Hana: Game Changer for SAP

Yet, it was fearedthat the German firm's best days were behind it. The perception amonginvestors was that it had missed the change over of applications tothe cloud and on to mobile devices. It was this change that waspowering new challengers to SAP such as Salesforce.com.

But theappointment of co-CEOs – Bill McDermott and Jim Hagemann – in2010 refocused the company on innovation and its customers.

What followed was12 straight quarters of double-digit growth in sales of software andrelated services.

But that wasn'tenough. Doubts still lingered about the company. Would it go down thepath of HP towards obscurity or remain relevant and successful?

Luckily for SAP,the man who developed its flagship software system - chairman HassoPlattner, is still hard at work. He developed a new systemarchitecture that may catapult SAP ahead of its competitors.

Plattner and ateam of computer scientists designed new architecture that is nowSAP's solution to the rapid growth of mountains of complex data andcompanies' desire to exploit this information to their advantage.

The newarchitecture, Plattner's brainchild, is called 'Hana' and should bethe catalyst for SAP's future growth.

SAP says Hana willallow companies to run complex reports on voluminous data in a matterof mere seconds instead of hours. That is due to the fact that Hana'scomputing takes place directly in the memory chip of the computer,instead of on a separate hard disk.

Thisentire concept was originally sneered at a few years ago by SAP'srival, Larry Ellison of Oracle (Nasdaq: ORCL), who often likes to poke fun at everything SAP.

However, he seemsto have changed his tune. Oracle now has its own in-memory product,called Exalytics, which was released in February 2012. It is quite abit different than Hana, but both at their core do in-memorycalculations.

Microsoft (Nasdaq: MSFT) is also expected to launch an in-memory product by 2014 or2015. It is currently working on it – project “Hekaton” - tocompete directly with Oracle and SAP. Hekaton is Greek for 100 times.

It is expectedthat customers will be able to install Microsoft's Hekaton on thecommodity servers they are using today. 

Hanais one of the key factors that is expected will allow SAP to keeppace with rivals including Oracle andInternational Business Machines (NYSE: IBM). IBM recently reported excellent earnings (up 11%) powered bygains in “analytics, cloud computing, [and] Smarter Planetsolutions”.

Last year'sacquisitions of Ariba and SuccessFactors and 2010 purchase of Sybaseare also expected to help SAP to keep pace with rivals.

SAPforecasts it will pass 20billion euros in sales by 2015, powered by three key areas: mobile,cloud computing and database computing.

Sales of Hana areexpected to reach 700 million euros in 2013, which may be aconservative estimate by the company. Hana had sales of almost 400million euros last year with about half of those sales coming in thelast quarter of 2012.

An additional keyselling point for SAP this year is the fact that it reported earlierthis month that Hana will support SAP's business suite managementsoftware, its cash cow.

Hana could turnout to be a real game changer for SAP, which may set it on the rightpath for the foreseeable future. As Hasso Plattner told the FinancialTimes, “I see now a clear future for SAP for the next five to 10years.”

 

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/.