In HANA and Gen-Y, SAP doth trust
By Edwin Yapp March 5, 2014
- In-memory computing, cloud and big data to drive SAP’s next wave of growth
- Engaging Gen-Y crucial to survival; will accommodate culture change to make it work
PROF Hasso Plattner sits across journalists from Asia after almost an hour on his feet delivering his keynote address and another hour on a panel session at the recent opening of SAP AG’s new Innovation Centre in Postdam, Germany.
Exuberantly fielding questions for 40 more minutes as rigorously as if he were just starting the day, the 70-year-old cofounder of SAP shows no signs of slowing down. When asked by Digital News Asia (DNA) what continues to drive him even after 42 years at SAP, Plattner pauses thoughtfully, and says, “There’s no reason why one should stop working even if he’s reached the age of retirement.
“I may not want to travel as much and meet five customers a day [like I used to] – that is for my management to do – but I’m happy meeting, say, one customer a week. I also enjoy the freedom between my life at the [Hasso Plattner] Institute and my [supervisory position at] SAP, but there is no reason why I should stop thinking and stop conducting.”
As the chairman of SAP's supervisory board since 2003, Plattner may not have day-to-day responsibility of running the company anymore, but it would be a mistake to think that he has little influence over the software giant as he’s still very much the life-force there.
Says one SAP insider close to Plattner, “SAP is Hasso’s baby and while it may be all grown up, it’s still his. And that’s why he’s still pushing the envelope within the company and being the driving force behind a lot of the changes we see today – from culture change to the push behind SAP’s HANA in-memory database.”
Founded in 1972 by Plattner and four other engineers who at that time were based in IBM’s Manheim, Germany office, SAP first specialised in enterprise resource planning (ERP) software, which is used to run everything from payroll, accounting systems, manufacturing and production systems, to human resources and supply chain management.
At the opening of the Innovation Centre in the scenic town of Potsdam, some 35 km southwest of Berlin, Plattner reflected on some of the misses the company he built had experienced over the past few years, including how SAP has long struggled with building a better user interface (UI) for its products, and how innovation at the company seemed to have plateaued over the years.
To put things in perspective, SAP is still considered one of the largest enterprise software houses in the world. Its market capitalisation stands at US$95 billion at the time of writing, and only two other enterprise software players – Microsoft and Oracle – are bigger.
In its earnings call recently, the company indicated that total annual revenue was up 4% to €16.81 billion for the full year ending December, 2013. Sales for the last quarter was €5.1 billion, up 2% from the same quarter the year before. Total annual operating profit was €4.47 billion, up 10% from last year, while operating margin was up 1.5% to 26.6%.
[US$1 = €0.73]
Despite its decent performance in the 2013 fiscal year, SAP’s stock has lost about 9% in value since the beginning of the year.
Betting big on HANA
The Waldorf, Germany-based software giant’s bet for the future lies in a new technology known as in-memory computing, a revolutionary way of processing data within DRAM (dynamic random access memory) chips -- as opposed to the traditional handling of data read/ write cycles between the main processor and hard disks residing in storage networks.
The most obvious advantage of this is the speed at which data processing and handling can take place – features that are increasingly desirable as the world grapples with petabytes of structured and unstructured data collectively known as ‘big data.’
Besides its lightning-quick computation, SAP aims to leverage in-memory computation to help companies transform their businesses, such as one highlighted by tech portal InformationWeek on a British-based gas and utility player called Centrica.
Research firm Gartner notes that although the in-memory data grid market, a key in-memory computing (IMC) segment, is small, it is likely to grow fast and reach US$1 billion by 2016.
In an interview with The Wall Street Journal, Plattner claimed to have realised this trend early on and began looking at in-memory computing as far back as 2006 in a bid to keep SAP ahead of the competition.
But to do so, he had to turn to unlikely allies – young people in their 20s who had no preconceived notions of how databases were built, and who shunned corporate structures and stodgy boardrooms in favour of open spaces, large screen TVs and foosball tables.
“It's not so easy to break out as a large company and do something radically different,” Plattner was quoted as saying in the Journal. “At the university, you have the freedom.”
The first prototype initially called HANA – then short for HAsso’s New Architecture – was presented in 2007 and the project was given more attention as SAP’s profits began eroding due in part to the global financial crisis in 2008.
The Journal went on to say, “But by the summer of 2009, a new group of students had a working database prototype that could filter through 250 million customer records, find 380,000 unpaid invoices and then single out the roughly 200,000 overdue bills in just 1.5 seconds. That compares with the roughly 20 minutes it would take standard software to do this, the students said.”
Next: How HANA and Gen-Y feature in SAP’s future