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Former Member

As I’m sure most of you heard, a couple of weeks ago SAP announced that the SAP Business Suite is now powered by SAP HANA.  This step marks the end of a long journey and the beginning of a new one.  As I was reflecting on the past 8 years of this first phase, a few thoughts occurred to me that I’d like to share with the community.

The End of the Beginning

In the spring of 2005, a few maniacs at SAP hatched a truly radical idea that we could fundamentally reengineer the data layer of the 3-tier architecture and someday run the largest SAP Business Suite systems entirely on an in-memory database.  It’s hard to exaggerate exactly how ridiculous that idea sounded back then.  The entire concept that disks could be removed from the database was bizarre, but the idea that a mission critical system like SAP ERP would run without disks at the same level of reliability was patently absurd.  I know this because everyone we talked with about the idea told us that.  But, there was just enough intellectual curiosity in those people to wonder what the world would be like if we COULD do it.

So we got approval from the SAP Executive Board to give it a shot, in total secrecy and see what would happen.  What started out as a theoretical exercise soon grew into a real-life experiment and in just a couple of months, we had passed the SAP SD Benchmark on an entirely new, in-memory database.  To say that the SAP execs were surprised is a horrible understatement.  However, a big, cold bucket of skepticism and reality was dumped on our heads and we were challenged by a certain fellow to “see if we could run Nestle* on it”. At the time, this was a ridiculous thing to ask, but it shows the level of seriousness with which we were approaching the technological challenge, but also the early and constant focus SAP has had on protecting our customer’s business, in addition to providing them with massive new value and capabilities.

(*Nestle is often used inside SAP as a generic reference for “MASSIVE SAP DEPLOYMENT”, we didn’t actually work with them at that time.)

Two weeks ago, we released the SAP Business Suite on SAP HANA and we can now “run Nestle” and every other massive SAP system in the world on SAP HANA.  Writing that sentence literally sent a shiver down my back.   I feel that this milestone for SAP is very similar to the Apollo 11 moon landing.  It was a “big, hairy, audacious goal” that nearly everyone who heard about thought was impossible, or at least seriously crazy.  In fact, those early days was when I learned what the German word for crazy was after hearing it so many times (verrückt).

So, you’d be pretty correct to assume that the release of SAP Business Suite on SAP HANA is a “dream come true” for many people in SAP.  When Vishal refers to HANA as his “little girl”, he speaks with the pride that any father would have for his own daughter who had achieved so many remarkable things in such a short period of time.  But just like a proud father, you celebrate each remarkable achievement and then look to the future and dream about what it holds for such a talented child.

So that’s why I consider January 2013 to be the “end of the beginning” for SAP HANA.  Now that “she” is a full-grown adult, ready to handle the most difficult challenges that the worlds biggest (and smallest) companies can throw at her, what’s next?  What are the next 30 years of her life going to look like?

Crossing the Chasm

Geoffrey Moore, the granddaddy of technology strategy, has a wonderful model* that I think perfectly describes the trajectory of where SAP HANA has been and is going.  *the most condensed explanation is in the second chapter of Dealing with Darwin.


Early Market: Bowling Alley:
a. “Cool Factor” or “Next Big Thing” syndromea. Crosses from one niche to several
b. Huge mortality rateb. New applications for product/technology
c. Big leaps in capabilities
Chasm:  Tornado:
a. Old news to the hipsters, not yet mainstream.a. Broad acceptance & Killer app
b. Purgatoryb. Competitors pile on
c. Where good/promising ideas go to diec. Pragmatists pile on = hypergrowth
Crossing the Chasm:Main Street:
a. Picked up by pockets in the mainstreama. Competition settles & marketshare is stabilized
b. Solves a real painpoint in a niche marketb. Long period of stability and sustaining innovation begins.
c. Crosses the “Good enough” line

*Shamelessly plagiarized from Geoffrey Moore, with his permission.

In Geoff’s “Technology Adoption Lifecycle” model (above), SAP HANA’s past two years of growth have taken “her” through the early market phase and now, with the announcement of SAP Business Suite on SAP HANA, I’d argue that she’s “crossed the chasm” and is entering the “bowling alley” phase of growth.  Here’s why:

With over $800 million in revenues and ~1000 customers in the first 18 months of market availability, SAP HANA has moved past the niche markets of “techies” and “visionaries” and has crossed the “good enough” line to penetrate the “pragmatists” in the mainstream of the SAP customer base.  We are already seeing several “bowling alley” situations where use case scenarios in one industry are being adopted and enhanced for adjacent industries or cross-industry scenarios. With the addition of the cross-industry SAP Business Suite now available, the bowling pins just got mowed down.  Also, with the release of SP05, SAP HANA now has taken a massive leap in functionality to enable mission-critical operations with scale-out, disaster recovery and high-availability.

Some would argue that 1000 customers is still “niche” in SAP’s global customer base of ~200,000 companies.  But, I’d counter that until a couple of weeks ago, SAP HANA really wasn’t “good enough” (by Geoff's definition) or broadly applicable for the entire customer base, so it was artificially limited in its target market to techies and visionaries.  Additionally, when you study the behavioral characteristics of SAP’s traditional customer base, the bell curve is much “fatter” in the middle with a higher distribution of pragmatists and conservatives than you’d see in a normal distribution.

When you add the rapidly expanding use cases that we’re seeing from customers and the big and quickly-growing-bigger portfolio of SAP and non-SAP applications on top of SAP HANA, I think its clear that we’re in the “bowling alley” phase and should hit the “tornado” phase very soon.  Quite frankly, I think the obvious “killer app” for SAP HANA is the SAP Business Suite. We’ll see how the adoption curve progresses for that, but from all the conversations I have with customers, it’s not a question of “if” they’ll go to Suite in HANA, it’s a question of “when” they’ll migrate.

A lot of Geoff’s work is actually on the dynamics of the companies who are competing to take a disruptive innovation across the chasm and he’s documented scores of failures and successes across multiple segments of the tech industry.  From that perspective, it’s also quite telling that all of the so-called competitors to SAP HANA are either “false competitors”, pushing pseudo in-memory solutions based on “old” technology or true in-memory niche solutions that lack the “pull” from an installed base of apps like the SAP Business Suite.  So, I’m pretty confident that SAP HANA is both the first in-memory database to cross the chasm, but also that it is defining the entire category as the market leader. 

Next step:  Blazing head-first into the "tornado" and the hypergrowth stage.   You'll know we've hit the center of this stage when the HANA "imitators" at the other large database providers actually release a true in-memory database, not some warmed-over disk-based kludge

Since Geoff’s model has proven itself to be spot on for multiple generations of technology adoption, I’m going to go ahead and make a bold prediction.  I’ll bet you a dollar* that SAP HANA reaches over 100,000 customers by 2018. 100x growth is actually a pretty reasonable number considering the characteristics of the pragmatist and conservative market segments and the speed of development that SAP and its ecosystem is cranking out new apps for the platform.

*Ping me on Twitter if you want to register yourself for my bet (I'll take your bet! @jeff_word) If I'm wrong, I’ll donate $1 to the UN World Food Programme for everyone who puts their name in but, I’ll expect all the losers to donate $1 to WFP when I’m right in January 2019. 

In a future blog, I’ll walk through another model by Clay Christensen on how the Innovator’s Dilemma applies to SAP HANA and it’s imitators.