Yesterday at a marketing focused event held in New York City, SAP announced SAP Business Suite 4 SAP HANA (SAP S/4HANA), a long title to depict the termed next generation of SAP’s Business Suite of applications. This new collection is to be fully built on the SAP HANA in-memory database platform but the product’s full potential will not be realized for many additional years.

It is uncharacteristic of SAP to pre-announce a major software development program, but these are challenging times for the enterprise software provider’s attempts to compete with more up and coming cloud-based applications providers.

SAP’s CEO Bill McDermott described SAP S/4HANAas the most important product launch in the company’s history. The CEO provided his typical verbose statements:

Today SAP is redefining the concept of enterprise resource planning for the 21st century. SAP S/4HANA is about uniting software and people to build businesses that run real-time, networked and simple. When Hasso Plattner invented SAP HANA, we knew the day would come for SAP Business Suite to be reinvented for the digital age. At a moment when businesses around the world need to enter new markets and engage with their consumers in any channel, there’s now an innovation platform designed to drive their growth. This is an historic day and we believe it marks the beginning of the end for the 20th century IT stack and all the complexity that came with it.”

However, SAP Founder and HANA champion Hasso Plattner was more to the point. He is quoted in Re/Code and Business Insider as indicating: “If this doesn’t work, we’re deadIt’s that simple.” Leave it to Hasso to succinctly get right to the point.

Business Insider and others, including Supply Chain Matters, acknowledge that SAP’s strategy for cloud adoption has been via acquisition. We recently featured a review of enterprise blogger Vinnie Mirchandani’s new book, SAP Nation, which more deeply explores SAP’s acquisition efforts to leverage cloud and the marginal results of such efforts. Billions have been spent in the prior acquisitions of SucessFactors, Ariba and Concur Technologies. It now appears that SAP will now turn toward its in-house development teams to yet once again, re-design millions of lines of code to be able to leverage the full potential of an in-memory database.

Regarding yesterday’s announcement, Mirchandani’s take was that there was little news of product depth, discussion of economics, along with his impressions that this announcement might have been rushed by SAP executives.  On the Diginomica Blog, long-time SAP observer Dennis Howlett provides User, Analyst and Partner initial perceptions of yesterday’s announcement. His two takeaways were that:

1. SAP believes it has a 3-5 year window in which to refactor 400 million lines of code or:

2. It doesn’t know where to start other than core financials as a moat to protect existing maintenance revenue.

Our Supply Chain Matters initial takeaway is that rather than being even more confused and unsettled by these continued SAP HANA focused development efforts, supply chain and procurement, and their associated IT support teams need to stay focused on the business challenges at-hand and make the best of the SAP supply chain management applications installed. A consideration for surrounding such applications with best-of-breed cloud-based applications or time-to-benefit services accelerators becomes ever more evident given this latest directional timetable of SAP.

This author does not perceive that supply chain has any current discernable priority in the current HANA strategy, and that is an opportunity lost.

Our additional concern is for SAP supply chain focused teams seeking end-to-end supply chain information and business network integration. Ongoing efforts to enhance Ariba applications deeper into extended direct procurement support and to fully leverage SAP’s HANA platform stand to be further extended with this latest SAP Business Suite directional timetable. There were already challenges for Ariba development teams and now the picture becomes more unsettling.

We will provide additional follow-up commentary relative to the announcement of SAP S/4HANA in the weeks and months to come.

Bob Ferrari

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