SAP estates in large enterprises comprise a “colourful” variety of tools and versions, and the supplier’s in-memory analytics database appliance HANA is expected to be a big part of the future of global business IT. These are two of the conclusions an HCL executive has drawn from a survey of 225 CIOs.
Steve Cardell, president of enterprise application services at HCL, was surprised at how fragmented the SAP customer base is. Only 6% of the organisations surveyed use the "Nirvana" of a single SAP instance. And, in looking to the future, 90% of the CIOs expected HANA to play a big role, he reported.
The HCL-sponsored global survey of large enterprises with more than $1bn (£643m) in annual revenue was carried out by research firm Vanson Bourne between January and March of this year. Some 40% of the companies were European.
It found that, on average, the respondents had five separate instances of SAP operating across their business. Some 39% stated they were running more than six instances.
The findings also showed that the average cost of running SAP was $1,518 per user, per year, but by moving to a single instance large enterprises could potentially make savings of up to 25%, with the average cost per user dropping to $1,135. From this, HCL concludes that large enterprises globally could save nearly $30bn through SAP consolidation.
The research also disclosed the prevalence of legacy SAP versions still being used as core operating platforms. The latest version of SAP (ECC 6) is only being used by 37% of organisations, while more are using ECC 5 (54%) and SAP 4.7 (44%).
There can be good reasons for not moving to a single instance – US or UK companies operating in defence would tend to have a separate instance for China – but single instance is some 25% cheaper, as a rule of thumb, said Cardell.
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“There are clearly very substantial political and operational hurdles that can stand in the way of companies achieving a single instance,” he added, “so we are now seeing large companies either making top-down decisions to drive through such changes, or deciding it is the wrong battle to fight so instead are looking to improve integration between systems.”
Single instance SAP versus multi-instance
There are two strategies in play, he said, as was evident in the survey – one that sees single instance conducing to being more nimble, and another that accepts the condition of being multi-instance.
The second strategy discounts single instance. “It does not matter for the new technologies they want to deploy for BI [business intelligence] or mobile or social media. Cloud means you can shrink the ERP [enterprise resource planning] core.
“The larger the company, the more the first strategy makes sense – say, 100,000 core users, as opposed to 5,000. The really old SAP customers, in process industries, have the most to gain from true single instance.
“But the more diverse your business units are, the greater the downside of single instance.”
By moving to a single instance large enterprises could potentially make savings of up to 25%
What does the future hold for HANA?
HANA adoption emerged from the survey as the most significant of five future trends – the others were mobile, social, cloud and big data.
It is one thing to use HANA for fast analytics, it is quite another to migrate SAP’s Business Suite to the platform, said Cardell. “In-memory computing promises to be a real game changer for many large enterprises, and on three axes,” he said.
“First, 90% of respondents said HANA had a big future place in their strategy. SAP has about 25,000 large enterprise customers – HANA has penetration in about 1,000 of those, and quite narrowly. So, if 90% of SAP’s installed base bought HANA, the licence revenue would be enormous," he said.
“Second, for customers it integrates the database and the application so that they are inseparable.
"And third, it could reshape the database market," added Cardell.
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“But we are in crystal ball territory. Whether it never becomes more than a peripheral accelerator for big data and BI or constitutes a shift as big as that from R/2 to R/3 remains to be seen.
"SAP could bundle the licence offer, or make HANA very cheap. It will be interesting to watch,” he concluded.