It has been a privilege to bring to market a transformative platform like SAP HANA and witness its massive and real growth. The results are not hype as one of the financial analysts has stated, but a direct result of the unbelievable demand and customer value we see. Here is my point of view.
While most of the industry was chasing trends like big data on database architectures that are either quite outdated, or only partially serve the needs of modern data processing, SAP was setting its own trend by fundamentally transforming data processing with SAP HANA. From June 2011 to Dec 2012, in 18 short months, it had over a 1000+ customers and EUR 550M+ in revenue to become the fastest growing product in SAP history. Here are my thoughts on why I think it’s a real success and why Geoffrey Moore has said that SAP HANA has crossed the chasm that many technologies fail to cross.
1) It Has Disrupted The Existing Database Market
SAP HANA was a fundamental change from the 30 year status quo in the database market. We challenged all the traditional divides that existed in enterprise software such as - between structured and unstructured data, between transactions and analytics and even between databases and application servers - all at once. We brought to market a new database that was completely in-memory (vs. disk), columnar (vs. row), massively parallel / scalable (vs. single node) and most importantly simpler (no aggregates or tuning) to run than competing databases in the market. We could simultaneously do deep analysis while capturing fresh transactions, with interactive speeds that kept pace with the human brain and did it across a broad number of data types. Most competitors are still struggling to provide an answer to SAP HANA and we have had the first mover advantage for the last 2 years in the market. It provides a significant jump in performance, with an average customer running their processes 100-1000x faster and 20+ of them more than 10,000x faster than before. This step jump in performance is the core reason why SAP HANA has seen the steep growth in adoption across a wide range of use cases.
2) It Is Building a New customer Base for SAP
Savvy CEOs and COOs as well as CTOs/CIOs recognize an innovation when they see one and more importantly they know the competitive edge “velocity” can give to their business. Technology enthusiasts and early adopters flocked to this new technology. The majority of the first 100 customers came from non-traditional use cases, far removed from our traditional application and analytics installed base. I still remember our first go-live customer did real-time ad placement on television based on content and viewer data collected in real-time from millions of digital video recorders and the next one mined customer complaints on medical devices to make sense of fault patterns. We had not only expanded our addressable market to now include databases, but also added new customers to SAP due to HANA. This trend has continued with breakthrough use cases from deep sea drilling, to real-time rerouting of passengers and airline crew to providing retail store associates with 360 view of their loyal customers on an iPad with data mined on SAP HANA. What is interesting about these use cases is that they are standalone SAP HANA implementations on front of the house processes for which lines of businesses are willing to pay to get competitive advantage.
3) Broad-based Adoption Across a Number of Industries
Industries like retail, consumer products and banking typically lead new technology adoption in data management. However, our experience has shown that the adoption of SAP HANA is broad based across 25 industry verticals, including Life Sciences (e.g. Genomics), Mining (e.g. Predictive Maintenance), Automotive (targeting promotions by dealership for instance) and our newest vertical – Sports and Entertainment (player scouting, and fan experience). This shows that the business value of SAP HANA came from use cases that gave our customers the edge in their industry and hence drove the adoption of SAP HANA. Moreover, in many of these engagements – instead of SAP telling our customer what the best practice business process was – we led with design thinking methods to co-create and iterate on use cases that provided breakthrough results providing value to customers and revenue to SAP.
4) Availability Across a Wide Range of Price Points, Partners and Business Models
SAP HANA is available in a very broad range of price points by market segment. For example, for startups and customers working on starter projects we have SAP HANA available at 99 cents / hour on AWS (additional AWS fees apply for infrastructure costs), it’s under $10K for small customers (SAP Business One), its available as a % of application price for SAP applications (very similar price points and business model to other database providers) and also available by size of data in main memory in the 100K – 15 M+ range for platform use cases. It’s available on hardware from 8 different hardware providers from small to large systems that fit every use case in the market. These price points, supportive partner networks and range of business models (direct/indirect/self service) make SAP HANA more widely available than the general perception in the market. For instance, SAP HANA on AWS already has more than 500 customers since launch in 150 days. Another example is the big success of the SAP Startup Focus program. It was launched to work with startups that are creating the next generation of applications without the burden of older generation applications and databases. Today we have 200+ startups in our development accelerator, most of them on use cases outside the traditional SAP applications.
5) Existing SAP Customers Found an Evolutionary Path to Adopt
Disruptive technology does not need to disrupt existing SAP customers. Many early adopters, came for the technology, but found their second, third and fourth use cases on SAP HANA due to its evolutionary path. The early majority, i.e. the next 1000 customers, was pragmatists and wanted to know the map for the “Road to HANA”. SAP HANA’s roadmap provided an incremental path with frequent releases. First, we provided data-marts side by side to existing databases to do real-time analytics, and then we became the primary database underneath our data warehouse and then finally became the database for both transactional and analytical workloads in one powering real-time business. This path proved to be a way to crawl, walk and run. Enterprise Systems live for long periods of time and SAP had to timelessly renew these landscapes with minimal disruption. Often SAP HANA would be the lynchpin why customers, who have stable SAP application instances would consider buying or upgrading their systems to the latest releases of the product. For example, we believe that a real-time MRP system powered by SAP HANA will fundamentally change how every-thing you see around you, from the clothes we wear to the cars we drive and the smartphones we love is manufactured, shipped and purchased. SAP applications run 70% of the world trade, imagine impacting world commerce and reducing costs at that scale if customers can adopt this technology.
SAP HANA is the cornerstone of SAP’s innovation agenda and the heart of our platform. It is a platform upon which a universe of next-generation applications will be built, some by SAP itself, some by startups and by an ecosystem of customers’ own IT teams, independent software vendors and systems integrators. The value of the platform is driven by the breakthrough technology it provides, the new use cases it makes possible across a broad range of industries that were not fathomable before and existing customers who can now non-disruptively adopt this technology. The financial numbers follow the real growth story of SAP HANA and not the other way round.