How SAP quietly changed strategy for HANA and Oracle

I present to your attention the translation of the article How SAP Has Quietly Changed the Strategy on HANA and Oracle by author Shen Snapp .

What is in this article?
')

• Initial Plan for HANA
• Recent changes to Oracle policy
• Choke on sugary oil from SAP marketing
• Problem in the absence of embarrassment
• As SAP, it underestimates
• Future HANA?
• Who was wrong and who is right?
• Who got it wrong?
• Who figured it out?
• Deloitte, Accenture, IBM, CapGemini, Infosys - all wrong about HANA

Introduction

In this article, we will look at the original SAP plan with HANA, and then discuss the recent unpublished change in policy for Oracle, which says a lot about what SAP has internally realized about HANA and its future.

Initial Plan for HANA

The initial SAP plan for HANA was extremely optimistic. He was defended by Hasso Plattner, and the plan was so extensive that a description of all this would be a separate article. However, the following were included:

• Books: Four books written by Hasso Plattner in the field of working with memory.
• Marketing and PR: Mass marketing and PR for HANA, which must have been one of the biggest efforts and costs in the history of enterprise software.
• Exaggerated Benefits: Offers tremendous benefits to HANA, some of which are devoted to whole articles, when articles exaggerate the benefits of HANA .
• The illusory concept of simplification: the message that because of the simplified model, HANA will actually significantly reduce the complexity of SAP, as well as business processes in projects.
• Creating an artificial S / 4HANA restriction for HANA: here, SAP took its best-selling ERP system, and in the new version, called S / 4HANA, limited it to HANA. This has always been an anti-competitive step, as there was no true technical reason for creating this restriction. But, as usual, the Federal Trade Commission, as well as the European Trade Commission, did not pay attention to this and did not make a statement. The concept was that many customers would migrate to S / 4HANA, and then they would have to buy HANA. But this approach has not yet been developed, as the market acceptance of S / 4HANA was incredibly low, which is discussed in the article “How SAP manages the perception of the number of customers” .
• Penetration and distribution: SAP adopted the following strategy after HANA was acquired in the database layer. SAP has tools for working with all kinds of databases and products that are provided to customers after they have acquired HANA. One of the problems with HANA is that SAP does not disclose to the customer all the components necessary to launch HANA when he buys a copy of HANA. The customer learns about additional products after they have made a purchase. Secondly, SAP has positioned lagging databases, such as SAP IQ, formally Sybase IQ for archiving data for HANA. The argument was that SAP IQ was much better exchanged with HANA, and this, according to plan, would force companies to crowd out third-party databases, which in fact were much better archived, in favor of SQP IQ.

As Oracle penetrated the application layer using its market share in the database, SAP in turn planned to grow (and not acquire) at the database level. Thus, they intended to oust Oracle from "their" accounts. You should be aware that being a third-party software provider, when you sell software to an SAP account, it is considered that you also own this account.

The SAP transition to the database level was based on inaccurate information. Oracle has penetrated the application layer. This is what I am not a fan of for several reasons: because acquisitions lead to concentration of markets, and concentration of markets invariably lead to less competition and blockage. But Oracle did have real applications that offered real value.

Market inefficiency Acquisitions are usually made by companies that dominate the same space. Oracle in databases. SAP in the field of ERP for large companies. Microsoft in operating systems and office suite. These “excess” profits are then often used to buy companies in related areas. However, this leads to lower profits. More than half of Oracle’s profits still come from databases. Three quarters of Microsoft’s profits come from Windows and Office (and not from XBox, phones, etc.). Acquisitions (and even growth in non-core areas) mean a decrease in the efficiency of the enterprise, as the bureaucracy increases, and the additions are less effective than the core. The only company that seems to oppose this rule is Amazon. It seems that Amazon can move in all directions, and be very effective in doing so. They even migrate to an area like AWS, which has a higher profit than the area in which they started (online retail).

Market Concentration: Acquisitions lead to market concentration, and market concentrations invariably lead to less competition and blockage. This lesson should be reviewed by each generation. But Oracle did have real applications that offered real value. Therefore, although I disagree with this, the Federal Trade Commission (which seems to spend most of its time donating donuts) had to approve the massive acquisition of Oracle. This is why purchasing software in most cases is not a good idea for government approval.

Recent Political Changes Regarding Oracle

SAP plans for HANA were so extravagant that they fell into the fantasy category. A few years ago, I worked in a consulting company and attended a meeting at which several SAP men came and were educated at HANA and S / 4HANA. What was organized as an educational presentation was one of the most aggressive marketplaces for HANA and S / 4HANA or any other product that I have ever witnessed.

Choke on sugary oil from SAP marketing

At one point, one of these high-ranking men said that "there will be no innovation in SAP beyond HANA and S / 4HANA."

“There was no innovation in SAP outside of HANA and S / 4HANA.”

This is a ridiculous statement, since it means that no other SAP products will get any development (in SAP, “innovation” is a euphemism for “development”). And, of course, the termination of all development, for all SAP products besides HANA and S / 4HANA, this will be a very bad and very illogical step. However, it is difficult to overestimate the hyperbole that surrounded HANA, and to some extent still surrounds it. HANA held SAP conferences, it took marketing communications from SAP consulting companies, each of which tried to push each other out of HANA. In one consulting company with which I had a contract, the seller was accepted with an amazing HANA transaction pipeline without checking anything out about him. The lust for any HANA expertise was so high that this, but probably other consulting companies, could grab anyone with HANA on their resume and on very favorable terms. On LinkedIn, almost at night, people added HANA not only to their experience with projects. There were HANA solution architects and HANA marketing specialists.

Problem in the absence of embarrassment

There was only one small problem, and it took me several years to figure it out. There was simply no point in HANA. Several years ago, I began to explore HANA on several criteria, because the hype around HANA smelled strange. I remembered too much about the Netweaver marketing program that preceded it. In fact, I compared HANA with Netweaver in an article. SAP's unremitting efforts with HANA paid off?

Information about a database reseller contract between SAP and Oracle (May 30, 2017)

The following document was agreed by SAP and Oracle:

SAP and Oracle have agreed on a long-term expansion of global resellers and support for SAP. For over twenty years, SAP and Oracle have worked together to provide customers with a supported SAP / Oracle environment, SAP applications, and an Oracle database. During this expansion, SAP customers may continue to acquire Oracle licenses from SAP and Oracle to support their SAP business applications, and SAP and Oracle will continue to offer support for the combined Oracle / SAP offer.

This is one of the longest affiliate ads SAP has ever signed. However, SAP sales staff until recently told customers that Oracle support would stop in 2017. This contract between SAP and Oracle changes this.

How is SAP evaluating it?

Here is the entire text for SAUG, the SAP Australian User Group article on the contract.

SAP and Oracle have agreed on a long-term expansion of global resellers and support for SAP. For over twenty years, SAP and Oracle have worked together to provide customers with a supported SAP / Oracle environment, SAP applications, and an Oracle database. During this expansion, SAP customers may continue to acquire Oracle licenses from SAP or Oracle to support their SAP business applications, and SAP and Oracle will continue to offer support for the combined Oracle / SAP offer.

From 2025, SAP will continue to offer integrated support for all Oracle and SAP environments (full time and runtime). SAP will continue its current resale procedure. Oracle Runtime Licenses for the first part of the renewal period until December 31, 2023. Over the past two years of renewal, from January 1, 2024 to December 31, 2025, SAP will sell the Oracle runtime license only to existing Oracle runtime clients.

These are 144 words. One hundred forty-four words about a significant change in the contractual terms, which all speak of significant changes in the SAP HANA policy.

Future HANA?

Here is another problem that SAP has. Without a large database established by HANA, they are at a disadvantage for much more popular databases in terms of the number of people and “communities” using them. My opinion is that SAP exaggerated HANA, hoping to “fake it until you did it” (“fake it until you make it”). But without this growth, the marketing push fades away, and it will become more obvious that HANA is not a fast-growing product, and therefore its inertia has stalled.



Does this look like a growing database? According to DB-Engines, which assesses the popularity of the database, the volume of HANA is reduced by 8 months. Admittedly, SAP is pumping a very large amount of marketing dollars and company energy into promoting HANA, effectively to the detriment of other SAP proposals. This is why the future of HANA doesn't really look good. HANA emerges from the main stream in applications, where it actually adds some reasonable value and now receives a return on SAP exaggerations in comparison with the realities of the real world. IBM and Oracle increasingly disagree with SAP - although both companies have a relationship with SAP and to some extent depend on SAP.

As you may have read in my recent article, SAP had already removed the cream from the top of the coffee when it was sold to BW. After BW, the value proposition becomes much weaker, since HANA is simply a database of analytics that is disguised as something more.

Now SAP is locked in this strategy, but it no longer makes any sense.

I draw your attention to the fact that SAP is already outdated. His new products turned out to be bad, they had a bad history of implementation on accounts, as described in the article "How SAP now works with its customers." It's time to save the ERP system, but stop buying so much from SAP. Our view of this is so emphasized that this is the main theme on the Brightwork home page.

Of course, this is radical for SAP customers. But in reality, nothing SAP has said will happen in terms of the benefits of these new systems other than ERP. This was, on the whole, a massive waste of resources in a failed strategy. But customers who have done this cannot admit a mistake. Interestingly, decision makers are very rarely held accountable for bad decisions.

As I mentioned in my article last year. Other teams in SAP will not want them to be drastically reduced, and then charged the full cost for HANA. This gives HANA guys an unfair share of recognition in the company.

Who was wrong and who is right?

Well, obviously, SAP was one. SAP stated that they will be the world's No. 2 database provider in 2017.

According to DB-Engines,

• They have the 13th most popular database - SAP Adaptive Server.
• They have the 19 most popular database - HANA.
• They have the 49th most popular database - SAP IQ (formerly Sybase IQ) and the 52nd most popular database - SAP SQL Anywhere.

Does this mean place number 2? I need someone really good at math to help me with this. Anyone have a Bill McDermott number? His data is always fairly reliable.

It seems reasonable that customers ask SAP vendors to apologize to them for reporting that SAP will not support Oracle after 2017. It looks pretty unfair, especially after this date has passed.

In many of the articles that followed HANA, I was repeatedly told by people who worked at SAP or at major SAP consulting companies, that HANA would be a huge success, and I simply lack vision. I encountered many discussions, with people who knew little about databases or comparative database projects, but they said that HANA had a future. This is how it works in SAP. When you work in SAP, it is meaningless and loyal to you to support this notion that SAP is the best in everything. And that the mere existence of an SAP product means that this product should be used - because it is SAP. The anxiety of people talking about things they did not understand reached a fever. Once I was condescending to a recruiter talking about how HANA will be so great and that I won’t get it.

Some time ago, I began to notice the pattern in the rhetoric of the people with whom I discussed, what is the topic of the article “How to drop the fact that where you were wrong with regard to HANA”. It described an argumentative style that moved away from the main HANA proposals, when they were challenged, they stated that HANA was “much more” than the database, and then changed the theme of the HANA cloud platform or HANA Studio, etc. SAP simply came up with a number products and imposed on them the name HANA. This created a lot of confusion, but allowed the initiators of HANA to substantially move the topic in other areas and declare that HANA was a “platform.”

Who was wrong?

Hasso Plattner: Hasso was the main driving force behind HANA. Hasso is so rich and powerful in SAP that no one can say no to him. However, Hasso greatly overestimated the benefits that something like HANA would bring to SAP. Hasso really thought he had found the magic pill to give SAP a new life, but he invested heavily in databases at a time when less expensive databases and open source databases were going to undermine the margins and sales of proprietary database vendors. This is what the article says about Accurate is Seeing Alpha on the Decline of SQL? SAP clearly invested in the wrong thing by going to the database, and then displaying such a premium product. Hasso was mistaken in HANA, not only that the market did not respond, as Hasso had predicted, but in most of what Hasso had said about HANA, it was simply wrong.

Bill McDermott: Bill McDermott is more a PR representative for SAP than a CEO. When Bill McDermott speaks, I never get the impression that he doesn't even know what he is talking about. Bill is a great seller, but in essence he presents an explanation of things in such a way that it seems the goal that the listener wants to get can be achieved very simply. For example, Bill told an interviewer with Fortune Magazine that you can do both transactions and Big Data in a single database. However, the HANA connection to Hadoop does not use the same database, does it? For those seeking career advice, you can earn more than $ 120 million a year without doing a lot of work. This is a good dil if you can get it.

Vishal Sikka: Vishal Sikka was for some time the “architect of Khana”, which is somewhat doubtful, given its level in SAP. I analyzed in detail Vishal's statements about HANA and concluded that he widely exaggerates the common cause and benefit of HANA. After reading his comments, I will never listen to Vishal on any topic as long as his name is tied to this topic. Interestingly, Vishal went to Infosys in 2014, which may have been due to reasons unrelated to HANA's progress. However, for those who are generally considered so clever, HANA makes no sense. But in SAP at this level you do what Hasso tells you to do. If HANA was partly his vision, he doesn’t need a PhD in computer science to admit that you don’t put an ERP system on something that is nothing more than an analytical database.

Bluefin Solutions: Bluefin Solutions, more than any other consulting company, went for HANA. They wrote articles, led by John Appleby, that for me, obviously, just copied and pasted from the templates provided to them by SAP. In one article, John Appleby stated that "SAP is completed on Oracle." This is a curious statement as evidence that he provided concerning S / 4HANA. John Appleby should know that SAP is much more than S / 4. Therefore, even if Oracle was completed on S / 4 (which, I think, is not as described in the article “Why should SAP go back to S / 4HANA ), this does not mean that all SAP applications are completed in Oracle. Four and a half years after Appleby made this statement, I wonder if he can guess that most SAP applications are being used as a database today (a hint, this is not HANA)? Therefore, consulting companies that are partners of SAP are unreliable sources of information about SAP. And this is especially true of public statements published in the media. After Appleby was promoted to Bluefin Solutions, Steve Chaflen took on the role of HANA promoter from him Appleby. Not only John Appleby and Bluefin Solutions, but all SAP consulting partners publish inaccurate information about SAP as they compete to see who can be more intensively interested in SAP in exchange for particular attention.

Gartner: Gartner probably gets about $ 100 million from SAP per year. All this is not disclosed. The primary analyst appointed by SAP is Donald Fienberg, who also links Gartner with SAP. This puts Gartner in a bit of a problem area, since there was no line between the analytical work done by Donald Fienberg and his role as the SAP relationship manager for Gartner. Donald Fienberg made repeated inaccurate and promotional statements about HANA, such as the following: “Now SAP can create a database for my transactions and analytics with everything virtual. People wanted to do both in one database for years, but could not do it because of the discrepancy between the two types of data. “These guys (SAP) are the first. This is a good thing. They have from two to five years to everyone else. “Oracle 12c, possessing this ability described by Donald, was released 6 months after writing this article. IBM DB2 Blu (which has the same ability) actually preceded HANA. And Microsoft SQL Server has a column repository index in 2012, so before that, Donald Fienberg made this statement.

Forrester: Forrester paid SAP for the message, which predicted a reduction in total cost of ownership for HANA, which SAP then sold and sold, proving that HANA "reduced total cost of ownership". This deftly changed the forecast to actual. Forrester made a number of inaccurate assumptions in the report, including the use of a runtime license for HANA. This is not a production license, and there was no reason for Forrester to use it except to artificially lower the cost of HANA. This is described in the article How Accurate was Forrester's TCO Study for SAP HANA? (Update from the first version of the article)

ASUG: Regular ASUG has become just the stage for SAP marketing, proving once again that they do not provide any filter about what SAP is saying or doing.

Fortune Magazine: Thanks to a series of what appears to have been paid for by placements, Fortune provided an opportunity for SAP to say whatever it wants in the future. Brightwork will be coming months to share the analysis of these articles, and how they were wrong.

IT leaders who bought HANA: IT leaders who supported the transition to HANA were deceived. Even in the "golden case" of HANA, which moves BW to HANA, there was never a reason for this. SAP customers could stay with Oracle and get a much better database with better performance than HANA at a lower price. I also believe that this applies to DB2 and SQL Server, which can also store data in a column repository, but I just didn’t research technical comparisons, like I have with Oracle, as described in the article, Which is Faster HANA or Oracle 12c . Nevertheless, Bloor Research recently conducted a study that was funded by IBM at that time, and I reviewed it and consider it quite accurate. In this study, which I analyzed in the article “How to Best Understand Bloor's Research on HANA” , and gave him one of the highest estimates of the accuracy of any publication, which I analyzed. These IT managers went around their companies and sent money to the SAP fuss project, which should have been used elsewhere. And this is a lot. I visited companies that needed investments rather badly in abandoned areas and instead decided to use this money to invest in HANA. What a waste of resources!

This is a very truncated list. In addition to people who were wrong, you can name every major consulting company SAP, Accenture, IBM, etc. They all promoted HANA, and they all made mistakes. Their support for HANA was so extensive that a book would be required to analyze all this.

That is why I have often said that if I need false information, I can always find it in a large consulting company.

Who figured it out?

Larry Ellison: Larry Ellison criticizes something reflexively, all that is bad for Oracle. But you must tell him that he made a very correct criticism of HANA. Probably one of his best sayings was in 2015, when he said, “For many years, SAP has offered many tests for its database systems," said Allison. "But when SAP introduced HANA, its database in memory, the company did not use any of their existing tests - "and they had a dozen of them," said Allison. They said they were going to write a completely new benchmark for HANA. "Now call me cynical," he continued, "but I think it was supposed to make it possible for HANA to look good. We let HANA distinguish ourselves, and we decided to run the same exact test on Oracle, and we did it more than twice as fast as they did. ”“ By the way, SAP did not certify our benchmark. We sent it to them ... again and again. And for some reason, they don’t want to certify ... The fact is that the entire SAP cloud works on Oracle and not on HANA. SAP Ariba in the cloud works on Oracle, not on HANA. SAP SuccessFactors in the cloud works on Oracle, but not on hana. SAP Concur runs on Oracle, not HANA. I don’t know what works on HANA, but it’s not [SAP cloud applications]. ” Each of these statements, Larry turned out to be true.SAP, in my opinion, played with benchmarks, because HANA tests for anything other than access to reading are bad. This is something that I checked even with people inside SAP. And, secondly, purchased applications do not go to HANA. Larry is right again.

Peter Goldmacher: The article How Popular is SAP HANA?, I noticed that Peter Goldmacher noted: “In a study note, Cowen analyst Peter Goldmacher made a deep dive into the results of SAP HANA. SAP stated that the annual growth rate of the annual HANA license due to fiscal 2013 is about 120 percent. If this growth rate is correct, Goldmacher noted that "the remaining 90% of SAP's licensed business, applications and business analysts are growing at a combined 2-year CAGR by about 2%, significantly below the category growth rate." Peter was right. As in the case of CRM growth for many years before, SAP simply transferred revenue to HANA from other sources. This is practically the same as SAP did with CRM, starting 15 years ago. SAP disagreed with Peter, releasing a meaningless statement about what percentage of HANA sales were autonomous. Every time HANA has been criticized,SAP justified in the media through a press secretary. And literally, every time I checked what a SAP representative said in defense of HANA, it turned out to be inaccurate.

Brightwork Research & Analysis: We wrote the most comprehensive and detailed criticism of HANA available on the Internet. As more information comes from the fields, it turns out that even we missed the HANA areas of weakness. Our research at HANA is checked on my LinkedIn article page, as well as on the SAP HANA blog (and S / 4HANA) sub-blog .

Conclusion

A huge number of people turned out to be in an erroneous state in relation to HANA. Fatigue HANA struck not only customers, but also SAP. Other groups inside SAP are tired of playing second fiddle to the HANA teams.

Inside SAP, under the brackets you can hear the following, - "you did not hear it from me, but ...". SAP now understands that it cannot come close to the HANA perception they hoped for.

• This is the reason for expanding relationships with Oracle.
• That is why SAP does not want to talk about this topic and why they want it to lie as quietly as possible.

As HANA time comes to a close, in a future article I’ll talk about how SAP will have to be rebuilt at HANA. It will be difficult, as it must be done in such a way as not to offend Hasso Plattner. Hasso needs to be handled very delicately. He should say that his vision was absolutely brilliant, but SAP clients simply did not have the opportunity to see their fantastic long-term advantage.