How a database technology boosts SAP to the world’s third-largest software company
A brief history story of the rise of HANA
This article will introduce how SAP HANA(high-performance analytic appliance), a database technology that boosts SAP’s Business. This is a very personal point of view so some content may not accurate.
Look at the stock of SAP. It rises since 2009 and become the 3rd largest software company. So What happened?
The Age Before HANA
SAP is the №1 in ERP(Enterprise Resources Planning) market. But SAP was also a pure ERP software company that didn’t have database technology.
If a customer wants to implement SAP’s software, They have to choose a database to hold the data from SAP.
The consequence is that SAP’s business was always bundled with some database vendors. (Almost Oracle) The database vendor doesn’t need much effort to get the contract. It’s easy money for them. SAP also wants to have a piece of cake. But it’s not easy to change the game. Because Oracle has a solid dominant position in the database area.
ERP Application has a very long lifecycle. Usually 15–20 years. In the 2000s, SAP’s business slow down by the end of the upgrade projects for their last-gen ERP Application(latest version was made available in 2006.) They need to make a very new cycle that every CEO wants to invest in.
Born of HANA
In 2009’s SIGMOD, One of the most important conferences in the database technology area. Doctor Hasso, the co-founder of SAP gave a talk named A Common Database Approach for OLTP and OLAP Using an In-Memory Column Database.
It was a common sense that OLAP for analytics and OLTP for the transaction. CEOs need a realtime data dashboard to support management decisions. But transferring data from OLTP to OLAP was the bottleneck. It’s difficult to get the data in realtime. Ignore the response of academic, This concept is irresistible for CEOs.
Personally, I think this is a turning point in SAP destiny. 1 year later, in 2010. SAP released the first version of its in-memory database which called HANA. This is a response from Oracle for the very first time.
In 2011, It sounds crazy to store all enterprise data in memory. But this is what SAP introduced about HANA. Hardware for HANA is unaffordable except for giant companies. But the structure of HANA makes it possible that put OLTP and OLAP operation into one database. No ETL Tool but fresh data. Image how fast your monthly report could be outputted and you can check it any time. SAP did some benchmark which shows it only needs 3s for HANA to export a report when Oracle DB need 1 day.
Like Oracle CTO Larry’s prediction. An in-memory database is not easy to use in the real world. Just a few Chinese government companies would like to try HANA. Despite the innovation, The prohibitive HANA still have a lot defect like HA, etc.
The Thrive of HANA
SAP did 3 things to make HANA soar.
1. Move quick
How quick? Over 80 releases from 2010 to 2104. It’s not a SaaS. The client who is using HANA needs to install the patch by themselves and it means service downtime. (As an outsider, I think it’s also a signal that there is not a lot client of HANA at that moment) SAP is good at selling semi-product to the client. All promise will become true after you bought it for several years.
2. Acquire Sybase
Sybase had the 3rd share in the Database area. Selling a copy of source code to Microsoft contributed SQL Sever’s success and conduct its wane. SAP bought Sybase in 2010 by $5.8 billion. Oracle’s arrogant make it lost the best chance to stop HANA. After the acquisition, SAP integrates Sybase technology to make HANA has more robust architecture like real-time replication. It also provides store cold data into the hard drive to lower the price.
3. Announce that next-gen ERP application only support HANA database
Another reason that only a few clients for HANA before 2014 is the last wave to upgrade SAP application was almost done. The customer is waiting for a new version of ERP, the core product of SAP. SAP announced that 2025 is the end date of support for the current ERP application. Next year, SAP released the next-gen application S/4 HANA. Literally only support HANA as the database layer. No oracle or other vendors. Boom! After 4 years of paid bug fixing. HANA is ready, SAP cut the link to Database Vendor.
Result
With the main trend of “Move to Cloud”. A lot of companies re-start to invest upgrade of ERP to boost SAP’s business. SAP consultant seems to become a hot position again.
The rise of HANA impacted oracle’s core business. Startup prefers open-source and enterprise ERP’s first choice is not Oracle. Oracle’s dominance starts to decline. Look at Oracle’s product release after born of HANA: Oracle Exalytics, Exadata, Oracle 12c In-Memory Option. The leader has become a follower.
What’s Next
Technology change so fast that realtime business dashboard was taken completely for granted. In-memory or not In-memory also not an important option if you use the cloud base database. What would be next SAP’s innovational technology to support growth? Maybe the answer is Cloud.
SAP Cloud Platform(SCP) was announced in 2017. It’s relative buggy and hard to use in 2017. Just like the early age of HANA, SCP changes very fast in 3 years. (Check my article for detail of SCP)Coincidentally, Recently SAP announced the end date of support for S/4 HANA and extend the date for the last version of ERP. Maybe it’s mean that SAP thinks their SCP was ready for their next strategic move? We’ll find it in 2021.
