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”

InformationWeek - - News Analysis - By Brian Pereira

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 Sales­ 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).


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.


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, 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, Sales­ 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”

Atul Pa­tel

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”

Alok Goyal

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”

Neeraj Atha­lye,

Head - Cloud Busi­ness, SAP In­dia

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