SAP layoffs may signal trouble for ABAP, HANA

Analysts say the moves could put SAP in a better position for new cloud investments, including untying SAP Cloud Platform from its HANA database underpinnings.

When SAP laid off 4,400 of its employees in early March, the company noted that the restructuring was part of a "fitness program." If the SAP layoffs and published reports indicate anything, it's that the vendor appears to be doubling down on its cloud strategies -- and jettisoning advanced development on its HANA database and ABAP programming language.

While analysts believe that customers will still receive support for products, early signs show that SAP may be more invested in opening up its SAP Cloud Platform to sit on top of other databases in the future.

The March SAP layoffs are not the end of the vendor's restructuring. According to published reports, SAP cut 446 jobs in the San Francisco Bay Area, the majority of which are software jobs. SAP isn't the only large tech company letting go of employees: PayPal and Oracle are also trimming their workforces, but not as much as SAP.

A hit to ABAP

The SAP layoffs hit Rich Heilman and Thomas Jung, both highly regarded ABAP developers, as well as Bjoern Goerke, chief technology officer and head of the SAP Cloud Platform business. However, Heilman accepted another job in SAP, according to a company spokesperson, and on April 1, Jung tweeted that he was moving to the technology and architecture team in the SAP Cloud Business Group.

This may be part of its cloud strategy because, to customize applications in the cloud, developers need to build ABAP on a platform-as-a-service model, then integrate with applications and interfaces -- a workaround that would be specific only to SAP because of the proprietary nature of the ABAP language, according to Duy Nguyen, senior director and analyst for applications procurement and operation at Gartner.

Rich Heilman and Thomas Jung were the two programmers that the ABAP community looked toward for help with issues that arose when developing in ABAP, Nguyen said. "Even though there's a bit of cleaning house, the goal [for SAP] is to look forward and recruit new blood in order to innovate -- but then there's a lot of old-school experts let go because they don't share the common vision." ABAP is not top of mind when it comes to innovation, he added.

HANA may no longer be a competitive differentiator

One of the reasons why SAP laid off so many of its HANA development staff is that providing a database is no longer a strategic differentiator, according to Joshua Greenbaum, principal of Enterprise Applications Consulting. At one point, HANA was a strategic differentiator because switching from a classic database to an in-memory database was a novel idea. However, the availability of services from AWS, Google and Azure has rendered databases a commodity, he said.

"This is the story of enterprise software: Yesterday's innovation is tomorrow's commodity, and tomorrow's innovation is something you put on stage in front of prospects," Greenbaum said, acknowledging that this is what SAP is doing. HANA and ABAP are no longer strategic, and many consider these to be anchors holding them back, he added.

SAP layoffs signal focus on newer technology, not trouble

Just because SAP let go of HANA and ABAP staff doesn't mean the company is in trouble, nor does it mean customer investments will be affected adversely, Greenbaum said. "SAP is really trying to refocus itself away from some of the proprietary technologies it was promoting. … This layoff and restructuring in the company is trying to bring the core of SAP closer to the cloud platform world, to the world of modern open source tools and open source platforms," he noted.

HANA won't be going away anytime soon, Greenbaum predicted. It's still the core database for the S/4HANA ERP system and other products, and it runs in the Azure cloud, Google cloud and on AWS. There is no reason for SAP to decouple HANA from its other products at this time. What will affect customers is that SAP is focusing more on business outcomes and less on technology outcomes, a positive for customers.

And as Greenbaum noted, SAP's competitors engage in reorganizations as well. But SAP received more press coverage due to its more open culture and the fact that a lot of the people let go in the SAP layoffs were SAP Mentors, developers and programmers who were part of an influencer group with more access than the average software vendor. "When these things happen, there's … a sense of betrayal. … It's different than Oracle, IBM or a traditional American company where it's the price of doing business," he said.

For now, it doesn't seem that existing HANA customers need to worry about their technology being sunset, and SAP's release of ABAP in SAP Cloud Platform may extend ABAP well into the future. However, the restructuring may also bring more options to SAP customers, as SAP continues with its cloud acquisitions and partnerships with Azure, AWS and Google Cloud.

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