Confused About SAP HANA? Here’s What IT Sourcing Pros Need to Know

By Jeff Muscarella

Partner, IT and Telecommunications, NPI

May 04, 2016

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What is SAP HANA? Most enterprise IT sourcing pros have heard the name. Many of us have seen the pitch or read a bit about it, and some of us have participated in purchasing it. But there’s still a ton of confusion surrounding SAP’s HANA offerings. Some say it’s a new database while others call it an in-memory computing platform. We hear it referred to it in the context of cloud-based applications. Proponents sing its praises as a new development environment.

The bottom line is that it’s all of the above. So, let’s take a deeper look.

HANA the Database/Platform:

Practically speaking, HANA is a new paradigm that founder Hasso Platner and team first demonstrated in 2008. With today’s advances in massively parallel processors and cheap, fast solid-state memory, Platner decided decades-old database and memory management programming rules were outdated. Hence, HANA as an “in-memory” database was born.

But there’s another more business-driven reason for HANA and it’s big and orange – Oracle. The two companies now compete so heavily on applications and cloud that SAP desperately wants to replace Oracle’s database technology (or Kryptonite) in its customer base. In fact, in a September 2013 blog Hasso Platner went as far as to say, “SAP HANA runs any Oracle based application without any change and mostly significantly faster.” Of course, Oracle has many claims about advances they’re making to their database technology, but they don’t appear to be as foundational.

Sounds great, you say…how do we buy it? This is where things begin to get complicated. HANA as a database is what SAP calls a “non-discountable product” and it comes in on-premise or cloud versions. The most common on-premise offering is HANA enterprise edition and is priced based on GBs of memory needed and 15% of HSAV or “HANA Software Application Value.” HSAV is the total value of the applications running on HANA and the fee is 15% of the purchase price of those applications – which are typically discounted. As you can see the discount you negotiate on the applications running on HANA will have a significant impact on the final price you pay for the HANA platform. And if that’s not complicated enough, there can be other charges for integrating HANA to other platforms (typically 5% or more) as well as many hardware partners selling HANA appliances.

Unfortunately, that doesn’t even begin to scratch the surface of HANA’s cloud based offerings often referred to has HEC (Hana Enterprise Cloud). A look at SAP’s HANA Cloud Platform Pricing and Packages table will show just how complicated this can get with the need to specify the various versions of HANA, connectors, tools, services, hardware, network and storage needed. For even more choices, check out Amazon and other partners’ offerings where you can even pay by the hour of use.

HANA Applications (S/4 HANA):

Since HANA is based on new programming techniques and architectures, it also allows for and even requires applications to be redeveloped to fully exploit its benefits. So, in February of 2015 SAP announced SAP Business Suite 4 SAP HANA (or SAP S/4HANA). Now this is where things get even more complicated for IT buyers as SAP S/4 HANA is available in traditional on-premise version (which can also be hosted by SAP and partners) OR in the cloud.
Currently there are three predominant flavors of S/4 HANA in the cloud (available on-premise, public or hybrid):

  • SAP S/4HANA, cloud marketing edition,
  • SAP S/4HANA, cloud project services edition for the professional services industry, and
  • SAP S/4HANA, cloud enterprise edition for full ERP capabilities.
  • Once again the pricing and terms for these are myriad - based on users and memory for enterprise ERP, revenue for project services, and contacts for the marketing edition. For a look at the five-page terms, they can be downloaded here from SAP’s web site. SAP is also fast at work combining their SuccessFactors, Ariba and other offerings with with HANA strategy, with almost quarterly announcements on integration and pricing.

    A few final thoughts…

    SAP has never been “easy” when it comes to purchasing, licensing, deployment or integration. This is no surprise as SAP functions as the epicenter and heartbeat of the enterprise IT ecosystem for some businesses. HANA is no exception to this legacy. Even in the realm of the cloud where simplification is celebrated (and a key benefit), SAP adds its own flavor.

    Interestingly, Steve Lucas, global president of the SAP Platform Solutions Group, recently said the following in a WSJ interview, “It’s one of the many, many lessons we learned from our experience in cloud computing—licensing doesn’t have to be that complicated.” Let’s hope he was thinking of the near future.