Software Development

SAP's strategy: Cutting complexity, boosting cloud and big data

SAP sets out a vision of making its software easy to use and pain free to buy, while adding cloud and big data. But is it giving its customers what they want?

Software giant SAP has expanded into areas far beyond its roots selling ERP software.

But as SAP's service and product portfolio has ballooned - from on-premise software into cloud, mobile and in-memory computing - the complexity of buying SAP has also grown.

Today customers report it can be difficult to know which product or service to invest in and whether they are getting value for money. This complaint was raised by SAP customers in UK and Ireland earlier this year and they called on SAP to reduce licensing and upgrade complexity.

SAP says it has an answer for customers confused by its complexity, its new 360 offerings. These are packages of products and services designed to provide everything needed to serve a specific business area.

The first to be released is SAP 360 Customer, a CRM orientated package that bundles SAP CRM-related tools - SAP CRM, its cloud-based Customer OnDemand, the SAP Jam social software platform and mobile device management services to serve content across a range of devices. Customers can buy the entire package at a single price or pick and choose the components they want.

Speaking at the recent SAP Sapphire Now conference in Madrid SAP co-CEO Jim Hagemann Snabe said:"This is the first of a series of solutions that a do simplification of the install, the decision, the use, the implementation and the pricing."

Speaking at the Sapphire Now conference Carter Lusher, chief analyst for software and enterprise solutions at Ovum, said: "Something that seems to be pulsing through all the presentations is relevance and simplification. So simplifying the technology, the user experience, the deployment options on the product side. Then on the business side you're simplifying the licensing and pricing."

"What they're really looking at is how they can be more relevant to the customer," he said.

But satisfying the customer on issues like licensing and upgrades is going to be something of an uphill struggle. SAP's UK and Ireland User Group has released a survey showing the majority, 80 per cent, don't understand how to upgrade to or integrate the cloud-based SAP OnDemand modules with existing SAP implementations.

Migration costs also remain confusing for customers, with 70 per cent of UK and Ireland users saying they felt that SAP has not been clear enough about the cost of migrating from SAP BW and BI to SAP BusinessObjects.

The primary complaint by SAP users in the UK and Ireland about SAP licensing is, according to vice chairman of the regional user group Philip Adams, the inconsistent way in which SAP licenses its products and services. For example, while some are by licensed by user numbers others are by data use.

However SAP is trying. Tim Noble, SAP's managing director for UK and Ireland, pledged to the UK & Ireland User Group conference today that SAP will endeavour to stick to a single metric when licensing and said the group is committed to making licensing 20 per cent less complex.

Speed of delivery

For SAP being relevant to customers also means matching the competition when it comes to the time it takes to implement its software and services.

Since its launch in 2010 SAP Rapid Deployment Solutions (RDS) has been helping reduce the time to get up and running with SAP. RDS bundles SAP software, services, tools - along with best practice for implementing these. Generic, pre-configured software and services are favoured, rather than bespoke offerings, with a view to implementing them rapidly, with SAP claiming delivery usually takes 12 weeks or less.

Ovum's Lusher said that SAP had had to get nimbler as it was losing out to competition like cloud CRM vendor Salesforce on speed of implementations.

"They were getting killed by people saying 'Sorry can't wait a year'," he said.

SAP is also improving is the rate at which it releases new products. According to SAP co-CEO Snabe SAP has halved the 18-months it used to take to get from product conception to release.

Cloudy future

SAP's pursuit of faster deployment and greater customer choice has also driven development of an extensive portfolio of cloud services.

Today it offers counterparts to its suite of products in the cloud, even if they don't yet share all of the on-premise functionality.

"SAP used to say it never wanted to bring the core ERP to cloud and yet that has not proven to be true," said Henry D. Morris, senior vice-president of worldwide software and services research at analyst house IDC.

Morris believes over time SAP recognised there is a market for purchasing individual ERP components through the cloud and decided to make moves into the space to keep pressure on competitors like Salesforce.

SAP has services for targeting customers with SAP CRM OnDemand; staff, through SuccessFactors and suppliers, through Ariba and financials through its recently released Financials OnDemand. It also has its cloud business suites, Business ByDesign and Business One.

By offering cloud alternatives to every product in its portfolio SAP is hoping to meet those twin goals of simplicity and agility. Upgrades will be pushed out instantaneously and its cloud offerings can be paired with its mobile device management offering Afaria to present that information to many different devices. Their centrally managed, always connected nature also makes it easy to build in support for social features, like social and collaboration platform SAP Jam.

Sven Denecken, VP of SAP's OnDemand solutions and head of co-innovation, said that SAP plans to eventually give its on-premise and cloud services the same functions and features.

But while SAP's OnDemand offerings may appeal to new customers, many existing customers can't see a good business case for switching to its cloud services. More than half, 58 per cent, of UK and Ireland SAP Users' Group felt that the company is not making it attractive enough for on-premise customers to migrate to cloud solutions.

Alan Bowling, chairman of the UK & Ireland SAP User Group, said the biggest challenge for SAP is persuading its existing customer base that they need to add a cloud service to their on-premise software: "You move to the cloud because you've got some significant functional advantage that you really can't get any other way or it provides a more cost-effective way of working once you've exhausted your current infrastructure. You're not going to abandon infrastructure, that's not a great use of assets."

Big data and better performance

SAP is also looking to bring performance improvements to its sofware and services. It plans to offer its in-memory computing platform Hana as a base for many of its products and services. This applies both to its cloud services - where Hana is already used as a backend database and computing platform for the likes of Customer OnDemand and Business Objects BI OnDemand - and its on-premise software, where it is already can be used with SAP CRM.

Hana's in-memory storage, column store and parallel processing architecture excels at big data analytics, in particular analysing hundreds or thousands of terabytes of data from many sources and making predictions in real—time. SAP reports Hana can reduce time taken to return reports by up to a factor of 100, allowing businesses to operate in ways not previously possible. For instance allowing a retailer to offer personalised promotions to shoppers via their mobile based on where they are in store, their purchasing history and other data.

SAP sees the addition of Hana to its product and service line as a feature to give it the edge over competitors rather than an opportunity to raise prices, Snabe said.

Although the Hana platform isn't a panacea when it comes to analytics, SAP's commitment to expanding support for Hana in its portfolio should reassure UK and Irish users that report they are "having challenges around the speed of processing and analysing SAP data". SAP User Group's Bowling called Hana a "game changer" for big data analytics and said its release, at a moment when businesses are amassing huge amounts of data, is "timely".

Future challenges

SAP is changing because its customers are demanding simpler and more powerful ways of running their business. Ovum's Lusher said this change is increasingly driven by the sky-high expectations set by our experiences as consumers: where we expect computing to do what we want, when we want it, on the device of our choosing. Today the same is increasingly expected of business software, he said.

"The complexity equation goes up for vendors but it goes down for their customers. It's a wholly different mindset that's driving the vendors crazy but they can't push back the tide," he said.

About

Nick Heath is chief reporter for TechRepublic UK. He writes about the technology that IT-decision makers need to know about, and the latest happenings in the European tech scene.

1 comments
A-mantra
A-mantra

Its really very nice and educative article. Cloud user are increases day by day and so applications too. Really thankful for SAP article.

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