Why SAP seems to be sidelining HANA

Big changes are under way at SAP, and HANA's weaknesses may be the root cause

SAP plans to triple its cloud business by 2023, according to CEO Bill McDermott.

In the same interview, McDermott told CNBC that SAP's aim is to more than double its market value from €120 billion to €250-€300 billion, with revenues growing to more than €35 billion in total at the same time. The German software giant is due to publish its first quarter financial results next week, which may provide an inkling of the baseline for these ambitions.

In March, the leaders of the original HANA team were made redundant, along with a number of their development team members

SAP has gone through an eventful few weeks, culminating in the departure of executive board member and president of SAP's cloud business, Robert Enslin. Chief technology officer Bjoern Goerke, head of global services Bernd Leukert and head of product marketing Ken Tsai are other high-profile SAP staff who have left the company recently.

Meanwhile, in March, the leaders of the original HANA team - Thomas Jung and Rich Heilman - were made redundant, along with a number of their development team members (although Reuters has since reported that Jung and Heilman are now staying at the company, albeit in new roles). In total, some 4,400 employees can expect to receive their marching orders, if they haven't already.

So, a major restructuring is under way at Europe's largest technology company.

For SAP to achieve its ambitious goals it will need to do far more than its current strategy of cajoling often reluctant customers into the cloud or onto services based on its HANA database platform. Instead, its goal appears to be transforming itself into a digital platform company - C/4HANA the customer experience oriented CRM suite could be a move in that direction.

"SAP has realised that it needs to shift its strategy and their priorities," analyst Josh Greenbaum of Enterprise Applications Consulting told CMSWire, adding that HANA is no longer a differentiator in the enterprise marketplace.

One part of the problem is the architecture of HANA itself, according to Mathias Golombek, CTO of database firm Exasol. An amalgam of three separate acquisitions (TREX, MaxDB and P*TIME), HANA was hurried out amid great marketing fanfare as a general-purpose database to displace Oracle, he said. However, while it is appropriate for many use cases it fails to scale to big-data type scenarios and its mixed heritage makes it difficult to maintain and optimise.

"It was an awesome story they told the market, but they didn't deliver on 50 per cent of the story. For SAP BW it works pretty well, as the analytical part of the stack, but as a standalone database using it with Tableau or Microstrategy or other BI tools then it doesn't really deliver.

"The primary goal was to [compete with] Oracle underneath SAP BW, but what they did wrong was telling people they are now going into data warehousing and standalone database market, because that's something totally different."

Despite the quality of its development team, SAP has been unable to refactor HANA to suit these use cases, Golombek said, because thousands of customers were already reliant on it and it would be very hard to make the changes backward-compatible.

HANA combines OLTP and OLAP capabilities, with row store and columnar store in the same box, but at the time it was released the market was already starting to move away from the idea of an all-purpose database, towards combining multiple databases each optimised for a particular purpose.

Angela Eager, research director enterprise software and application services at analyst firm TechMarketView, agreed that SAP's former strategy has come to the end of the road.

"With so many multi-modal databases in the market it is hard for a supplier to stand out and SAP's strengths have been applications and business processes," she said.

"HANA is the database behind applications such as S/4HANA and C/4HANA and that's unlikely to change. However, the restructuring around HANA and ABAP [SAP's programming language], coupled with work around SAP Cloud Platform and Cloud Foundry technologies for example, could suggest SAP is opening up to alternate databases and open source platforms as part of its wider cloud strategy."

Golombek also believes SAP will start reducing the emphasis on HANA "hiding it underneath their BW and European solutions and focusing more on the business side."

Edit: 19th April.

Responding to this story a SAP spokesperson said the restructuring "is designed to invest more of our resources in areas where SAP customers tell us they expect us to invest. New SAP HANA innovation is one of those key priority areas."

SAP also sent the following comment from CTO Juergen Mueller:

"The reality is that HANA has been wildly successful for SAP and for our customers with more than 28,000 customers on the SAP HANA platform. Almost all of our SAP applications, including SuccessFactors, make use of HANA now. This turns it into one of the largest-scale, if not THE largest-scale, enterprise application database. Just with SuccessFactors, more than 125 million cloud users are getting the benefit of SAP HANA.

"SAP continues to innovate on SAP HANA, in fact the latest version of SAP HANA (SPS04) was released this month (April 2019) and includes many innovations across the board to deliver even more intelligence, agility and efficiency."

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