SAP Shakeup: McDermott Speaks Out - InformationWeek

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SAP Shakeup: McDermott Speaks Out

After an exec shuffle, SAP co-CEO Bill McDermott insists the company's priorities have not changed and it is not backing off on Hana.

Does the surprise resignation of SAP Executive Board member and tech leader Vishal Sikka portend a diminished role for the Hana in-memory platform?

"Absolutely not," says SAP co-CEO Bill McDermott. Despite the appointment of an applications-development veteran, Bernd Leukert, to the top technology post and a recent change whereby Hana financial figures are no longer reported, McDermott tells us the in-memory platform remains at the heart of the company's long-range plans.

[Want more on the management moves? Read SAP Management Shakeup: Hana Mastermind Leaves.]

That doesn't mean applications won't be getting more attention, he says, particularly as SAP ups the ante on cloud computing. On that front SAP announced more personnel moves on Wednesday (after our interview with McDermott), including the departure of top cloud executive Shawn Price, who had only served in that role since January. The entire company is now focused on cloud, SAP stated, so Price's responsibilities will be spread among the leaders of each business within the company.

Set to become sole CEO later this month (as co-CEO Jim Hagemann-Snabe moves to SAP's Supervisory Board), McDermott confronts plenty of tough issues and competitors. In this exclusive interview with InformationWeek, we asked him plenty of tough questions. Read on for insight into a range of topics that will determine SAP's future.

InformationWeek: Do this week's personnel changes at SAP reflect any changes in strategy for the company?

Bill McDermott: Absolutely not. There's a total commitment to both technology and applications. If you had to use math, I would call it 50/50. A lot of the leaders that have been behind the scenes at SAP are now going to come forward. For example, Franz Faerber has been the lead developer on Hana from its inception, and he's going to take a center-stage role on the platform. And Bernd Leukert [an app-development veteran and now the top tech leader on the Executive Board] put the SAP Business Suite on Hana. When you look at the combination of these two leaders, we're going to have Hana as a database and Hana as a platform with the applications on top to really enable customers to rethink how they run their business... So the direction has never been more focused than it is now.

Bill McDermott is set to become SAP's sole CEO later this month as co-CEO Jim Hagemann-Snabe moves to the company's Supervisory Board.
Bill McDermott is set to become SAP's sole CEO later this month as co-CEO Jim Hagemann-Snabe moves to the company's Supervisory Board.

IW: SAP recently stopped breaking out financial results for Hana, which seems to deemphasize the product. Why did you do that?

McDermott: Hana is so much a part of everything in the company now. Ariba and all of the line-of-business cloud companies are now on Hana. All of the SAP Business Suite applications are available on Hana. So Hana will serve as a database and as a platform, and it will have fundamentally new applications built on top of it. Breaking it out didn't make sense any more. It's not a separate line item.

One of the benchmarks to consider is that we're approaching 1,500 startups on Hana. They're building their business models on Hana. We also reported in our last earnings call that more than 3,200 customers are now on Hana. Every new business process that we're looking at -- including some that will change the world that we'll feature at Sapphire -- are all about Hana. So I actually think we'll accelerate the focus on database, platform, and Hana, as opposed to the other way around.

IW: There was a rumor that Vishal Sikka wanted to take Hana open-source. Have you ever considered spinning out a separate company so SAP could stay focused on applications?

McDermott: No, I think the moves we've just made are the ones that make sense. We have great leaders like Bjoern Goerke [now CTO], who will focus on technology, Franz Faerber, who will focus on database technology and platforms, and Bernd Leukert on applications. What you'll see us do is build go-to-market [offerings] and businesses within our company focused on each segment. I just moved Greg McStravick [formerly head of North American sales] to run the sales effort on database and Hana in a very focused way [reporting to Steve Lucas]. The same is true for analytics and the line-of-business cloud [meaning Ariba, Hybris, and Success Factors].

IW: SAP has put four years of intense work into Hana. Is the heavy-lifting development completed? Because there's certainly a perception that the core apps have been neglected over that period.

McDermott: The last time we reported on Hana it was at more than €1 billion in revenue and was the fastest-growing product in the history of software. So there's a lot to be said for accelerating that business. At the same time, we're looking at accelerating the delivery of breathtaking applications on top of Hana. The ecosystem is taking part in that. I was beamed into EMC's conference this week during Joe Tucci's keynote because they bought DSSD. That company is working with Hana exclusively to build real-time, in-memory database applications and cloud-based solutions, and that obviously impressed EMC.

The time is now to build more applications in each of the industries we serve. We're also calling ourselves the cloud company powered by Hana, so if you're a business executive or a CTO trying to integrate everything in the cloud, we want to be the distinguished market leader. Hana is part of all of that.

IW: Do cloud customers really care about the platform behind the scenes, or is that just part of the techno babble they're trying to avoid?

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio

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User Rank: Apprentice
5/9/2014 | 7:49:08 PM
Re: Revolving Door At SAP?
McDermott's "using 90% less hardware because of Hana's compression technology" is pretty misleading.  In reality, HANA needs a lot more hardware than most competitor solutions.

Here are some real-life facts from personal experience...

A 3TB ERP database running on DB2 on AIX gets an overall compression factor (data and indexes) of 2.9 using static compression (v10.1 adaptive compression would be a bit better).  That's not anywhere near as good as HANA's 10 times reduction, right?  Wrong, because the Suite on HANA sizing guide states that you should size at 50% of the uncompressed source database size *including indexes*, and then add a further 20% safety margin.  In other words the effective compression factor for Suite on HANA is actually less than 2 for non-BW scenarios.

Uncompressed, the storage footprint of this ERP database would be a little under 9TB, which means the HANA sizing would be 9 * 0.5 * 1.20 = 5.4TB DRAM.  The current database uses less than 60GB of DRAM.

Don't forget, the 5.4TB is just the DRAM sizing!  The standard HANA persistent storage sizing rule of 4 x DRAM applies, so this database will actually require nearly 22TB disk compared with the original 3TB.  How 22TB is ten times less than 3TB (or to be fairer, 9TB uncompressed) beats me, but perhaps Bill will reply to explain?

To round off the hardware requirements, don't forget the log sizing of 1 x DRAM, another 5.4TB, which I believe is mandated to be SSD storage.

Then you can double all of the above for your DR site.  Still, at least your performance will be incredible, or will it? We know that IBM has leading SD benchmarks but SAP continues to refuse to release an SD benchmark for its own HANA database.

If I had picked BW, the comparison would definitely be much more favourable to HANA, but HANA would still require slightly more disk and of course a lot more DRAM.

D. Henschen
D. Henschen,
User Rank: Author
5/8/2014 | 1:53:36 PM
Re: Revolving Door At SAP?
Yeah, that's a part of the question he didn't answer. You only get so much time with CEOs, so I pushed on to more important questions. Open sourcing is a popular tactic these days used in hopes of promoting fast adoption through freely downloadable community editions. The commercial angle is providing the support, and there's also hope of building the community of developers. SAP is practically giving Hana -- and cloud-based dev sandboxes -- to the startups McDermott mentioned. Maybe giving up the IP to open source is just more than others at SAP could take?
User Rank: Author
5/8/2014 | 1:32:29 PM
Re: Revolving Door At SAP?
Sounds like he didn't confirm or deny the open source rumor, Doug?
D. Henschen
D. Henschen,
User Rank: Author
5/8/2014 | 11:17:24 AM
Revolving Door At SAP?
I also asked McDermott about SAP's ability to keep top talent. He said entreprenurial CEOs of acquired companies, like Bob Calderoni of Ariba, Lars Dalgaard of SuccessFactors, and John Chen of Sybase, don't tend to want to stick around to run departments of larger companies. "Call them up. They're all still great friends of the company and we remain on good terms."

The best contrast here would be, which has managed to keep Marcel Lebrun of Radian6, Michael Lazerow of Buddy Media, and Alex Dayon of InStranet, among others, though it did lose Byron Sebastian of Heroku.

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