Yet, it was feared
that the German firm's best days were behind it. The perception among
investors was that it had missed the change over of applications to
the cloud and on to mobile devices. It was this change that was
powering new challengers to SAP such as Salesforce.com.
New Leadership
But the
appointment of co-CEOs – Bill McDermott and Jim Hagemann – in
2010 refocused the company on innovation and its customers.
What followed was
12 straight quarters of double-digit growth in sales of software and
related services.
But that wasn't
enough. Doubts still lingered about the company. Would it go down the
path of HP towards obscurity or remain relevant and successful?
Luckily for SAP,
the man who developed its flagship software system - chairman Hasso
Plattner, is still hard at work. He developed a new system
architecture that may catapult SAP ahead of its competitors.
Hana Is Born
Plattner and a
team of computer scientists designed new architecture that is now
SAP's solution to the rapid growth of mountains of complex data and
companies' desire to exploit this information to their advantage.
The new
architecture, Plattner's brainchild, is called 'Hana' and should be
the catalyst for SAP's future growth.
SAP says Hana will
allow companies to run complex reports on voluminous data in a matter
of mere seconds instead of hours. That is due to the fact that Hana's
computing takes place directly in the memory chip of the computer,
instead of on a separate hard disk.
This
entire concept was originally sneered at a few years ago by SAP's
rival, Larry Ellison of Oracle (Nasdaq:
ORCL), who often likes to poke fun at everything SAP.
However, he seems
to have changed his tune. Oracle now has its own in-memory product,
called Exalytics, which was released in February 2012. It is quite a
bit different than Hana, but both at their core do in-memory
calculations.
Microsoft (Nasdaq:
MSFT) is also expected to launch an in-memory product by 2014 or
2015. It is currently working on it – project “Hekaton” - to
compete directly with Oracle and SAP. Hekaton is Greek for 100 times.
It is expected
that customers will be able to install Microsoft's Hekaton on the
commodity servers they are using today.
Hana
is one of the key factors that is expected will allow SAP to keep
pace with rivals including Oracle and
International Business Machines (NYSE:
IBM). IBM recently reported excellent earnings (up 11%) powered by
gains in “analytics, cloud computing, [and] Smarter Planet
solutions”.
Last year's
acquisitions of Ariba and SuccessFactors and 2010 purchase of Sybase
are also expected to help SAP to keep pace with rivals.
The Future
SAP
forecasts it will pass 20
billion euros in sales by 2015, powered by three key areas: mobile,
cloud computing and database computing.
Sales of Hana are
expected to reach 700 million euros in 2013, which may be a
conservative estimate by the company. Hana had sales of almost 400
million euros last year with about half of those sales coming in the
last quarter of 2012.
An additional key
selling point for SAP this year is the fact that it reported earlier
this month that Hana will support SAP's business suite management
software, its cash cow.
Hana could turn
out to be a real game changer for SAP, which may set it on the right
path for the foreseeable future. As Hasso Plattner told the Financial
Times, “I see now a clear future for SAP for the next five to 10
years.”
This article was originally written for the Motley Fool Blog Network. Be sure to read of all my articles for the Motley Fool at http://beta.fool.com/tdalmoe/.