On February 9, SAP announced the launch of its next-generation enterprise process application, SAP Business Suite 4 SAP HANA (S/4HANA), in China. This is the third product launch event of SAP globally but it’s the first event during which the product is being launched with customer together.
From my discussions with Chinese customers during the event, I believe that SAP is on the right track to address their major concerns. However, enterprise architecture (EA) professionals in China should take a realistic approach when evaluating the feasibility of the architectural evolution of their enterprise process applications.
Chinese clients have suffered from complexity for a long time.As mentioned in my previous report, complexity is one of the key challenges that Chinese companies have faced in their drive to achieve business growth and product innovation, and product innovation must focus on simplicity to enhance customer experiences. This is particularly true when it comes to adopting mission-critical management software. It’s quite normal to hear complaints about the complex user interface, long implementation times, and the significant effort required to maintain and customize software; customization is much more popular and necessary in China than elsewhere due to the need for various types of localization.
Many of you will be in the midst of a negotiation with SAP at the moment, because SAP does about 40% of its license deals in the October to December quarter. It’s a sourcing cliché that software companies give their best discounts at their fiscal year end, but just because you are making a purchase in month 12 doesn’t mean that you are getting a good deal. I see a lot of SAP proposals and contracts, and I’m often surprised by the gulf between the actual deal on the table and what I would consider to be an acceptable proposal – one that sets the relationship up for mutual success, balancing price, flexibility and risk.
Buying software from powerful providers such as SAP is very different from buying hardware, services and non-IT categories. Unfortunately, many sourcing professionals seem to think that they’ll look weak if they engage expert help to coach them during a negotiation, but it isn’t a question of haggling skills, it’s a question of deep, current market knowledge. Unless you have that, you risk:
I recently had the opportunity to spend some quality time with NetSuite in San Jose at its customer forum — SuiteWorld. The event gave me a long, overdue deep-dive into their current strategy and the chance to speak with many of their customers one-on-one.
The big announcement from the event was the availability of its manufacturing solution. The evening before the event started I had a good conversation with our Sourcing Analyst Liz Herbert — who spends a lot of her life focused on the SaaS providers — and asked her why NetSuite was not growing more quickly. Her response was that its lack of a manufacturing solution is partly to blame. So when it was announced by CEO Zach Nelson the next morning, it certainly helped to fill me with confidence about its future.
SAP launched its HANA in-memory computing platform in 2010. HANA is a converged analytics appliance. Three years later, SAP has officially launched Business Suite on HANA: globally in January and in China on March 19. SAP clients can now run mission-critical applications on the converged infrastructure for optimized performance. Personally, I would suggest calling this an example of converged applications, which in short refers to the business applications that are architected around the converged infrastructure for performance and simplicity.
I had several conversations with architects from the retail, logistics, and manufacturing industries, as well as Tom Kindermans, SAP’s senior vice president of applications for APJ, about these converged applications. I tend to believe that this is the next wave of application architecture, after mainframe, client/server, and browser/server. With the deployment of these converged infrastructure offerings and the evolution of the applications that run on top of them, it might change technical architectures across infrastructure, information, and applications, as well as the organizational structure of IT, the architecture, and the partner ecosystems. My assessment:
The definition of converged applications is blurry. The meaning of incorporating converged applications can vary quite a bit. Sometimes it means migrating an application from one server to the other; sometimes it means refactoring your networking and storage design for load balancing and disaster recovery; and sometimes eliminating an original performance bottleneck means that business challenges that had been lurking under the surface might emerge for you to resolve. It totally depends on your business goals.