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SAP: No application will be left behind!

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SAP enters a completely new development phase in its history. That became again clear during analyst briefing for PAC at the SAP EMEA database and technology partner event in Barcelona as well as TechED in the USA end of October 2013. 

The marketing of SAP during the recent quarters has been focused completely on Hana. Today, Hana is recognized as an in-memory database capable of replacing traditional relational databases and as database platform supporting system for the SAP application suite. However, SAP wants more – much more. Now, SAP positions Hana as a platform and no longer as a database. Finally, the platform shall be the underlying technology platform for all SAP applications. And SAP is using its technology in-house. The 62.000 employees of SAP work with applications from the business suite and 15.000 employees use the CRM functions, all based on Hana. Additional functions like process integration, predictive functions, geospatial function and the like have been built into supporting engines surrounding the core in-memory database engine. Actually, SAP made its homework and has roughly  an 18 to 24 month time advantage if compared to the competition.

With this, SAP is changing from an application vendor to a platform vendor. This requires a completely new marketing approach. Besides keeping its enterprise customers happy and convince them to move to Hana, SAP needs to communicatively address partners in a completely different way. Until now, SAP was somehow in a 1:1 personal communication   with its partners – dedicated contact persons for large partners like HP or IBM and contact center Partner Edge for smaller Partners – which allowed a tight control of the partner business. Now, as a platform vendor, SAP needs to recruit a far higher number of business partners, especially ISVs to build up a huge developer community. They need to help SAP bringing the Hana message to the market, build applications on top of Hana and, potentially migrate their existing applications from a relational database to Hana. For this purpose, SAP restructured its partner program to become mass partner ready. The result is a program with pretty much industry standard conditions, although it is designed to guarantee low entry barriers for new partners. Also the pricing of participation in the new partner program seems to be moderate. On the one hand side, SAP has 1000 startup companies working on Hana – an impressive statement. On the other hand side, SAP needs to demonstrate to established partners, selling applications successful on other databases, that SAP can generate enough market pull so that the partners make more money if they migrate their application to SAP’s database and that the joint value propositions is more competitive. The interest of the SAP partners and partner prospects is at least there. Now, SAP needs to keep the ball rolling.

It should also be noted that during the last weeks, SAP could demonstrate remarkable attraction for some new partners. There was a Hana partnership with Teradata announced and SAS Institute decided to move its analytic engine to Hana. One should keep in mind that Teradata was never a real friend of SAP because of the competitive situation between the Teradata analytics offerings and SAP BW with related analytics tools from it Business Objects acquisition. Moreover, SAS always favored its own data and file system arguing that it is faster than any relational database. Now, some SAS tools are also offered on Hana. For SAP, these are milestone decisions which should generate followers soon. It could be the basis for a self-expanding strategy. If more such partnership deal could be announced SAP strategy become a self-fulfilling prophecy.

Although everything seems to be perfect, SAP strategy to bet its farm on Hana bears some risk. A final response from the competitors remains to be seen. Oracle is not heading for an in memory data base underlying transactional SAP applications. Microsoft seems to have other problems. At least IBM brings with DB2 BLU a competitive in-memory system to the market that is now in the SAP certification process. But right now, the HANA momentum speaks for SAP and IBM has to invest great effort to head up with SAP HANA. Even more if we take into account that IBM is one of big players to offer SAP HANA appliances. But moving from an application company to a platform company takes more than a couple of happy partners. It requires to keep partners successful with their own customers, build a real community among the partners, and demonstrate the long term advantage of the new technology. Taking a look at the SAP partner ecosystems shows that not all traditional SAP partners are ready to drive the new HANA platform business even more if we take into account the big cloud wave. The vast majority of SAP partners have built their business models on the business applications that SAP has delivered for the last 40 years. Although today partners earn a lot of money on the back of SAP software, HANA as a Plattform and the cloud are going to shake the core of their business models in the very near future. PAC’s recommendation to SAP partners is to reinvent their business models. Applications will not be left behind by SAP, but partners will –  if they are not actively driving their business model – in the new era of IT.

Bottom Line: The framing conditions for SAP have never been better. With Hana, The company has a product that is innovative, “survived” three year of remarkably successful marketing, customers and partners demand the new technology platform, partners are interested and, startups try to use Hana as a foundation for new companies.  – Additionally, the competition seems to struggle with SAP seriousness to win over larger parts of the database and technology market.


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