SAP Simple Finance shows HANA's potential for 'disruptive innovation'

ORLANDO, FLA. -- SAP's unveiling of its HANA cloud-driven Simple Finance application follows on the company's newfound theme to "run simple." In addition, SAP co-founder Hasso Plattner has said HANA's in-memory database technology, along with cloud computing, will bring disruptive innovation to SAP, its customers and enterprise applications in general.

SearchSAP Executive Editor David Essex sat down with Frank Scavo, president of management consulting firm Strativa, at the Sapphire NOW 2014 conference held here earlier this month. They discussed Simple Finance, SAP's "run simple" theme, and how SAP's database technology compares with competitors from Oracle and IBM.

Hasso Plattner and other SAP executives made a point of talking about the work that goes into making things simple. How far do you think they've gotten?

Frank Scavo: Some of this is aspirational because historically, SAP has not been a very simple company. SAP competitors make a big deal about the fact that SAP is a large, corporate, functionally rich but complex system. They've made some progress already by re-platforming on the HANA platform, and Hasso spent quite a bit of time in his keynote talking about how that really was an opportunity to simplify the applications. [It allows] a very dramatic reduction in the number of lines of code, storing data at the transactional level instead of aggregated data, which makes the application that much simpler from a transactional standpoint, but pushing off a lot of the functionality into the reporting side, and instead of keeping aggregated data, you simply operate on the transactional data.

The first step they've done with that is in these simplified, simpler financials. The plan then is to roll that out to other parts of the Business Suite and make the whole Business Suite simplified. They're making some progress on that score, but again, a lot of this is in the roadmap for future quarters and years.

Simple Finance was the biggest news of the day, from my point of view. CFOs have been talking and hearing about predictive analytics for a long time. It seemed like there were some analytics capabilities in what SAP showed during the demo today. Is that a piece of Simple Finance, or are they just trying to put the core financials and reporting and make them run faster on HANA?

Scavo: I haven't had a chance to actually see what the functionality is, but my understanding is they went and they talked to the customers about where the real pain points were in SAP financials and have focused on really applying some design thinking to simplifying the use of those feature points. I think analytics is probably part of that. Some of the transaction processing steps have been simplified, but I think it's important to see what they've actually done with the product.

A good chunk of today's keynote was taken up by a very theoretical discussion by Hasso Plattner about aggregation of information in databases. Harvard professor Clayton Christensen was talking with him about how that relates to business processes and organization, and the flattening of organizations. Did you think much of that? I thought some of it was -- maybe not over people's heads -- but a little bit academic, for lack of a better word.

Scavo: I'm a big fan of Clay Christensen. He's the brains behind the whole theory of innovation and disruption, which everybody uses today. SAP, as a large leader in enterprise software for many years, is really in a classic position to be disrupted under Christensen's theory. So I think it's appropriate that they talked today about that. Christensen's trying to make a more general statement about how this type of thinking to do away with aggregation in software has a larger context in business -- to allow businesses to be more flexible and not have the organizations constrained by how they segment customers.

It was a little bit academic. Some of that may have gone over the audience's head. I thought it was interesting, but most SAP customers are looking for something a little more down to earth and applying to their pain points right now.

Was there anything else that you saw today, either on the show floor or hearing from customers, that is significant?

Scavo: The simplification theme is more than just the products. SAP is a large, multinational company with a lot of different layers, and frankly, for customers it has not been that easy to deal with over the years. So I think simplifying the product is one part of the customer experience. Simplifying things like the contracts, the price list, how customers get support, the whole ecosystem of service providers around SAP -- there are a lot of opportunities for simplification besides simplifying the product.

If SAP really wants to run simple, it's got to support that outlook more.

At Oracle OpenWorld, I was hearing a lot of talk from Oracle CEO Larry Ellison about all sorts of database simplifications to help with performance. That's certainly a claim we were hearing today from Plattner and other database experts. Do you have any thoughts about where HANA fits into the competitive picture?

Scavo: Right now, the HANA database is really, for the most part, limited to SAP customers, and then the startups, of course, that are building applications on it. It has not yet emerged as a real competitor to Oracle's database or IBM's DB2, and so on.

At some point, if they're successful, it could really become a very disruptive technology for all the relational database vendors, but they're nowhere near doing that at this point.