Yesterday SAP announced SAP HANA 2, an updated and improved version of its flagship product SAP HANA, and new SAP HANA microservices through SAP Hybris as a Service. SAP HANA 2 will be available for first customers on November 30 and an express edition shortly after its general availability. Note: if SAP talks about RTC this usually differs from General Availability, which is only after a successful ramp-up period of about 3 months to validate a product with early adopter customers. So the Express Edition will probably be released around end of Q1/2017. In usual bold marketing words SAP HANA 2 is poised to be a “new foundation for digital transformation” and is according to Bernd Leukert, member of the executive board, Products and Innovation at SAP SE, the continuation of “breakthrough innovation on a highly stable core data platform for our customers”. SAP HANA 2 shall deliver enhancements in the areas of database management, data management, analytical intelligence and application management as well as well as two more services for cloud customers: Text Analysis and Earth Observation Analysis. The latter in a beta status only. These latter two new HANA functionalities are likely to be the reason of tying the two announcements. The update cycle of HANA 2 shall be 6 months.

Some Observations

It is interesting that SAP refers to the new HANA services as microservices. This suggests that these services are built on top of the HANA 2 core – or else HANA itself has been rearchitected to be built on a microservice architecture. I rather think the former, also as the delivery is via YaaS. So, SAP is somewhat muddling the waters here. There is an enhancement to offload read-intensive workloads to secondary systems, with the reason to improve operations. While this seems sensible on the outset: Does this suggest that there are scaling problems with read operations? A new edition of the SAP Enterprise Architecture Designer Web application with a focus on information (data) architecture is part of the delivery. Data architecture is only a small part of Enterprise Architecture, in fact part of the Systems Architecture domain, which in itself is one of four domains. I’d be interested to have a look at this tool. The predictive analytics capabilities have been enhanced. Although the press release talks about “Analytical Intelligence” SAP does not jump on the bandwagon of Artificial Intelligence and Machine Learning here. This is interesting in itself. The extension of runtimes to support additional languages and the enhanced file processor API is an important step although the statement of build packs and runtimes “can be used within SAP HANA extended application services, advanced model” is sufficiently fuzzy to raise some question marks. There is no statement about upgrading/migrating from SAP HANA to SAP HANA 2.

My PoV

Assuming that the upgrade from SAP HANA to SAP HANA 2 is a simple upgrade we are definitely seeing an evolutionary approach here that combines additional functionality with ecosystem play and a (gentle) push into the cloud. The push to cloud is evidenced by making some interesting services, namely the trio of Text Analysis services, available via YaaS only. While the Earth Observation Analysis service is interesting in itself its highest significance probably lies in its suggestion for an upcoming industry orientation on top of HANA. This would cater for SAP’s solution orientated strengths. Making all these services available on top of the platform indicates the remuneration models SAP is going for: A base fee for platform and core applications plus usage based billing for sometimes important parts of functionality, which are delivered as metered services. It remains to be seen whether SAP finds a customer friendly balance here. The ecosystem play shows itself in adding language runtimes and the express edition that both will attract additional developers who will build new services and applications on top of HANA. Combined with YaaS this is a powerful model. A focus on analytics and integrating the platform into Enterprise Architecture is evident, although the EA angle likely needs quite some improvement. Why would I use the seemingly incomplete SAP Enterprise Architecture Designer when EA covers so much more than data architecture? However, the idea of using HANA as an architecture repository is quite intriguing. Analytics is a core (horizontal) part of a platform as it is important for nearly every business scenario. Here we are coming to a concern, which revolves around what has not been announced. While very much hyped the topics of AI and machine learning are important. And both are platform technologies, as advanced analytics capabilities are. Salesforce just nonchalantly, almost in a sub-clause announced their Einstein as being part of the platform. SAP so far keeps fairly silent on both topics, apart from a partnership with IBM Watson.

After my SAP CRM State of the Nation and Light at the End of the Tunnel articles of earlier this year it is time again to have a look at what and how SAP is doing in the wider CRM arena. After all SAP also recently released its 1608 Hybris version, which in my eyes makes SAP very competitive again. Let’s start with some facts, which I’d like to put into a bigger context:

• SAP CRM 7.0 is in mainstream maintenance until end of 2025. This should give some relief to the existing customer base
• SAP CRM (the on premise product) continues to receive only little investment; on the positive side this investment is very customer driven
• At the same time CRM 7.0 is the only version that is not in customer specific maintenance; means it is the only version that still gets legal/regulatory and other updates
• SAP’s CRM strategy ‘Beyond CRM’ has a strong focus on the Hybris line of products, which, I think, meanwhile is highly competitive
• As an aside to the above points this situation makes the maintenance fee of 22 per cent for SAP CRM in combination with the suboptimal support appear very high
• The user interface of the Hybris line of products is a lot sleeker than the UI of CRM 7.0
• From a functionality point of view, especially looking into industry specific functionalities, CRM 7.0 still has an edge over the Hybris portfolio, with the possible exceptions of Retail as an industry and Hybris Marketing.
• S/4HANA is getting pretty successful – this may be taken as conjecture, but people I trust confirm this;
• S/4HANA, however does not have a discernible CRM foot print that I am aware of – let us hold this thought for a while
• SAP has a good number of on premise customers and I do think, cloud or not, this will continue to be the case – not only for SAP; let’s talk about that again in 2025 ;-)

What does all this mean for customers?

Well, that depends … Let’s consider some scenarios.

You do not run CRM but want to change this

Do not forget to have a look at the Hybris line of products, especially if you are already an SAP customer. Ruling it out right from the beginning meanwhile is a mistake in any case. The Hybris line of products can compete with both Salesforce and Microsoft and, in the case of e-commerce also has a clear edge over both. Microsoft does not offer a strong e-commerce solution itself and Salesforce is likely to be busy integrating Demandware better into the suite of products.

You still use SAP CRM pre 7.0

This can only mean one of three things. Customer is happy with the solution and self-sustainable – or not using it at all. In these situations, one just needs to be sure that no maintenance fee is paid anymore. Check your contract and accounts. If there happens to be a contract on customer specific maintenance because ongoing support is needed, my strong recommendation is to consider an upgrade or change of system. In any case one should get out of customer specific maintenance; e.g. go third party maintenance, or contract experts in, if support is required. Any of these scenarios is less expensive than customer specific maintenance and offers a few, but differing, advantages. Better go for an upgrade to CRM 7.0 or migrate to the Hybris line of products, if you cannot see yourself positioned in a self-sustained scenario! After an upgrade to CRM 7.0 you still could go third party maintenance, on an improved platform … but that is another story. Of course, the decision for Hybris or CRM 7.0 needs to be carefully evaluated. SAP has a focus on Hybris, system integrators one on billable days. After all the decision boils down to what you need now and in 3 – 5 years. Preparation pays off.

You use CRM 7.0

Now this is where the fun starts. This scenario is where SAP gives least guidance. It is also the reason for this post … Because there is no other way than considering the Hybris products if additional, modern functionality is required to improve the customer facing operations. On the other hand, this is pretty costly and may result in redundantly licensing/subscribing to overlapping functionality. This certainly needs to get checked and corresponding negotiations are likely to be easier if SAP is chosen as opposed to . The good news is that the integration between CRM 7.0 and the Hybris line of products is improving a lot. The bad news, of course, is that integration is needed … So, basically SAP is in the hot chair to provide vision and guidance for customers.

Two Scenarios for SAP to improve the Customer Situation

Let’s take up the thought I put on hold above. The ongoing need for integration between different SAP products and solutions is hard on customers as well as SAP. And it is not really necessary. A micro services architecture on HANA can take care of that. Personally I would treat Hybris Commerce as a separate entity here but that may be up to debate. Both approaches essentially boil down to fulfiling Hasso Plattner’s original vision of Business by Design. The technology is all there.

Scenario 1 – “S/4HANACRM”

CRM 7.0 already runs on HANA. S/4HANA is missing a CRM. So one could get the idea to modularize CRM’s object model more and to make it a part of S/4HANA. This also involves adopting the S/4HANA UI. Maybe strip out some of the marketing functionality and replace it with SAP Hybris Marketing. Over time do the same with other functionality, probably starting with merging the Hybris Service Engagement Center and Hybris into “S/4HANACRM” replacing the existing CIC. Continue with the balance of service sales functionality. This could give a nearly immediate boost to S/4HANA, cover on premise, private- and public cloud scenarios, and, most importantly, provide existing on premise customers with a clear migration path, which is currently missing. There is also a richness of industry specific functionalities immediately available. On the flip side there still is the existence of different products that address the same potential customers. This needs to get managed. Technically I can imagine that the configuration initially is somewhat of a challenge due to different concepts.

Scenario 2 – “S/4HANAHYBRIS”

This approach basically works the other way round. Take the Hybris portfolio of CRM applications and merge them into S/4HANA. This emphasizes on the current strategy (although an overall rebranding might be in order) and should be less work as the Hybris suite should also be very close to a micro services architecture. Following this approach would also help SAP to start from a cleaner code base with less legacy. The implementation of customer facing functionality would also follow an ‘important things first’ approach. Industry specific integrated processes will come later, along with clearly defined migration paths, e.g. leveraging the Data Hub. On the down side this approach might initially cause some not overly excited customers, if they do not get access to the good new functionality they need via the Hybris solution stack – at reasonable conditions. Of course SAP might have a totally different view – but these are the most promising ways for SAP to approach ‘Beyond CRM’ that I see. I actually would opt for the “S/4HANAHYBRIS” scenario.