A Reality Check on SAP HANA’s Future (Spoiler alert: It’s not going anywhere but up.)

SAP’s HANA, which started life as an in-memory, columnar database platform almost ten years ago, has always been a lightning rod for controversy. Maybe it started with the simple fact that, armed with its own database, highly tuned to SAP’s own software needs, SAP was clearly planning on usurping the dominance of the Oracle database in SAP’s customer base (which it apparently has done, though details are hard to come by.) Or maybe it was the fact that HANA made other companies’ data warehouse technology look old and tired (for which SAP earned a last-refuge-of-the-market-loser lawsuit from data warehouse dinosaur Teradata.) Or maybe it was the fact that with HANA the company was abandoning its longtime strategy of supporting customers’ choice of database by forcing them to deploy all of SAP’s new product offerings on HANA (cf S/ HANA, C/4 HANA), all the while moving to run its recently acquired cloud products on HANA as well (a shift, mostly from Oracle DBs, which has been moving forward steadily as well.)

Regardless of why, the controversy factory was all primed to go when SAP announced a set of layoffs last month that, among many other individuals, targeted a number of employees who had been part of the HANA family for quite some time. The implication seemed clear: SAP was de-emphasizing HANA and its strategic value. As the above link shows, I pretty much said as much myself at the time.

There’s been a lot of phone calls and meetings since, and SAP has taken pains to convince me to the contrary. To their credit, when all is said and done, there’s a preponderance of evidence that signals SAP’s intention to maintain HANA’s strategic position in its customer base (and possibly beyond, more on that in a moment.) While it will never become a dominant player in the overall database market, dominating the SAP market and staving off the inroads of its direct competitors would be a pretty solid win for SAP. That would require a continued investment in HANA, at least to keep it on par with a market that is constantly evolving how data, development, and deployment are managed in a multi-cloud, hybrid, and rapidly innovating market. And that investment is apparently continuing.

Let’s start with the fact that SAP’s official count is 29,000 HANA customers as of Q2. I estimate that about 1/3 have licensed HANA as part of an S/4 HANA sale, and we have to put an asterisk next to that number, as the number of S/4 HANA licensees that have gone live as a percent of the total is still relatively small. But the others, mostly BW and some HANA Enterprise Cloud and Suite on HANA, still make for a respectable customer base. It’s not clear if these numbers include any of the SuccessFactors customers that are running on HANA as part of SAP’s slow and steady migration of their SuccessFactors code onto HANA. When the eventual migration of the rest of the SAP cloud properties to HANA is completed, the total customer count will increase significantly – SuccessFactors alone has over 6700 customers and tens of millions of users.

Meanwhile, the strategic value of moving existing cloud properties to HANA is in evidence in strategic deals like the 200,000-plus user rollout of SuccessFactors at Microsoft. According to a briefing SAP Digital Business Services gave at its analyst event last summer, the Microsoft implementation is running on HANA in the Azure cloud, something I’ve been told is as much a strategic move by SAP to showcase SuccessFactors on Azure as it is by Microsoft itself to gain experience running a major HANA system in its cloud.

The Azure connection is another important proof point for the strategic value of HANA: as Microsoft tries to up its game against cloud platform rival Amazon AWS, being able to run large, strategic enterprise workloads is an important way to get Azure on the short list. The two cloud rivals are both pushing HANA workloads as major entry points in their competitive battle. And you can expect Google Cloud Platform, which is already offering pay-as-you-go, “no lock-in” HANA licenses, to up its game now that ex-SAP cloud czar Rob Enslin has moved over to GCP.

Meanwhile, the hyperscalers are competing with one another to see which can support the fastest deployment and most flexible use cases for HANA. AWS last year touted its ability to spin up a full HANA instance in less time than it takes to complete a standard 45-minute presentation (which was, of course, demoed during an AWS presentation.) AWS allows customers to “buy” HANA in its online marketplace, and supports the migration of existing on-premise HANA licenses to the AWS cloud. Along with promoting a continuously evolving set of HANA-based services running on AWS.

I think it’s safe to surmise that AWS and Azure both see strategic value in HANA and are putting their money and people on the line to make that happen. I doubt they would do that without having serious reassurances from SAP that those investments are being matched by similar commitments by SAP.

Underlying the push into the hyperscale market is the fact that HANA’s strategic focus is moving more and more into the “database of databases” opportunity that is opening up as customers come to grips with the massive distribution of data across their multiple cloud and on-premise systems. HANA is an integral part of SAP’s Data Hub and Analytics Cloud strategies, it’s at the core of the overall Analytics Cloud strategy at SAP, and SAP has of late been rolling out a constant stream of updates and additions to HANA to meet these requirements.

SAP and Intel have also been hard at work improving the hardware side of HANA’s in-memory database story. Intel’s new Optane memory technology was designed to help improve memory capacity and utilization in HANA systems, and the results reported by SAP and its customers show significant improvements. However much skepticism you may apply to self-reported benchmarking (which is my general stance), Intel’s investments in HANA and its customers base, like those of Microsoft and Amazon, wouldn’t be taking place without a nod from SAP on future development commitments.

In another indication of SAP’s intentions vis-à-vis HANA, a quick search of the session catalogue for this year’s SAPPHIRE/ASUG Annual Conference reveals almost 700 sessions that cover HANA in some form or another, fully a third of the total session count. The majority take place inside SAPPHIRE, but a significant number are in the ASUG tracks as well.

Meanwhile, although SAP’s layoff was widely touted as a realignment, and while that realignment looked like it was downgrading the strategic value of HANA, SAP has assured me that the net number of employees focusing on HANA and analytics is slated to increase overall, and that’s for a team that I am told is already one of the largest development teams in the company.

One more thing – in a call with Hasso Plattner, the company chairman indicated that SAP was also focusing on putting non-SAP workloads on HANA. While I’m unaware of any significant non-SAP uses of HANA, Microsoft’s Azure documentation references this kind of use case, and partner CAP Gemini talks about using HANA as part of a strategy to consolidate non-SAP databases under a single management umbrella. I don’t think HANA needs non-SAP workloads to be successful, but having a significant number of customers looking at HANA detached from running a SAP cloud product would qualify as an important endorsement.

The controversy around the layoffs may still be simmering for some, and news that an activist investor has targeted SAP is in my opinion one of the most important developments in the SAP saga in a long time, far exceeding pretty much any other company news so far this year. But I believe the question of HANA’s primacy at SAP can and should be put to rest: there are many things HANA isn’t and will never be – including a top tier competitor in database market share and a major independent revenue source for SAP. One more thing it most certainly will never be is a sideshow at the SAP product rodeo. HANA is too important for that, and underestimating its importance and future role in the company is a mistake no one should be making. Controversy not withstanding, HANA is here to stay.