SAP co-CEO talks new product areas, in-memory computing

SAP should add new product categories every 18 months, says co-CEO Jim Hagemann Snabe

SAP could be entering significant new product categories soon, judging from remarks made by co-CEO Jim Hagemann Snabe on Thursday.

"To sustain growth, once every one-and-a-half years or so, we have to add a new category," Snabe said during an appearance at the Morgan Stanley 11th Annual Technology, Media & Telecoms Conference in Barcelona, which was webcast.

SAP made a big push into mobile applications with the May 2010 purchase of Sybase. Around that same time, it ramped up efforts around in-memory computing with its HANA platform.

"If you see us acquiring ... we would be either acquiring to accelerate our pace or open up a new category," Snabe said. "There are categories where we are not participating."

He cited collaboration as one area where SAP has room to grow, but did not say it would do so through acquisitions. Should SAP go that route to gain more collaboration technologies, two natural choices would be close partners Jive Software and Open Text.

Overall, SAP is looking for new products that will help "pull the core," -- the company's base ERP (enterprise resource planning) software suites -- rather than supplant those products, Snabe said.

While SAP is the world's largest ERP vendor, it's got plenty of room to grow within customers' environments, he added. Snabe cited one professed "wall-to-wall" SAP customer that in fact was running 400 non-SAP applications.

"With a very committed SAP client, we today have an average 5 percent of [their IT spending]," with the other 95 percent going toward infrastructure, services and other applications, he said. "We're not asking for more budget. We're simply re-shuffling."

Still, SAP sees plenty of opportunities for brand-new ERP sales, Snabe added. "We estimate there's a million companies in China that need ERP." In comparison, SAP today has 170,000 customers, he said.

Snabe spent much of his time discussing HANA, an in-memory database that is available in appliance form from an array of hardware vendors. HANA stores data to be processed in RAM instead of reading it off storage, providing a performance boost and allowing users to explore information more freely than they could with pre-aggregated data sets, he said.

He described how SAP first went to 50 customers "who trust SAP and who are often early movers in new technology," asking each for examples of problems they could solve with ultra-fast data processing. "That obviously gave us 50 different answers."

For example, an oil company would like to discover new wells more quickly by analyzing seismic data in minutes instead of through overnight batch jobs, he said.

"That's significant problem-solving, but it's not scalable," he said. "You can't prepackage it. That phase took us like, a year."

SAP has since ported HANA to its Business Warehouse data warehousing platform, which has some 16,000 implementations around the world. While SAP still intends to roll out a series of specialized HANA applications, the BW integration will help it make "real money" on HANA, Snabe said.

It will be a painless transition for customers, he claimed. "The first customer went live, and it took two weeks," he said. "This is not a high-touch consulting effort."

In fact, a move to a HANA-based Business Warehouse is paid back by the infrastructure savings alone, Snabe claimed.

He stressed that SAP has no interest in getting into the hardware game itself, given the double-threat posed by rapidly increasing processing power alongside sharply falling costs.

Snabe also took a sideways shot at rival Oracle and its growing family of integrated data-processing appliances.

"Our competitor is saying well, you cannot optimize a system without having control of the hardware," he said. "We're not disputing that. We're just saying we think we can control the hardware without owning it." SAP issues firm specifications to partners for the hardware needed to run HANA, he said.

In this way, SAP avoids "going into a very complicated business with low margins that's undergoing a transformation," he said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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Tags IT managementCIO roleMergers and acquisitionsOraclebusiness issuesbusiness intelligencesoftwareapplicationsSAPOpen Textit strategydata warehousingJive Software

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Chris Kanaracus

IDG News Service
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