Submitted by Charles Homs as part of our contributors program.
If SAP’s past statements about revolutionizing the IT industry and the subsequent realities of failing to live up to their expectations are an indication, then we shouldn’t expect much from SAP’s in-memory technology HANA. Here are some examples of what SAP has stated in the past about what it thought were major steps in the development of SAP’s product offerings that were “destined to revolutionize the IT industry”.
NetWeaver. When SAP first announced NetWeaver in June 2002, SAP thought it had figured out something that no one had ever done before. In 2004, the then SAP CEO stated: [NetWeaver] “will put SAP even closer to the top of the software world, just behind Microsoft and ahead of No.2 Oracle” June 28, 2004, SAP CEO Henning Kagermann in the InformationWeek article “Billion-Dollar Bet”
In reality, SAP NetWeaver didn’t go anywhere. Only SAP customers use it. Its vendor share remains an abysmal 1.4% (source: Gartner 2011).
CRM. With Siebel’s success and Salesforce an upcoming CRM vendor, the then SAP America’s boss Bill McDermott figured it was time to say something about SAP and CRM. What came out was not exactly an insightful remark:
“SAP plans to take the customer-relationship-management market by storm” ? “without any particular effort to innovate” April 28, 2004, (then SAP America CEO) Bill McDermott (now) co-CEO SAP worldwide
Eight years later, SAP has a lower vendor share compared to Oracle in CRM (source: Gartner 2011). Perhaps SAP should have considered innovating after all?
Organic growth. For a long time, SAP explicitly stated that it wanted to grow organically, witness for example this 2008 statement:
“Organic growth remains the primary driver for growing our business. SAP has shown that we can outperform the market with significant organic growth, and we will continue to do so.” October 31, 2008, SAP CEO Henning Kagermann in the Oct 18, 2007 SAP Q3 earnings call
SAP didn’t want to say that in 2008, it had acquired 29 software vendors. Another 11 followed since, including vendors like Sybase and SuccessFactors, bringing the total number of acquired companies to 40 in 2012. Perhaps SAP didn’t “outperform the market” after all.
Business ByDesign. Then there was the case of a new SaaS suite, which according to SAP had billion dollar potential. So far, only about 1,000 companies have signed up. The total revenue of SAP’s SaaS products is approx. $24m (FY 2011).
“SAP today unveiled SAP Business ByDesign, the most complete on-demand business software solution specifically addressing a new market of prospective, fast-growing midsize customers.” [SAP] “sees a worldwide market potential of more than $15 billion” September 19, 2007, SAP CEO Henning Kagermann in a SAP press release.
But wait, according to SAP now it will all change, SAP has something new. It will revolutionize the IT industry, and SAP states that it will become the number 2 database vendor.
“Hana is a category killer.” – “Hana is maybe the biggest innovation for business software in the last 20 years.” January 25, 2012 SAP co-CEO Bill McDermott in the SAP 2011 earnings call
If history is a good predictor of the future, SAP customers will face an even more complex environment, now with parts running in-memory. SAP has never re-engineered anything, only adding more stuff to the architecture.
HANA looks promising in the sense that it will for sure speed up some old SAP data warehouse systems. HANA is estimated to bring SAP an additional Euro 500m ($650m) in 2012, but SAP HANA revenue will come mainly from existing customers, and from multiple products including data warehousing and analytics applications, making it hard to measure exactly what is HANA and what are common non-HANA components. SAP will announce predictive analytics later this year, also based on HANA, creating even more hoopla. Together with SAP and Oracle, there is a dozen vendors that sell some form of in-memory product. Says financial analyst Richard Nguyen from Société Générale:
“We believe that it is still too soon to claim that SAP HANA would upend this market against established vendors like IBM, Teradata or Oracle.” (Source: Société Générale, ‘SAP vs. Oracle: clash of the titans’, 23 March 2012).