SAPs Berlin Wall

As we approach SapphireNOW, I notice more comments and blogs from SAP executives and partners which in some shape of form touch on HANA. In many ways, HANA has dominated SAP world for the last few years so it’s not surprising. With S4, HANA will continue to get top billing for years to come.

But from a customer economics pov, does that obsession with databases make sense? In the economic model I built for SAP Nation, non-SAP software costs totaled $ 15 billion a year, so rough 7% of the annual run rate. That includes database, BPM, testing, virtualization and other infrastructure software.

People are surprised the database cost is so low.  The reality is the Oracle or DB2 or SQL Server software typically supports way more than SAP applications in a shop. And quite a bit of SAP software is shelfware. So the “effective” database cost allocable to SAP function points is actually not as high as might appear on the surface.

The really big costs in SAP world are labor – outsourced and internal BASIS, ABAP, FICO and other talent. Labor makes up 70% of costs in SAP Nation. Some of that labor includes DBAs, but databases have been automated a lot more in the last several years compared to application layer.

Just as inefficient are overpriced, outdated data centers and network costs in SAP shops

The funny thing is SAP hardly ever talks about or picks on those costs. At Sapphire next month you will see the same booths of outsourcers with tens of thousands of consultants. And billions a year in wasteful travel costs. You will see telecom providers who sell MPLS circuits to SAP shops at outrageous price per mbps. You will see hosting firms which have not reduced prices for years, when they should be doing so every quarter.

In the book, I compared SAP’s obsession with Oracle as that of Ahab for Moby Dick.  I wrote “While the whale was fearsome, many readers would say Ahab was actually the villain with his relentless obsession and reckless use of the ship and crew in chasing the whale”

I am tempted to go to Sapphire, and emulate Reagan standing before the Berlin Wall, and say “Dr. Plattner, tear down these massive partner booths”.

That’s where the massive inefficiencies are in SAP Nation. The database just makes for entertainment as Oracle and SAP continue to take potshots at each other.

(Cross-posted @ Deal Architect)

Article source:

News Feed


Read more Protection Status