Australia has emerged as the fastest adopter of SAP’s HANA real-time technology in Asia. Freya Purnell spoke with Anthony McMahon, senior vice president, database and technology, SAP Asia Pacific Japan, about why Australian customers are making the investment and how they are justifying the value.
SAP HANA has emerged as the fastest-growing product in SAP’s history since it was launched just over 12 months ago – but this is no casual purchase. It has achieved that mantle with just under 600 customers worldwide (as of October), so that provides some indication of the significance of the investment.
SAP’s Anthony McMahon says the maturity of the Australian and New Zealand markets in terms of ERP and analytic technology adoption compared to other parts of Asia has been a key factor in our willingness to venture into the database space with SAP.
“I think there is a certain level of trust and investment that’s come with that, so that the customers are now very open to looking at innovative database platforms from SAP and anything that can help identify and extract more value out of that investment,” McMahon says.
The natural cynicism of Australian customers has also, ironically been an aid in adoption, driving a more relentless focus on generating a business case to be ascribed to any new investment, outside the normal project or maintenance budget. Effectively, they are making SAP work hard for the money.
“We have gone through the exercise of getting a business sponsor and looking at some innovative use cases for different customers, and then they can really scrutinize and be very rigorous on that business value. Once we cross that hurdle, the adoption is very, very fast,” McMahon says.
Organisations from across the full spectrum of SAP HANA are seeing this value – including fast-moving consumer goods, insurance companies, government agencies, retail and utilities – although the use cases typically fall into three broad categories: Business Warehouse acceleration, SAP application acceleration, and customer data mart initiatives.
The speed seekers
Those seeking to optimize the performance of SAP Business Warehouse (BW) and Business Warehouse Accelerator (BWA) are typically driven by a need for speed. While McMahon is quick to point out that some are very happy with the way these applications are performing currently, others are looking for more.
“They are looking for a way to improve and accelerate their systems for some of their analytical applications or their operational reporting that works with BW, and HANA is providing them with levels of performance around the deployment much better than any other database platform solution in the market is offering,” he says.
In this type of use case, the IT barriers to change are fairly low, as long as the business case is there to justify the improvements.
“As they migrate the data from their existing underlying database to HANA, there is no change required to their existing applications and reports they are using out of BW,” McMahon says.
In some cases, this use of HANA is removing barriers that have frustrated companies for many years.
“The CIO of one customer, a large beverage company, said that in eight weeks of deploying BW on HANA, they are now able to get access to information in operational and senior level decision making that they have not been able to produce for 20 years.”
[subhead] The ‘better, faster, stronger’ adopters
With around 25 SAP applications now running natively on HANA, some customers are adopting the technology so they can get access to what are effectively solutions on steroids – such as BusinessObjects Planning and Consolidation (BPC), Cost and Profitability Analysis (COPA), and Contract Accounts Receivable and Payable (FICA).
“What you are seeing is customers getting performance out of those applications that’s now justifying the use case for adoption, or they are willing to migrate to the new HANA instance because of the business value it’s giving them,” McMahon says. “An example could be on BPC, the CFOs are now able to do some month-end closing and planning scenarios that they just didn’t have the window to do at the end of quarter or month.”
The slicers and dicers
The third use case is where organisations are able to build a customer data mart powered by HANA specifically to overcome previous limitations around deep analytic ability, particularly for large data volumes.
“It’s actually a new custom data mart that’s been put in, often between your enterprise data warehouse and analytics tools. These applications might be built specifically for customer segmentation, supply chain visibility or decision support for credit risk scoring in the financial sector,” McMahon says. “Most of those we are seeing are non-SAP customers, using other ERP data.”
Getting more bang for their buck, some customers are adopting all three use cases to justify the HANA investment.
Keeping a low profile
Though more and more Australian and New Zealand customers are adopting HANA, few are willing to speak publicly about their implementations and the expected business value. Companies such as steel fabricator OneSteel, beverage company Frucor, construction equipment manufacturer Komatsu and the Super Cheap Retail Group have all become customers, but there are also adopters at the small to midsize end of the market. Footwear distribution company Aqueo became an early stage ramp-up customer for SAP Business One on HANA, and spare parts distribution company, ANPR has also gone down this path.
“ANPR has been able to get significant advantages around how much inventory they carry, the service that they are delivering to customers, the repeat business and customer management, that they couldn’t experience before they deployed HANA,” McMahon says.
While businesses seeking acceleration benefits are more open about their use of the in-memory technology, where business cases are driven by initiatives to gain competitive advantage, the level of secrecy is much higher.
“Customers are using it for new use cases in the way they might be analyzing their customer base, or changing business processes around decisions making to customer-facing staff instead of market, or taking decisions around capital investment on inventory management, because they can now predict more accurately,” McMahon says.
Building the right partnerships
While some of SAP’s existing BW partners have been quick to get on board with HANA, McMahon acknowledges that there is much more work to be done by SAP on developing the ecosystem for HANA.
“We have probably been overly cautious – we want to make sure that for any of the early projects done by our partners, the experience and the deployment goes perfectly because we really want HANA to deliver on everything that the customer believes it can do, as they have evaluated it,” McMahon says.
“To a certain degree, we have maybe held back some of our partners to make sure that we have got the right migration methodology, the right use case testing, the right project management and then over time will free up some of that IP and build out the ecosystem, because we have to do that if we want to scale. For many customers they want that choice as well – they have got an existing partner that they trust and work with.”
To achieve that scale, gaining the support of the developer, database architect and independent software vendor communitities is also a critical part of the plan for SAP, to encourage further development and innovation on the HANA platform.
“To us it is very important that the industry and many other customer see HANA as a real-time data platform, not just a real-time in-memory database for SAP use cases,” McMahon says. “You can write innovative applications, real-time applications, because all the underlying services you need to deliver that, whatever the data source, whatever the decision support layer that you are using can be done in HANA in real time.”
Though winning the allegiance of these market is outside SAP’s usual oeuvre, McMahon says the company benefits from having brought Sybase, BusinessObjects and Syclo into the fold.
“Those businesses were all about an ecosystem of application developers that was nothing to do with the SAP landscape. So we have people that have done that in the past, we just need to learn from them and make sure our programs drive that,” he says.
With these ambitious plans in play to win over both SAP and non-SAP customers, McMahon is positive that the rapid growth seen in ANZ will continue.
“Look at what some companies have been spending historically in the space and not getting the business value they expect. We have got customers really wanting to work with us on this because they do see this as a way to unlock some of the money that they might have been spending on maintenance or upgrades or duplication of infrastructure and data sets, and turn that into a very nimble, flexible solution like HANA. We don’t need the economy to grow, we just need to redirect some of that spend.”
This article was originally published in Inside SAP magazine Summer edition.
