SAP Is Driving Analytics, Cloud and Mobility in the Nexus of Forces

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1 G SAP Is Driving Analytics, Cloud and Mobility in the Nexus of Forces Published: 24 August 2012 Analyst(s): Donald Feinberg SAP has moved from applications vendor to software provider with a broad portfolio that includes business analytics, information management and mobility infrastructure. Although weak in adoption of social media, SAP has embraced Gartner's Nexus of Forces as its go-to-market strategy. Key Findings Enterprises' need for business applications places SAP at the intersection of technology and business. This puts SAP in a strong position to play a driving role in the Nexus. SAP is responding to business requirements by focusing on analytics and information, mobility and cloud in order of their importance to business. Social media has become important in CRM, and SAP must address this to maintain a leading position in CRM applications. SAP continues to have the broadest device support among all the multichannel vendors, and the strongest mobile device management (MDM) offering, Afaria. SAP has an aggressive strategy to become the world's most powerful vendor of enterprise mobile application platforms. Part of this strategy involves the acquisition of Syclo, a mobile application development vendor, and partnerships with Adobe Systems, Appcelerator (a mobile applications company) and Sencha (an application frameworks, tools and cloud services company). SAP's application infrastructure and architecture strategy (Hana Architecture) shows that SAP has an advanced and progressive vision regarding the role that in-memory computing will play in this context. SAP's long-term goals for developing a cloud platform are not clear. SAP must develop a clear strategy, and describe and develop a strong platform to support the cloud. Recommendations Begin to evaluate SAP applications on the level of integration of Nexus forces, that is, how well SAP is integrating social, cloud and mobility features to enhance its applications.

2 Push SAP to provide a detailed road map for cloud, if you are likely to need applications in a cloud-based environment in future. Customers must understand the implications of upcoming changes to the cloud strategy of SAP before investing in these applications. Evaluate providers whose offerings integrate the Nexus forces (especially mobility and social) with SAP applications because SAP offers an open application architecture. Continue to push SAP for additional integration of social offerings for CRM and marketing lines of business. Analysis This document was revised on 30 August The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com. SAP's business strategy fits into Gartner's Nexus as it embraces the cloud, mobile and information forces (see Note 1 and Figure 1). SAP is unique in having aligned its go-to-market strategy and execution model around the Nexus by building its business strategy around applications, database and technology, mobility, cloud and analytics. Although its focus on mobility, cloud and information is positive, SAP could go further by incorporating social media into its strategy. Without adding emphasis on social, however, SAP endangers its support for the Nexus as a whole. Page 2 of 10 Gartner, Inc. G

3 Figure 1. The Nexus of Forces Source: Gartner (August 2012) SAP's Hana Architecture Strategy Is the Center of Nexus Strategy SAP's application infrastructure and architecture strategy (Hana Architecture) are key strengths of SAP's business strategy in terms of Gartner's Nexus. Hana is a premium-priced product based on SAP's in-memory database management system (DBMS) and, although primarily for analytics today, will support mobility and cloud applications and, potentially, increased integration of social data. SAP's Hana strategy is a bold attempt to effect a generational change for the company and a disruptive, innovative change for the IT industry. It will enable SAP to compete with thought-leading architectures and new high-business value applications, such as SAP Customer Segmentation Accelerator and SAP Predictive Analysis. Although this vision is in the early stages of market Gartner, Inc. G Page 3 of 10

4 acceptance, other vendors, such as Oracle, are validating the strategy with market hype and product releases to compete with Hana. Figure 2 summarizes SAP's position in each of the four Nexus forces, which are discussed in the following sections. We have positioned the four Nexus forces on this figure along with examples of the vendors offerings to show the relative maturity of the products (y-axis) and our current rating of the offerings for clients to consider when seeking to address that issue (x-axis). Figure 2. Assessment of SAP Offerings That Address the Nexus of Forces Maturity High Business bydesign SUP SAP Sybase DBMS Cloud Mobile Medium StreamWorks SuccessFactors Information Social Afaria Low SuccessFactors Jam Hana Caution Promising Positive DBMS = database management system Source: Gartner (August 2012) Information SAP has built a strong information management base through acquisition and internal development. SAP is positioned well for information and Gartner believes SAP will continue to grow its information strategy and product set to become one of the three dominant vendors in information management. SAP introduced Hana in 2010 and made it generally available in June Initially, SAP released Hana for stand-alone analytic applications; organizations could use its speed to enable applications they could not enable before. In 2012, SAP released Hana as the infrastructure for SAP's NetWeaver Business Warehouse (BW), replacing the DBMS of record and the Business Warehouse Page 4 of 10 Gartner, Inc. G

5 Accelerator. The increased performance of the Hana platform will be of interest to the approximately 13,000 SAP BW customers. Over time, we believe Hana will enable changes to the BW structure by simplifying the complex schema and processing performed in the BW. It will push BW processing down into Hana. SAP has released many new applications enabled by Hana, such as SAP Business Planning and Consolidation, SAP CO-PA Accelerator, SAP Sales Pipeline Analysis and SAP Customer Segmentation Accelerator. As of June 2012, SAP claims about 500 Hana customers demonstrating the strong interest among SAP's customers for these applications, including the BW. SAP has also made Hana available to the SAP partner network and ecosystem in a smaller version, Hana Edge, for deployment in the ecosystem with partner applications and, today, with SAP Business One Analytics. We believe that Hana is an innovative, disruptive technology that will eventually push its competitors to offer something similar. SAP bought Sybase in 2010 and integrated it into SAP this year. In addition to mobility, SAP Sybase added broad offerings in data management with Sybase IQ, Sybase ASE, data integration and data quality tools and Sybase Replication Server. Sybase data management, along with Hana, forms the basis of SAP's information management strategy. SAP has also formed the Database and Technologies group as the go-to-market organization for all technology products including the SAP Sybase products, Hana and the enterprise information management (EIM) products MDM, data integration and content management. SAP Sybase ASE is certified for the SAP suite of applications, including BW, in addition to SAP's support of IBM DB2, Microsoft SQL Server and Oracle. This gives SAP its own DBMS to support the applications, which raises the question about impartiality to platform. We believe SAP will continue to offer and support all current DBMS platforms while favoring its ASE offering. 1 SAP Sybase IQ is a data warehouse (DW) offering and can stand alone in support of a data warehouse environment. SAP is also positioning IQ with Hana as an integral part of its strategy. Enterprises can use Hana for the DW of record for analytics with IQ for older data. Additionally, IQ, with its integration to alternative stores, such as MapReduce, enables the integration of big data with Hana and forms the DBMS infrastructure of a logical DW. 2 We believe that SAP has made the right investments with SAP BusinessObjects 4.0, which launched Business Intelligence and Enterprise Information Management 4.0 (BI and EIM 4.0) in This shows that SAP has bet on key areas of innovation, such as in-memory analytics, columnar databases, mobile delivery, mining social sites for content, and enabling embedded analytic applications. 3 SAP BusinessObjects can perform structured data and text analysis typically associated with social tools. As yet we are unaware of enterprise clients using this tool to mine social data. SAP considers the BusinessObjects 4.0 release a milestone that leverages technology trends, such as in-memory analytics, or mobile BI content provided through tablet and smartphone devices. The FP3 release also adds built-in social and collaborative capabilities. At the same time, SAP uses its BI capabilities to launch new analytic applications, such as Healthcare Practitioner Spend Analysis and Enterprise Risk and Solvency Management. Gartner, Inc. G Page 5 of 10

6 Mobile SAP continues to execute its mobile strategy aggressively to become a leader in enterprise mobile development. SAP has reinforced its early bet on mobility (compared to other major independent software vendors) through organizational changes that place it on an equal footing with other major SAP initiatives, such as Hana. SAP has one of the largest mobile development efforts in terms of devoted internal resources and partner management. SAP partners actively integrated with Sybase Unwired Platform (SUP) during 2011, and we expect that to continue. 4 SAP has a strong mobile device management (MDM) offering, Afaria. As with other mobile enterprise application platform vendors that offer MDM and mobile application management (MAM) capabilities, this enables SAP to provide a broader, better integrated mobile solution, while extending its reach throughout enterprise IT. In June 2012, SAP acquired Syclo to consolidate SAP's direction in mobile applications. 5 Syclo had built a strong business around its packaged mobile applications and development platform, particularly in industries such as oil and gas, utilities and other asset-intensive industries. The acquisition followed a period of cooperative competition (co-opetition) between Syclo's Agentry integrated development environment (IDE) and SAP's SUP. SAP plans to merge Syclo's Agentry platform with SUP, and will base its enterprise asset management and field service mobile applications on Syclo's. SAP has been closing gaps in the application layer of its Mobile Application Development Platform (MADP) by forming new mobile application development partnerships with Adobe Systems, Appcelerator, and Sencha. Relying on partners is a short-term, but overall weaker, solution than using other mobile vendors. We believe, SAP must add HTML5 native capabilities to its mobile platform. Since SAP bought Sybase in 2010, Sybase 365 has scaled well in mobile banking, especially in emerging economies. It has a large global reach, touching over 900 operators. SAP's mobile messaging offering is best-of-breed, with strong database/interface support, global reach, campaign management and prebuilt application modules. Gartner believes that, by 2013, SAP will offer context-enriched services through a combination of the Sybase 365 mobile consumer application platform, SAP applications and Sybase's data analytics. Cloud SAP has created a separate division with around 5,000 staff to deliver cloud services, and often speaks about its cloud focus on people, customer, financial and supplier management. SAP generates revenue from 20 or more cloud applications such as Business ByDesign (BYD), Sales OnDemand, Travel OnDemand and SuccessFactors BizX Suite, but does not yet have a single, integrated cloud-based platform that it can use to develop future cloud applications or to allow clients to develop their own. Hana can support a cloud infrastructure with its high-speed, in-memory scalable architecture and brings together two Nexus forces, information and cloud. The Hana Architecture will underpin SAP's Page 6 of 10 Gartner, Inc. G

7 software as a service (SaaS) and packaged business application strategy. The Hana Architecture (whether in the platform as a service or on-premises renditions) will potentially be a key offering in SAP's next-generation application infrastructure. 6 SAP has made targeted acquisitions to aggressively strengthen its cloud portfolio. These include the acquisition in 2012 of SuccessFactors, a SaaS vendor in the human capital management space, and the planned acquisition of Ariba. Ariba provides cloud-delivered business-to-business network services and enterprise procurement applications. 7 SuccessFactors is at the center of SAP's new Cloud Division with SuccessFactors' CEO at its helm and will enable SAP to offer a complete human capital management solution for the cloud. BYD, relaunched in 2011, has been slow to gain a major market presence and SAP will need to move quickly to integrate more than the current BYD with Employee Central from SuccessFactors, broadening the full SAP cloud offering. Buying Ariba will put SAP at the forefront of multi-enterprise process and integration enablement with a global network in the early stages of formation. SAP clients will benefit immediately from the deal through access to Ariba Discovery, Ariba's online directory of suppliers. These and future acquisitions form the core of the SAP Cloud and SaaS offerings. This strategy confirms SAP's commitment to protecting its core ERP business by buying successful SaaS offerings to extend it, reducing the threat of SAP being seen as providing system-of-record products, while clients turn to specialty providers for differentiation and innovation. Social SAP has powerful tools for analytics in BI 4.0, which it has not used to exploit social analytics. It would benefit from integrating its applications more closely with existing social sites and creating mobile applications that are integrated with these sites. Although BusinessObjects Mobile BI can be used to analyze social data, SAP would need to integrate these mobile applications with the cloud and its information/analytics offerings. A road map for integration with aspects of social data, such as for customer sentiment analysis, would result in a business strategy that fully embraces Gartner's Nexus of Forces. Without the strong integration of social, this would jeopardize SAP's support of the overall Nexus of Forces, leaving an opportunity for competitors. SAP could increase its social capabilities and integration with the Nexus forces by: Enabling SAP applications to work with popular social networks. Greater integration of StreamWork with applications, specifically cloud and mobile based. Giving clients tools, other than APIs in StreamWork, to develop social applications. StreamWork is social collaboration and decision-making and has been integrated into some applications for collaboration, such as CRM. SAP acquired Jam for social networking with SuccessFactors, but has yet to explain how this will integrate with StreamWork or other SAP applications. Gartner believes that as SuccessFactors is integrated with other products in the SAP Gartner, Inc. G Page 7 of 10

8 Cloud, Jam and StreamWork will become integrated with SAP offerings, supporting mobile and cloud. Gartner believes that SAP's limited focus on social will be, in the short term, masked by the strength of the other Nexus forces within the SAP product mix. However, if SAP wants to compete in a Nexus-integrated world in the long term, it will need a much stronger strategy for integrating social with other offerings. Advice for IT Leaders Although still incomplete, SAP's strategy is likely to shake up the application infrastructure market. As SAP integrates the forces of the Nexus across the product line, many changes will occur in the SAP products, which will affect current customers. When evaluating SAP for current or new applications, IT leaders should: View Hana as a viable option. Expect the Hana Architecture to impact the industry significantly, because it will be central to SAP's next-generation application strategy. If you are an existing SAP client, plan to migrate from SAP's NetWeaver-based applications to Hana within the next three to five years. Examine each mobile offering's heritage. Ask for integration road maps and guarantees of support because SAP's product sets are in flux. For example, the SAP Mobile Defense & Security 1.6 and Mobile Direct Store Delivery applications are based on SAP's legacy Mobile Infrastructure platform. Ask SAP to communicate up-to-date platform road maps for the Nexus forces. Recognize that the integration of Syclo will take at least one to two years, and the partnerships with Appcelerator, Sencha and Adobe are nascent. Expect that platform road maps will change significantly as SAP starts to execute the next phase of its mobile strategy; it is likely to be forced to add HTML support, such as jquery Mobile, to its platform without relying on partners. Recommended Reading Some documents may not be available as part of your current Gartner subscription. "How to Tackle the Challenges of Running a Global SAP Competence Center" "Magic Quadrant for Mobile Consumer Application Platforms" "SAP's Mobile Strategy Will Force Enterprises to Make Complex Choices" "SAP to Buy Into Software as a Service With SuccessFactors Deal" "How to Get Started With a Pace-Layered Application Strategy" Page 8 of 10 Gartner, Inc. G

9 Evidence 1 "Choosing the Appropriate Database Management System Platform for SAP" 2 "Does the 21st-Century 'Big Data' Warehouse Mean the End of the Enterprise Data Warehouse?" 3 "SAP Launches BusinessObjects 4.0" 4 "Magic Quadrant for Mobile Application Development Platforms" 5 "SAP to Enhance Mobile Offering With Syclo Buy and New Partnerships" 6 "SAP Throws Down the Next-Generation Architecture Gauntlet With HANA" 7 "SAP to Buy Into Software as a Service With SuccessFactors Deal" and "SAP to Strengthen Cloud Portfolio With Ariba Acquisition" Note 1 The Nexus of Forces Cloud, social networking, mobility and the strategic use of information are the four forces that combine to create a new era of computing and new opportunities for business. In the Nexus of Forces: Information is the context for delivering enhanced social and mobile experiences. Mobile devices are a platform for effective social networking and new ways of working. Social links people to their work and each other in new and unexpected ways. Cloud enables delivery of information and functionality to users and systems. The four forces intertwine to create a user-driven ecosystem of modern computing. See "The Nexus of Forces: Social, Mobile, Cloud and Information" and "Re-Imagine IT Using Insights From Symposium's Analyst Keynote." Gartner, Inc. G Page 9 of 10

10 Regional Headquarters Corporate Headquarters 56 Top Gallant Road Stamford, CT USA European Headquarters Tamesis The Glanty Egham Surrey, TW20 9AW UNITED KINGDOM Japan Headquarters Gartner Japan Ltd. Atago Green Hills MORI Tower 5F Atago, Minato-ku Tokyo JAPAN Latin America Headquarters Gartner do Brazil Av. das Nações Unidas, andar World Trade Center São Paulo SP BRAZIL Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Level 9, 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner s prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner s research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity on its website, ombudsman/omb_guide2.jsp. Page 10 of 10 Gartner, Inc. G

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