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THE BUSINESS VALUE OF SPEED!

Posted by Vishal Sikka in Blog on Aug 5, 2012 10:15:06 PM

Lessons from 10,000X SAP HANA Performance Club

 

SAP HANA is being adopted at an amazing rate, as demonstrated in SAP's strong Q2 results. Then, about a week ago in Beijing at our Sapphire, more than 100k people listened to my keynote live, and there were crowds 10 deep lined up at the HANA "city" to learn about HANA!  As I was walking the show floor, I ran into Patrick Hoo, the CIO of NongFu Spring, a beverage company in China, who gave me an incredible story. He mentioned how with HANA, he was able to achieve an astounding 35% improvement in his company's transportation costs, by getting dramatically better at calculating and planning optimal truck routes, often on-the-fly and within a day, when it used to be a day+ long batch job before.  And I asked him how big a deal it was, and he said that transportation costs are by far the largest costs in his company, taking up 15% of NongFu Spring's revenue!!  And this got me thinking, on the long day flight back, that we have often focused on the breakthrough technological improvements that HANA bring, but not always articulated the business benefits and the end-user empowerment enabled by this technology.

 

So today, I want to focus on this, and share with you how 17 customers have achieved a 10,000+ times performance improvement in their existing business processes, and what this means to their business.

 

To be able to easily comprehend the impact of the 10,000x performance improvement that SAP HANA delivers, consider this: a 10,000x improvement in the typical speed of a snail, moving 1 centimeter in 10 seconds, would allow the snail to compete with world record holder Usain Bolt's sub-10s sprint in the 100 meter dash at the London Olympics! From first hand conversations that I have had with many CIOs that have a high innovator's index (see my last blog titled: Measure of an Innovator: The Innovator’s Index), I have seen this dramatic improvement in performance enable them to change the clock speed of their business, leaving their competitors behind, like snails. They can now do more in less time with fewer resources - dramatically improving their current business processes and powering new business models that may provide a snail versus Usain improvement in revenue and profitability in the future. How? I have categorized these improvements and opportunities in 3 main areas.

 

#1. Real-time Analytics

The early use cases with SAP HANA address a conventional pain point by accelerating analytics, and hence insights, on massive volumes of detailed data. Hence, end users can not only get answers faster (e.g., CO-PA reports that used to take hours can now run within seconds) without disruption, but also are now empowered to ask any question without requiring additional investment of IT's time or resources to pre-define queries, pre-aggregate data into tables or cubes, or to generate indexes and materialized views.  Animal nutrition leader, Provimi, for example speeds up their CO-PA report from 10 hours down to 2.4 seconds with SAP HANA, covering all company codes and 2 years of data. This accelerated performance (15,000x faster analysis and insight) has enabled Provimi to increase profitability as business users can make real-time purchasing decisions for raw materials based on the latest demand forecasts. Similarly, Lenovo has improved reporting performance dramatically cutting down the latency from the time data is entered to the time it is analyzed, thus driving operational excellence in global shipments to meet ever shrinking product lifecycles. Similarly Mitsui in analysis of retail data, Hilti in understanding profitability of leased tools, and SAP IT in 14,000x faster sales pipeline analysis show how speed of analysis can empower decision makers to analyze massive amounts of diverse data sources with trusted fresh information in real-time and to make sound decisions. Effectively, this helps these organizations drive a culture of data driven decisions. It bears mention that this speed is not accomplished by sacrificing completeness of data sets or their pristine value as has often been the technique employed by many in the past.

 

#2. Real-time Business Process

While real-time insights power operational and strategic decisions, sometimes, this same insight can alter business processes leading to decisions that enable much greater scale of savings across the company. Surgutneftegas, the Oil and Gas giant in Russia, enabled an amazing real-time inventory and material management process for 20,000 remote oil wells by delivering the right quantity and type of materials when needed. With SAP HANA, they were able to perform inventory analysis 14,000 times faster to reduce out-of-stock situations - for them this is a mission critical process in Siberia. Similarly, Cornell University Bookstore improved inventory turnover and decreased inventory at hand by using SAP HANA to forecast whether a title will be out-of-stock at any time during the school year. With SAP HANA, the forecasting process was improved by 22,000x (from 10+days to 39 seconds). Additionally, SAP has further enriched this process by leveraging SAP HANA to recommend both optimal stock level and sourcing strategies (old vs. new) with an associated confidence range to maximize margins for Cornell - this improvement was not even considered previously.  ARI, a leader in fleet management services, has leveraged SAP HANA to improve critical roadside assistance to customers and can now provide differentiating value to customers with complex fleet services.  Nongfu Springs, as I described previously, using SAP HANA, reduced the time (from 24 hours down to 3.7 sec) it took to do complex supply chain analysis of bottled water from source to retail locations thus optimizing the business process. Essar, a leader in engineering and construction in India, used SAPHANA to improve its project level profitability by obtaining real-time insights into cost, performance and timeliness of projects across the entire group - from 15+ hours down to 4.8 seconds (an improvement of 11,500x). According to Mr. Ram, CIO of Essar, for the first time IT is ahead of the business and they can now provide new ways on conducting project planning and execution.

 

#3. Real-time Business Models

Empowering people to make the right decisions and improving the business process would make any CFO or COO happy with SAP HANA. However, what really excites CEOs is the ability to rethink their businesses based on the speed that SAP HANA can deliver. Consider the opportunity to rethink the business models within the airline industry with dynamic pricing optimization based on real-time availability of seats and demand, as Emirates is planning with SAP HANA - a process that took 12 hours to calculate the optimal pricing for a fare class, now takes 0.89 Sec in SAP HANA scanning 165M records (48,539x faster).  One of the largest consumer appliance manufacturers in China - by running the credit verification process 15,000 times faster, they will now be able to perform real-time credit checks and approve loans on the spot. Similarly McLaren's CEO envisions being able to predict and transform the outcome of races based on real-time analysis of car sensor data, leveraging historical data with predictive models for a 14,000x faster data analysis - from 5 hours to 1 second. Yodobashi is transforming its customer relationships (loyalty reward calculation) by leveraging a 100,000x faster incentive calculation (from 3 days to 2-3 seconds). This enables Yodobashi to offer personalized offerings while a customer is at a physical store or on its website. Think about the possibilities for Charmer Sunbelt Beverage, that can now  get the right selection of the perfect beverages to the hottest selling store shelves at the right time through real-time Order-to-Cash calculation across 300 KPIs and multiple systems - this used to take 30 days and now takes only 28 seconds (86,000x improvement). Or, consider the potential investment returns for customers of Global Financial Technology (GFT), an investment management software company, that uses SAP HANA to accelerate the quantitative analysis of stock portfolio running  their proprietary  models to calculate the most optimal holding duration that maximizes stock return; they've discovered that using SAP HANA this process can be 10,000 times faster. Think about the social impact that SAP HANA can make when hospitals like Charité can cost-effectively provide personalized healthcare by employing pattern discovery that brings together information from several treatment cases to allow a holistic analysis, thus eliminating the previously time-consuming manual tasks within the process. These examples clearly demonstrate that speed is a fundamental capability enabling new business models and hence delivering new value

and ultimately competitive advantage.

 

Summary

Speed in computing has often come at the cost of limiting data or expending resources to curate it. "Real-time" has always been a notion of a quick response, but in the past we have seldom seen evidence of measurable impact for businesses that would benefit from having a truly real-time approach. Thus, not until now, have businesses experienced resounding business value from speed and real-time response that has not been impacted by subjective decisions about how to use data sets or by latency caused by redundant data layers. With SAP HANA any CIO can dare to dream about delivering on innovative business models achieving higher scores on the innovator's index - not only will they likely see tremendous performance improvement, but also witness the execution of processes previously thought not possible before owing to constraints associated with traditional databases. This renaissance of computing from SAP is well underway, and there is no reason for anyone to be left behind.  A dramatic improvement in business is in our hands, if we choose to challenge ourselves.  Are you ready to stretch your Innovator's index? Have you already seen similar benefits?  If so, or once you have done so, the whole HANA and IT community and I would love to hear your thoughts on this.


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