Posted by Verdi Ogewell and Felix Nilsson
You’ve probably heard about SAP’s in-memory database platform, HANA. The company has certainly made a lot of marketing noise about it. CEO Bill McDermott even called it a “game changer” when he presented updates to the S/4HANA platform at the New York Stock Exchange a few months ago.
But is it a game changer? We’ve talked to one of SAP’s global Top 10 customers, the consumer packaged goods giant Unilever. In this TV report, you will meet the former VP of global IT at Unilever, Marc Bechet. He is strikingly enthusiastic about the possibilities of the system, but also admits that changes of this magnitude are bound to create challenges.
“There will always be issues that have to be dealt with and managed, and it’s all about having the right people,” says Bechet, possibly alluding to the fact that these projects will give consulting firms like Accenture lots of new orders.
So far there are success stories among both large global enterprises and mid-sized players who have bet on HANA. There seems to be a palpable enthusiasm about what can be achieved with this new technology.
Last year, for example, VerkstadsForum reported that Danish skylight manufacturer Velux had decided to implement HANA. The company was one of the first SAP HANA customers back in 2012. IT manager Anders Reinhard said the initiative had exceeded the company’s expectations – even if building a credible business case from the perspective of new technologies and methods was a challenge at the start.
He added that Velux has wanted to speed up their data management for several years and to process larger amounts of data related to things like BI solutions (Business Intelligence) to get faster and better decisions. Reinhard says the result was better than expected.
Meeting with a global IT big shot
That being said, what can HANA technology mean for IT management in a large global corporation? A lot, claimed Unilever's former VP and manager of Global IT ERP, Marc Bechet. He recently spoke at SAP’s Innovation Forum event in Stockholm.
“We have several concrete examples of what basic HANA features – such as the ability to process data up to 10 times faster than before – can mean to streamline operations,” he said in an interview with the PLM TV News team. “But beyond that, we also found that it has enabled a new way of working. Instead of waiting for an overnight batch run, and then getting the first reports on the numbers the next day, we can get the first results within the hour. This allows our finance people to get an early look at what the numbers show and start analyzing, and if necessary iterate and get better quality numbers. So it’s not only about reporting, but also about how to drive performance management.”
“We have several concrete examples of what basic HANA features – such as the ability to process data up to 10 times faster than before – can mean to streamline operations,” says Unilever’s VP and former chief of Global IT.
Huge company, huge demands
It’s hardly surprising that speed and performance are important to a consumer packaged goods giant like Unilever. The company is one of the largest in its field with brands such as Dove (soap), Sunlight (detergent), Lipton tea, Knorr (sauces, spices), Pepsodent (toothpaste), and Magnum (ice cream) to name a few. Every day, around the clock, the company has approximately two billion customers purchasing one of its various products.
“Supporting an operation of this size obviously puts enormous demands on the IT,” said Bechet. “Meanwhile, we have the ambition to grow, actually to double our revenue, which means that we have to be innovative about our core SAP platform.”
Earlier this year, SAP announced the launch of the S/4 HANA platform. How do you react to this?
“We’re very pleased to hear about this launch because this is SAP starting to re-architect the SAP applications to take advantage of the speed and the capabilities of HANA,” added Bechet. “We’ll see a reduction in the core footprint of SAP with ‘Simple Finance,’ Simple Supply Chain or logistics coming soon after that. So we’ll see the core of SAP becoming simplified, and with time we’ll also see Business Suite being collapsed to run on the HANA platform. So it’s not only reducing the complexity, but also adding a whole new layer of capabilities.”
It’s clear that the cloud will play a key role in the future, and Unilever has already started moving some HR, marketing, and core ERP functionalities to SAP's cloud environment.
“Yes, well we’ve started to do some work in the ERP space on the Cloud HANA platform,” Bechet explained. “We have actually built a reference system on the HANA enterprise cloud, and that has given us the opportunity to gain experience, and gain a better understanding of what we can do with cloud, as well as deliver this particular solution. And it has been a positive experience. For the most part we have been able to deliver value faster than what we would have been able to with the normal, ‘on premise approach.’ ”
As for the problems and challenges that surround the system and its implementation?
“There are always problems with any IT system,” Bechet said. “There will always be issues that have to be dealt with and managed, and it’s all about the people. It’s actually about having competent people that understand the systems and what needs to be done, who can analyze what the issue is, and react and respond quickly to fix those issues.”
The need for competence seems like a no-brainer, but what about the broader questions on data migration and the pains of switching to a whole new generation of software applications? When asked about this, specifically in regard to the large number of customers that are running on Oracle databases, SAP spokespeople seem to sidestep the question.
“I’m not seeing this as a challenge; I’m seeing this as an opportunity,” said SAP HANA’s André Borchert. “In order to utilize the capabilities of HANA you have to perform a database migration, but that is also true for other technologies. Doing this will allow them to utilize their existing investment in SAP, migrate over to HANA, and then they have the capabilities of having all their data sitting in memory, but not just sitting and being stored in-memory, we also have inbuilt capabilities to process data.”
SAP’s vision: The Boardroom of the Future. It’s about big TV screens, real time data and sharp tools for predicitive analytics.
The Boardroom of the Future
More speed and faster batching obviously means a lot. But there’s more, said André Borchert, pointing to the importance of simplification. The launch of S/4HANA gives the Business Suite a new, modern “mobile first” interface as well as integrated big data management. The system is also built from the ground up on HANA which not only provides dramatic performance gains, but also simplifies administration, added André Borchert.
“It is one of the most important points about HANA,” he explained. “We now use this platform and the HANA strategy to simplify what we have built over the last 30 to 40 years.”
HANA has also gained quite a bit of market traction during the past year and despite the tech CEOs’ penchant for hyperbole, it is hard to disagree when SAP chief, Bill McDermott, calls S/4HANA the company’s “most important launch in 23 years.”
SAP evangelist, André Borchert, claims that migration from databases like Oracle isn’t a problem. “It’s an opportunity to gain speed and simplicity”.
Borchert described the main points of the solution from three perspectives:
1. S/4HANA means that you get a platform that truly simplifies application structure. All of the layers and architecture that had to be built on traditional databases disappear. Data is always readily available in memory.
2. The applications become smaller, sleeker and simpler processes. We get seamlessness across diverse applications and devices. The key here is role-based experiences and simplified processes.
3. Continuity - even though we’ve entered the cloud era, SAP offers its customers choices: You decide whether to use business systems, or parts of them, in the cloud, installed on premise or as hybrids where some remain on premise, while the other runs in the cloud.
From pilots to implementation
After HANA launched in 2011, the years 2012 to 2013 were dominated by pilots and early adopters/ "But in 2014, it has gained commercial momentum and 2015 is the year of real world implementations," said Anders Schyllert, managing director of SAP Sweden.
“The tests we have done and our ‘proofs of concept’ have shown more benefits than what even we at SAP would have foreseen. Therefore, the project has expanded and we now have one user after another who stands up and confirms the benefits of the solution,” concluded Schyllert.
SAP’s CEO, Bill McDermott, claims that S/4HANA is a game changer.
HANA is a technology platform, not an ERP system
It’s important to understand that what SAP is offering is a technology platform, not a standalone ERP system. SAP has started to port its capabilities and applications to HANA, but for companies who prefer to run another ERP system, HANA might not be the best bet.
SAP is known for system complexity and is possibly the system that has the most to gain from speedy technology platforms like HANA. However, a less complex business system with higher levels of usability might be perfectly acceptable on traditional database solutions. Additionally, there are other providers of in-memory technology, like Oracle. And the migration of data and systems to their solution might be less disruptive and costly to customers who are already on Oracle databases.
The advantage of SAP’s HANA master plan is that it offers tremendous performance capabilities to customers that are deeply invested into the SAP ecosystem. The disadvantage is that it appears to be somewhat monolithic.