Why SAP HANA is an integral part of SAP’s cloud strategy

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SAP HANA is an integral part of SAP’s cloud strategy

On premise software applications leaders are grappling from the changes posed by the emergence of “cloud” in the IT industry. SAP AG (SAP)—whose software is installed on the majority of the Fortune 500 company’s servers and data centers—and Oracle Corp. (ORCL)—a leader in traditional enterprise software—have tread on the acquisitions route to benefit from the rapid growth in the “cloud space.” However, Salesforce.com (CRM), Workday Inc., the cloud solution providers, and new start ups are giving SAP stiff competition because of their price affordable cloud-based applications.

cloud market share
The previous chart shows the market share held by players in the Infrastructure as a Service (or Iaas), Platform as a Service (or PaaS), and Software as a Service (or SaaS) market. Salesforce leads the SaaS market while Amazon (AMZN) leads the IaaS and PaaS market.

SAP HANA and its expanded deployment

In-memory computing is crucial for cloud computing because cloud services are offered online. This requires companies to rapidly process large volumes of data. SAP HANA allows companies to store data in the server’s main memory instead of relational databases.

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The HANA platform can process massive amounts of information because of its in-memory technology. It also hosts SAP’s cloud offerings. It has proven to be a competitive differentiator. HANA is the platform for all SAP SaaS and managed services offerings However, Oracle and IBM (IBM) are also developing in-memory offerings. In the future, we’ll see whether or not HANA is a differentiator.

SAP keen to leverage the CRM market’s strong growth potential

cloud space

The adoption of cloud-based CRM applications (or apps) is expected to accelerate compared to on-premise apps. A report from Gartner says 41% of CRM systems were SaaS-based in 2013. Salesforce.com leads the CRM market, with a share of ~16%. SAP captures the second position at ~13% share. Oracle, Microsoft (or MSFT), and IBM make up the rest of this market.

Personalized and responsive user experience through “SAP Fiori” and “SAP Screen Personas”

Revenues have seen an increased adoption. To enhance its revenues through cloud and SAP HANA, SAP included the “SAP Fiori” user experience and SAP “Screen Personas” within its software license.

SAP Fiori launched in 2013. It’s a collection of apps that uses the latest design principles to deliver an improved user experience. Currently, ~300 apps use it.

SAP Screen Personas enables customers and partners to quickly personalize SAP software for their enterprise. It enhances their experience.

Strategic acquisitions

In May, 2014 SAP acquired Fieldglass—a software supplier engaged in managing the contract workforce. This acquisition is in line with the earlier acquisitions of SuccessFactors Inc.—a personnel software supplier—and Ariba—an online marketplace. The acquisitions are targeted to increase the presence of SAP in cloud or internet based applications.

The strategic acquisitions and enhancement of the SAP HANA features show that SAP is on its way to make more of its on premise software portfolio in the cloud space.

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