-time. This is done using real-time analytics from HANA in the backend, running SAP BusinessObjects Mobile.
“People want to see analytics on-the-go, so I think mobile analytics will be a killer application. The mobile analytics solution is available on the app store,” says Patel.
SAP BusinessObjects Mobile presents information from BI or web intelligence reports. It also has the capability to use the information from HANA. For instance, many SAP customers use Crystal Reports and all these scenarios are now available on its mobile analytics platform. So, all Crystal Reports or web intelligence reports built on-premise, are now available on the mobile device.
What’s more, SAP has embedded analytics in ERP. “Customers who buy our ERP solution today also get Business Objects. SAP is offering embedded content — with more than 100 reports, mashups and dashboards created using Business Objects. So, if you are in an ERP screen, you will see a Business Objects element embedded. This is called embedded analytics. In addition, you can use this framework to build extra reports on top of ERP,” informs Patel.
Apart from analytics and BI, SAP also wants to extend certain enterprise functions to the mobile platform. It recently acquired a company called Syclo for solutions that address mobile asset management, field service, inventory management and approvals/ workflow. These will now be integrated with the Sybase Unwired Platform.
SAP is also working closely with
three partners for mobile solutions: Adobe, Appcelerator and Sensor.
But enterprise users also want to build their own applications to enable mobile workers to access enterprise data. For that, SAP has the Sybase Unwired Platform (SUP). It says there are more than 2 million developers who have committed to the platform. Sybase and RIM have been working together for some time to create applications, and now SAP wants to have similar partnerships with Apple and Samsung.
“At the end of 2010 we had just two mobility applications. But at the end of 2011, this number shot up to 150 plus. A bulk of these apps came from partners. When 2 million developers create apps, the power of this platform will be realized. Ever since we acquired Sybase, we have been working very aggressively with partners,” said Alok Goyal, COO, SAP Indian Sub-continent.
There is also the trend of users bringing in their own devices and trying to connect these to enterprise networks. That presents IT with a new set of challenges like securing data and preventing data leakage. What’s more, managing different devices and different mobility platforms (Android, RIM, iOS, Windows Phone, Symbian) is a nightmare for IT managers and CIOs.
SAP has addressed this through Sybase Afaria, a software platform that delivers centralized control of all mobile devices and tablets — including iPhone, iPad, Android and BlackBerry. SAP Afaria offers enterprises the flexibility to deploy on-premise or partner hosted.
“We want to provide the best applications and the best underlying platform for user enterprises. One platform will manage heterogeneous devices — everyone carries a different device, so how do you manage all these different devices in the enterprise in a secure and robust manner? And that’s what SAP Afaria will address,” said Goyal.
SAP CIO Oliver Bussman said SAP has itself been using different mobile devices internally and has tested its Afaria and Unwired platforms.
“We are the second largest user of iPad’s globally with 17,000 iPads used by SAP. We also have 13,000 iPhones deployed. And we have started
Analysts believe HANA, an in-memory database appliance that processes records at incredible speed, will be the game changer for SAP. It will be the centerpiece in the integration of SAP’s on-demand, on-premise, and on-device solutions
deploying different Samsung Android devices. So we have a mobile device agnostic strategy,” said Bussman.
SAP also wants its large base of customers to come and experience its Afaria and Unwired platforms, and to “play” with all the applications. It has latched on to the consumerization of IT trend, and wants to take the same approach as Apple. Prospective or existing Apple customers can walk into an Apple store, use its various products, and explore the features and applications. There is a special section in the Apple store called the Genius Bar, where Apple experts are on hand to address technical queries from users.
SAP is trying to create the same experience and give a ‘consumerlike’ feel for its mobile applications. It recently unveiled a Mobile Solutions Center (MSC) in Mumbai. The MSC is dedicated to help customers experience SAP’s mobile innovations as well as understand how to integrate mobile solutions into their business strategy. It plans to launch more MSCs in other Indian cities, and also in other countries.
Notes from a press release inform that the MSC will connect businesses with SAP mobile industry experts, where they can learn best practices to develop or expand their mobile strategy.
Like the Genius Bar and Apple stores concept, companies or customers visiting the MSC can interact with SAP solutions in the experience zone, where they can gain handson experience of real-time mobile scenarios across industries. And of course, they can play with the wide range of SAP mobile business apps.
CLOUD + SOCIAL
SAP’s Business ByDesign portfolio brought applications that were meant for large enterprises to the SME sector. The move from CAPEX (licensing models) to OPEX (pay-as-you use) is an attractive proposition for SMEs that are unable to make huge investments in software licenses upfront. But SAP insists that its cloud offerings are not meant to replace on-premise applications — rather, on-demand will complement on-premise; a SAP cloud application will pull data from an SAP application on-premise, and make this available to users on the cloud. So, users will have specific views of this data on the cloud, and collaborate on decisions and workflows, using social media interfaces. SAP has also acquired companies like SuccessFactors and Ariba to take its plans for cloud forward.
“We see a lot of uptake for cloud
ERP (OPEX) from the SME sector. It is a TCO value proposition. But with large enterprises, it is an innovation value proposition. Some of our large enterprise customers have chosen our supply chain solution on-premise, but are also looking for a cloudbased reverse auction platform or a cloud sales force automation. So the investment in on-premise is extended to the cloud or mobile platforms,” said Neeraj Athalye, Head - Cloud Business, SAP India.
SAP customers want to collaborate on the decision making process, on the cloud. And that’s where SAP StreamWork, a collaborative decision making software, comes in. It connects to the SAP backend, so you can pull your purchase history or account history from the ERP into a collaborative decision making environment, explains Athalye.
StreamWork is aimed at the “Facebook generation” of users and it allows them to create an activity and add people, who become part of the collaborative discussion. Users will receive an e-mail with a link to the discussion in StreamWork. Users can add files, agenda, tools catalogs etc. The soluition includes time management, coordinating tools, voting, video and discussion tools too. And there are many partner tools embedded like Mind Mapping, ConceptDraw, Box.net etc.
SAP uses StreamWork internally for collaboration among its employees and partners. Records of discussions are stored on the cloud, not on the client. So anyone joining in the discussion later can pick up the history. If the event is captured from start to end, one can audit it in future. So it doesn’t matter if people move on or teams change.
There are iPad and BlackBerry apps available for StreamWork.
But again, analytics will be the killer app for collaboration on the cloud. SAP is reselling a social media analytics solution from NetBase, and is also integrating it with SAP Business Objects.
Predictive analytics is the next thing that customers are demanding. Here’s one scenario how it can be used in the retail industry. Data collected from stores can be used for retail store segmentation analysis. The analysis can be performed in the database in HANA, and also in data sources such as Business Objects Universe and in CSV files. The solution that is used here is SAP Business Objects Predictive Analysis. In addition to the algorithms for predictive analysis the product also includes new data visualization tools.
Until recently SAP was reselling a predictive analytics solution called SPSS. But IBM bought the company in 2009. So SAP either had to acquire a predictive analytics company or build its own solution. It decided to use the IP acquired from Business Objects and created SAP BusinessObjects Predictive Analysis (its BI platform).
“We have a big Business Objects
SAP’s late entry into the predictive analytics market has also allowed it to observe the deficiencies in competing products, such as SPSS, Cognos & SAS, and build these in its own solution — SAP BusinessObjects Predictive Analysis
customer base (of 46,000 customers worldwide) and they are demanding predictive analytics. Secondly, we believe that, with the help of HANA, we can create an in-memory data mining experience,” says Patel.
The solution lets users create new predictive models, do data visualization, and share the results in PML (Predictive Markup Language) with other tools in the market. In addition, SAP has its own models stored in HANA Predictive Analytics Library (PAL), and also those in the open source System R.
SAP is now competing with SPSS, Cognos, SAS and some smaller players in the predictive analytics market. But its late entry into this space has also allowed it to observe the deficiencies in competing products, and build these in its own predictive analytics solution. The large library of predictive models is a case in point.
Patel informs us that SAP has customers like Air Asia in Malaysia using this solution to study the customer experience, and compare this with data from other airlines. Then there are a couple of consumer product companies in Singapore evaluating it. An Australian bank wants to gauge what customers are saying about its products and services, and wants to sign up for this tool.
Look closely at SAP’s proposition and you’ll see that analytics and HANA are the centerpiece to its SMAC strategy. With its large ecosystem of developers and a wide base of SAP ERP users across verticals, SAP is poised to revolutionize the way business is done today. Competitors like Oracle, IBM, EMC, Salesforce.com and Microsoft are keeping a close watch on SAP, and there are smaller competitors like Roambi, Workday and NetSuite. But will prospective customers who have invested in say Oracle switch over to SAP because of the benefit of speed, integrated products and a better user experience? That may be so only with the larger enterprises who benefit from the full spectrum of solutions —the ones who look at transformation in a big way. The CIO of a medium-sized company told us recently that his product margins aren’t large enough to justify the ROIC (return on invested capital) for SAP. He is making do with customized solutions for now. SAP will want to first get such companies on to its on-demand platform. Meanwhile, the battle for SMAC is going to get heated in the next few months and all eyes are on SAP, SAS, EMC, Oracle and IBM.
“With the help of HANA, we can create an in-memory data mining experience for our Business Objects customer base of 46,000 customers worldwide”
Vice-President, APJ, SAP Analytics
“Today, everyone carries a different device to work. SAP Afaria will address the issue of managing different devices in the enterprise in a secure manner”
COO, SAP Indian Sub-continent
“Some of our large enterprise customers have chosen our supply chain solution onpremise, but are also looking for a cloudbased reverse auction platform or a cloud sales force automation”
Head - Cloud Business, SAP India