Economics of SAP HANA Adoption in the Cloud – one real customer example

It’s with a great honor that I write today, sharing another of my customer experiences on SAP HANA adoption.

And it’s with a great honor as I’ve just been named a “SAP HANA Distinguished Engineer” (you can read the nomination announcement at: http://www.hdespot.com/2016/06/24/antonio-freitas-sap-hana-distinguished-engineer-hacker-and-troublemaker/).

Feel truly humbled that the HDE community (http://www.hdespot.com) valued my contributions toward building and sharing knowledge on SAP HANA.

On the words of my friend Tomas Krojzl (http://www.hdespot.com/author/tomas_krojzlcz-ibm-com/), one of the greater expectations upon a SAP HANA Distinguished Engineer is to openly share knowledge on this area to help the product and the industry grow and advance.

So, to honor that principle, coming today with a very short note on a concrete customer example, that I was privileged to guide over the last 8 months from proposal to delivery.

Today my focus will be on the “economics of SAP HANA adoption in the Cloud”.

Without identifying the company these values relate to, I’ll provide relative values on this company’s costs when operating their SAP Systems on-prem with a legacy Risk/AnyDB config, in the Cloud with Windows/AnyDB, and finally in the cloud with Linux/HANA.

Setting the scene

I know that one of the biggest concerns of most companies evaluating adopting SAP HANA, is the economic impact in terms of infrastructure and managed services.

I’ve been writing about “SAP HANA openness” for 3 years now, and the key implication of the increased openness of SAP HANA has been allowing lower entry costs and lower operating costs of this infrastructure.

Although in the past most of my focus was on on-prem deployments of SAP HANA (look for example the following whitepapers I’ve contributed to: http://www.emc.com/collateral/emc-perspective/h14459-making-sap-hana-mainstream-datacenter-part1.pdf and http://www.emc.com/collateral/white-papers/making-sap-hana-mainstream-datacenter-part-2.pdf), today I have to agree with a lot of the reasoning I’ve seen from John Appleby (http://www.hdespot.com/author/john-applebybluefinsolutions-com/)  where he said that any customer today considering starting an SAP application implementation, if he did not chose to do it on HANA and on the CLOUD, he was not providing a good service to his company.

I struggled with that a bit at the beginning, as I had an idea of cloud built at the image of the first cloud providers, where there were a lot of concerns in regards to security and compliance (especially when thinking on non-US companies putting data in US datacenters), but also around service assurance (Application level SLAs for Performance and Availability), which led in many cases to see their operational costs go up due to the increased complexity of managing the cloud provider’s flaws.

You all know that I’m passionate about what I do, and that I struggle to do a job or work for a company I don’t believe in.

Well, having come to Virtustream I’ve found a company that merges the best of Cloud (agility, cost savings, flexibility) with the best of IT Outsourcing (security and control, managed services, application level SLAs).

So, over the last 9 months I’ve been, on one side “learning Virtustream”, and on the other presenting Virtustream to customers and then guiding them to migrate their systems to the Virtustream Enterprise Cloud.

It is necessary some months on the job for you to start to see results of your own work, and it with great gratitude that I’m seeing the first customers I’ve consulted with, going into production on the Virtustream cloud.

And this provides me a unique opportunity to do a “before and after” analysis, and that is what I’m coming to share here now.

I hope to get the specific customer I’m writing here about to become a public reference soon, but until that happens, here is a bit of their story and also some insights on the numbers behind the story.

               Looking for “The Right Cloud”

First of all I have to say that this is a very innovative company, as their operating model (being this company operating in a very traditional manufacturing area), already included a consumption based billing to their end customers.

So, for them, paying only for what you actually consume, was already embedded on their DNA.

15 years ago they were running their SAP systems on-prem, and being a very agile company with a very light IT department supporting their operations all the countries they operate (way over 50), it was clear for them that the internal IT needed to focus on activities that truly added relevant value to the business.

Then this led them to sign an infrastructure outsourcing contract with one of the big manufacturers, running all their SAP Systems on a Risk/AnyDB platform.

After 10 years with this provider, they felt that they kept lagging on the business expectations, in terms of response time, cost of change, and ability to experiment and innovate.

On their words “every single new request was painful to get”. It “took weeks to be able to schedule a meeting as the provider always come with large team to each meeting” and the simple factor of reconciling agendas was a nightmare. Then the costs associated with small changes plus the lead time necessary for any change to happen, sometimes just killed the business case, as the business units would have lost the window of opportunity.

So, coming to the end of this 10 years outsourcing contract, they decided to go back to the market, and hearing all these new things about cloud, asked for cloud offers from all the known players in the market.

Their conclusion was disappointing. The model all providers were presenting, resembled a lot the experience they already had with that IT Outsourcing over the last 10 years. Have to mention here that this being an European organization, hosting their most critical production systems in a US datacenter was out of the question, and that the requirements on security and compliance were very strict.

So, instead of confirming with the “least bad” option among the responses they got to their RFP, they hired the consulting services of one of the market analyst firms, which looking at their magic quadrants immediately pointed them out to a player they haven’t invited to the tender.

That player was Virtustream, and I was assigned to support that opportunity.

               Defining the right cloud: First impressions

Having this customer today already in production on the Virtustream cloud, gives me a chance to go back and ask them: when did you made up your mind that Virtustream was the right option? What made you decide?

And this customer has been kind enough to be open and transparent about this, as in his own words “we have not contracted a supplier, we have brought in a strategic business partner to our business”, and so open and transparent communication is a fundamental baseline for the collaboration their company expects from Virtustream.

First of all, would like to share the goals they have documented on the RFP they sent to all the respondents:

• Improvements in the agility and flexibility of the organization in a changing market
• Improved quality of service and reliability of business processes
• Improved relationship between business and IT
• Scalability of operations
• Significant cost savings through true consumption based billing
• Have a fully managed service and have internal IT as service managers, not IT engineering and operations

And their first impressions were like this:

• We wanted agility
• We wanted solutions out of the box
• We wanted solutions specifically designed to our problems
• We wanted fast turnaround times
• We wanted a knowledgeable business partner that was able to advise us on the best way for our company
• We wanted a simple consumption model
• We wanted to pay just for what we actually use, and not for what has been allocated to us
• We don’t want to over-size, but rather to right-size and grow as we go
• We wanted to have control and visibility on where our data resides
• We wanted s strategic innovative partner with capacity to support our own innovative ideas

And this is what they felt none of the providers that had responded could offer, and that they saw all through their interaction with Virtustream.

A key aspect here was that instead of responding to the RFP they had written, which of course was a reflection of the IT outsourcing they had been on for the last 10 years, Virtustream challenged most of those requirements, and instead proposed them a different approach:

• Some of the key benefits of cloud is agility and cost saving
• The only way to get these is to have “brutal standardization” both at the infrastructure level and in the processes
• So, let’s look at what we have to offer out of the pocket in our standard catalog, and then evaluate the real business requirements for the applications to be hosted on the cloud
• Whenever is acceptable for the business the standard SLAs offered by the standard offerings of the provider, let’s adjust the requirements on the RFP, so that instead we can just “pick from the menu” and build an order specific for you
• If there are some very unique business requirements that our standard offer and SLAs cannot cover, we’ll build a custom solution to you

Here I have to say that having the CIO in the discussion, and being a very senior person with a very deep understanding of the business, advised by a team of direct reports also very knowledgeable and pragmatic, and enabled to make the decision to adapt all requirements to the standards offered.

One of the biggest barriers I see for many customers to have a positive adoption of cloud for their enterprise mission critical SAP Systems like SAP ERP, is that they design RFPs that do not ask for what they truly need! I understand this, as one cannot ask for something they do not know. So, the reality is that most RFPs I have seen to host production mission critical systems on the cloud, either ask for a cloud model based on the first generation of cloud providers (read my blog on this at: http://sapinfrastructureintegration.blogspot.com/2016/05/sap-hana-adoption-in-cloud-made-simple.html) that are not suitable for this purpose, or have been written for an IT outsourcing model which has proven to under-deliver over many years.

So I have to say that this customer was truly innovative, by being available to open a blank sheet of paper, learn how Virtustream operates and delivers services, and then rebuild their requirements from a different starting point. This was a key success factor for the levels of satisfaction this customer is observing now.

The outcome was the presentation of a financial offer 1 week after the first meeting, signing a contract in 3 months after the first meeting, and having all systems migrated to the cloud less than  3 months after contract signature (migration included multiple system landscapes, being one of them a SAP ERP 6, and the other a SAP BW, core to the company's business).

And all of this with a very smooth migration process, and better performance, visibility and control on the cloud than they ever had with their IT outsourcer.

So, the first impressions on the engagement, and the way the whole process was handled, showed this very innovative customer that this company was the right choice for them.

Joking a bit, they said that “mentally” they decided to buy 1 week after the first meeting, and the rest of the time was just to confirm and validate that decision as what we were delivering was completely different from anything else they had seen so far, so they needed to learn more about us to be confident of their purchasing decision.

Also they mention that one of their bigger concerns was the fear of losing control, or not being able to get proper support and attention as the “the provider was all on the cloud”, including managed services, and so through this process only happened a hand full of face to face meetings.

He recognized that having not only the systems “on the cloud”, but also the “managed services on the cloud”, enabled them to get access to the best professionals in the world regardless of where they are located, and that the responsiveness and “presence” of the team throughout the complex migration project (this was the first OS/DB migration this customer had gone through) was better than anything they have experienced with their outsourcers over the last 10 years.

We had the pleasure of being invited by the CEO to a discussion, where he explained the importance of these systems for their operations, and that without them they would be completely stopped. This conversation was critical to build trust and a common understanding of the goals, as this was a strategic decision for that company, that could not be taken lightly.

               What about the economics?

So far it is all very nice, but what about the economics?

One of the key decision factors for this customer was also to get “significant cost savings” on IT infrastructure and managed services.

And here is where the story becomes interesting.

This customer had the strategic goal of implementing S/4, as they do understand the benefits of HANA in things like real-time treasury management, as they need to manage the cash balances across countries, and having to move money between countries with bad market conditions, can dramatically erode the company’s profitability.

Also they buy commodities as raw materials for their production processes, also a situation where operating in real time can make the difference between profit and losses.

Then the question was: how much will it cost me to migrate to HANA, consume an infrastructure for HANA, and operate HANA?

There was a whole lot of unknown, and a high risk perception, as their outsourcer had tried to upgrade them to EHP7 a number of times to get them ready for HANA, and it was a slow and painful process. It took them more than 6 months just to get a stable development system.

So here are the numbers:

1. Just by migrating from on-prem Risk/AnyDB to the cloud with Windows/AnyDB, this company saved about 40% in their monthly bill!!! This includes all infrastructure services (compute, network, storage, security, service desk) and managed services (OS, DB and SAP Basis management, including ITSM process handling and overall service management).
2. This project was executed in 2 phases: phase 1 was just migration from Risk/AnyDB to Windows/AnyDB; phase 2 was upgrade with DMO from Windows/AnyDB to LINUX/HANA.
3. The 1st phase of the migration project will have a payback time of less than 6 months (meaning, 6 months of savings on the monthly charges paid the migration project);
4. The project for the technical upgrade with DMO to migrate to HANA was also funded by 6 months of savings!
5. The total monthly costs of running on the cloud with Linux/HANA were 17% higher than running with Windows/AnyDB. Which means that still with some increased costs against running on the cloud on LINUX/HANA vs Windows/AnyDB, it was still a lot lower than the costs of the IT Outsourcing contract they had for the last 10 years (we are talking more than 20% savings every month).
6. This customer evaluates that the business benefits of adopting HANA for their business, will complete overshadow the costs of the infrastructure and managed services, by multiple dozens multipliers.

Have to say that some of these numbers are “projected savings”, as with the Virtustream patented microVM consumption model, we expect the real numbers to look even better.

When talking about the difference in cost between running those systems on the cloud with Windows/AnyDB versus LINUX/HANA, we wanted also to understand where the difference came from, and so here is a bit more detail:

• Compute: costs more 116% on HANA vs AnyDB, and represents 29% of the total monthly HANA costs;
• It is a fact that SAP Business Suit applications on HANA consumes more CPU and Memory than on AnyDB. This is a factor of much of the application code and data structures not having been yet optimized for HANA. So, the benefits we see in terms of data footprint reduction when implementing Simple Finance, isn't yet available for many of the other business areas (to understand more about this, read: http://sapinfrastructureintegration.blogspot.com.es/2015/04/will-sap-s4-hana-really-require-less.html).
• Note that this simulation does not account for the impact that Virtustream’s patented microVM based consumption model will have, which we expect to make these numbers look better, as the customer can for example shutdown non-productive systems through the night or weekends when they are not used, and they will not pay this item for those period. These optimizations have not been factored in. 
• Again here, the fact that we have more OS images due to the separation of the HANA DB and APP Servers on different OS instances also has some influence.
• OS Licensing: costs more 1305% on LINUX vs Windows, an represents 2% of the total monthly HANA costs;
• This is due to 1 factors: 1) the fact that Linux support costs a lot more than Windows subscription licensing, and 2) the fact that when running on HANA we have more OS images as we do not run any systems as “central servers” (DB+ASCS+PAS on the same server). The good thing here is that the weight of this cost on the overall costs is very low.
• Backup: costs less 70% on LINUX/HANA vs Windows/AnyDB, and represents 2% of the total monthly HANA costs;
• I believe here factors like HANA not having indexes, and the compression play a big part. We’ll need more time in production to be able to take more supported conclusions.
• Storage: costs more 3% on LINUX/HANA vs Windows/AnyDB, and represents 9% of the total monthly HANA costs;
• We believe the storage costs could be lower, but as customers get concerned with SAP’s recommendations for x-time multipliers on Memory to disk (to know more about this, read http://scn.sap.com/docs/DOC-62595), they end-up over-provisioning capacity they will never use. I expect that as I get more customers “from proposal to production”, with more experience to provide stronger advice to customers to start with less storage, as in the cloud, they can grow as they go.
• Managed Services (OS, DB, SAP Basis): costs more 3% on LINUX/HANA vs Windows/AnyDB, and represents 37% of the total monthly HANA costs.
• The difference is relatively small and is due to the fact that the customer when running Windows/AnyDB had some central servers, so less OS images to manage, and we are implementing all systems separating the SAP HANA DB into a different server from the ABAP Application Servers.

NOTE: these values are specific to this customer scenario, and are dependent on the mix of systems in the landscape, the size of those systems, etc. So these numbers intend only to show – on this specific example – where the higher cost of operating HANA actually came from. Also, on these vales are included all software and services necessary to operate a full infrastructure service, and not only the respective hardware components. On your specific reality these numbers may be different depending on your source system, target system, landscape size, data volume size, etc.

               Conclusions and looking into the future

So, even if there were no business benefits from running their business on HANA, the savings of migrating to HANA on the cloud would have paid the migration project in less than a year.

When factoring in the business benefits of HANA, there is simply no argument against.

And to this you have to add the strategic and operational benefits brought by the adoption of the
Virtustream cloud:

• Better performance
• Better responsiveness of the services team
• Lower cost to experiment, by being able to spin up a sandbox system to test new functionalities for a couple of days and then shut it down, only paying for the resources actually consumed on that period
• Better cost predictability and transparency

It is indeed a great pleasure to have seen this project develop, watch this customer unleash creativity, and getting their IT team already focused on the next step, and how else can they help their business be more efficient, more innovative and more competitive.

And the next step on this customer’s roadmap, after a small stabilization period for the systems we've just migrated, is to start evaluating IoT scenarios, as they see a lot of potential in streaming data from their manufacturing machines and cross analyze it in real time against their orders data, inventory data, commodity costs, etc.

So, I’m already thinking on how to enable them to start experimenting with HANA Vora, and build a lab environment to enable them to bring that innovation to their business faster… Stay tuned for news on this soon!

So, this is it. The conclusion is simple: running SAP HANA in the Cloud is a lot cheaper that running SAP applications on Risk/AnyDB. Running your SAP applications on HANA in the Virtustream cloud will also provide you a way better service than the one outsourcers have been providing. So, why wait? Get started on your SAP HANA adoption plans!

Would love to hear your own experiences, your challenges in building a business case for SAP HANA adoption, and know how the numbers worked on your specific scenario.

Looking forward to your feedback!

SAP HANA, S/4 and IoT - why you should care

These are the most challenging times most SAP customers and service providers have lived in the last 20 years, since SAP transitioned from the mainframe world to the client-server world through the evolution from R/2 to the next generation of software announced in 1992 that was the R/3 system!

And the challenge comes associated with the fact that with the announcement from SAP that the future SAP ERP will be called S/4 and will only run on HANA, customers get faced with the fact that, wanting to keep using SAP Software for the long run, the adoption of SAP HANA is no longer a matter of “if” but rather a matter of how and when.

Also the emergence of Cloud and the multiple of options it entails, pushed by very different and sometimes conflicting messages from all the providers in the market, further adds to the challenge of making decisions on what is the best IT strategy and architecture to serve the business needs for the future.

Mix these with a very complex economic environment, with an increasingly de-regulated economy, where the easiness of movement of information, capital, people and goods across the globe is unprecedented, demanding for organizations to step up their business models to survive, in a way that they become prepared either to build and shape markets or to rapidly adapt to fast changing market conditions. In such an environment Information Technologies are more than ever a critical component of competitiveness.

No business organization can live today without information.

IT organizations need to make sense of all the “noise” happening in the market to find what is the most appropriate choice for their particular situation - today and for the future.

Through this post, I’ll share my understanding on a number of changes happening, in a way that IT leaders can leverage them for a pragmatic and business wise decision process.

This is the first part of a series, being this part focused on starting to reflect on SAP HANA, S/4 and IoT, why they matter and their architecture implications.

This blog aims to demystify these concepts to those readers not yet familiar with this topic.

          SAP HANA, S/4 and the Internet of Things

In fact, it’s this reality of increased competitiveness that is driving for the emergence of new paradigms like “real time” and “automated machine-managed” business decision making.

As information, and the knowledge derived from that information, become increasingly critical for organizations, the next frontier is to be able to set rules for a business that – based on real-time data – makes it possible to steer decisions towards what is happening now or even what are the most likely future business conditions, and not only based on the information of what happened in the past.

Multiple events over the last decades have demonstrated that in just a few days, the business environment may observe changes so dramatic, that what might be a good decision based on the information of just 1 week ago, may now lead you to the abyss.

Also, the evolution of technology that enables today most devices to have communication capabilities and to generate data on their status and activity, associated with the increased availability of “public relevant business information”, like online exchange rates and whether conditions, makes that the volumes of data available for the organizations to analyze and decide upon, are exploding. In this space the buzz words of the moment are:

• Internet Of Things (IoT): referring to availability of “data generating devices” connected online and generating information to be processed by business systems;
• Social: referring for example to data on users activity on the internet, that represent as well massive volumes and variety of data;
• Big Data: that refers to the massive volumes of data, its massive variety and different value, which organizations need today to tackle with generated by all of the above.

All of this comes tied in to the massive growth of “mobile”, another buzz word that highlights the fact that today business users want – like private users – to have access in real time at their fingertips about what is happening with their businesses, where waiting hours or even minutes for the information to show up on the screen is not acceptable.

S/4 is SAP’s response to this need for organizations to operate in real time and to manage in an integrated way, not only the structured data that business systems have managed for the last two decades, but also the big data generated by Social and IoT. And S/4 is only powered by SAP HANA, as traditional databases are not able today to provide the capabilities to respond to this new reality.

It is no longer enough for business managers to know what happened in the past. Today is fundamental to know what is happening now – in real time – and based on trends and the inter-relation between multiple variables – internal and external – to forecast what the future may be, enabling a “what if & future looking” decision making.

It was because of this reality that SAP has come up with SAP HANA, a platform that merges transaction processing, operational reporting, and prospective analysis – all mobile enabled – on the same platform.

As you know, SAP HANA is way more than a database; it is indeed a data management platform architected for the current business environment of “uncertainty and fast pace of chance”.

To be able to tackle with this business reality, SAP broke with HANA a quite some long time computing paradigms:

• In-memory computing: store large volumes of business data in-memory for faster processing and “second grade” response times for mobile apps;
• Merge OLAP and OLTP: do transaction processing and analytics on the same platform enabling real-time prospective analysis upon current transactional data;
• Social and IoT: Integrated processing of structured and unstructured data, merging information from machine, social and the existing business structured data, to drive new business models and faster “time to action”.

Not wanting to cover all these in detail, as they have been widely communicated by SAP and each of these three aspects bring new variables to the table that SAP Architects haven’t faced until now, let us just spend some paragraphs on it, to explain their implications.

          In-memory computing

In-memory computing has been the most communicated characteristic of SAP HANA, as the basis for “faster data processing”.

Why is that?

In the late 90’s, one of the key barriers to enable computer systems to analyze and process larger amounts of data faster, was the limited computing capacity of existing systems.

In the end this is all a matter of affordability, as the cost of IT cannot be higher than the benefit IT brings to the business.

So, if you want to process a certain volume of data, you might need to spend such amounts on computing capacity, that a certain scenario wouldn’t just be sustainable, as the market might not pay the cost of such a solution.

This has made that for many years, a significant level of innovation brought to computer systems was targeted at increasing the computing power (the ability to process larger amounts of data faster) reflected in aspects like the increase of CPU clock speeds, increased capacity of RAM chips, reduced latency and increased bandwidth on the communication between CPU and RAM, alongside with a significant increase size in the CPU internal cache (working memory inside the CPU itself).

As the volumes of data managed by organizations increase, alongside with this massive increase in computing capacity, the bottleneck in computing systems has moved to data movement and transmission.

So, this movement opened the space to change paradigms: instead of storing data further away from the CPU, why not starting to store it as closer as possible? Instead of using the RAM just as a temporary buffer to hold data being processed, why not use RAM as a permanent store for data?

SAP was visionary in seeing the opportunity for this paradigm change, by bringing to market SAP HANA.

For organizations using RAM as a permanent store of data, that is accessible by the CPU faster than ever, means that with SAP HANA, they’ll be able to analyze more data faster, and so it opens the possibility of streaming in real time information from what is happening in the business, and make “automated” machine managed / rules based business decisions in real time.

Being the bottleneck these days on data transmission, but considering that the ratio of analyzed data for a business decision may only imply that less than 10% of it is newly generated data, we are definitely up for some significant paradigm shifts.

Note as well, that this idea has a significant lateral implication: now it’s possible to make this data accessible on mobile devices with “second grade” response times.

In an economic environment where uncertainty is the only thing businesses have as certain; this is definitely an edge for many organizations. But it will have implications on IT infrastructure requirements, which will translate in impacts on other business variables like risk and cost for example. We’ll explore these impacts further ahead in the document.

As SAP HANA stores data in RAM, which is a type of non-persistent memory and is internal to a computer, questions come up like: how do I protect this system from disaster, or how to I recover from a failure, what volume is affordable to store in memory for my business scenario, how do I operate and evolve such an environment, what communications architecture will I need to put in place to tackle these new volumes of processed and transmitted data.

          Merge OLTP and OLAP

The other characteristic communicated in regards to SAP HANA innovation, is the merge of OLTP and OLAP on the same platform.

In the past, for the same reasons referred on the previous point of affordability, software vendors designed two different platforms to make different types of processing for the business.

OLTP stands for online transaction processing. This system processed the transactions of what is happening in the business.

OLAP stands for online analytical processing. These systems were meant for data analysis and decision support.

Why were these two separate? Because, considering the limitations of past computer system architectures, it happened that performing the processing needed for the business analysis consumed all the resources on the system, making it that being both on the same platform, your business operations (transaction processing) would be negatively impacted. So, I would say this is one of the big reasons SAP has come up with the BW system in the early 2000’s.

So, vendors came with 2 different platform designs each one optimized to a type of processing, and built processes both to keep them isolated and minimize impacts of one on the other, while keeping them as aligned in terms of information as possible.

Again, this was another situation of computer systems innovation driven by business needs, but at the same time business functionality limited by technology limitations.

The exploding volumes of information organizations are managing for decision making, and the need to have increasingly more up-to-date information, has taken this model of OLAP and OLTP on separate systems reach its limit. And is clear that the “OLAP and OLTP on separate systems model” has reached its limit by observing the number of organizations where the 24 hours of a day are no longer enough to extract data from transaction processing systems, load it into analytic systems, and report on that data.

Here, SAP, leveraging a number of technology innovations saw also an opportunity to innovate, and by leveraging the massive computing capabilities that today’s systems have which have evolved a lot faster than the improvements in data communications, and by realizing that what makes today the separation of OLAP and OLTP reach its limit is the limitation on data movement and transmission, SAP designed a system that would be able to perform both simultaneously.

You may argue that SAP is going back to the model that existed 20 years ago. And we would say you are right. But 20 years in terms of business, is a lot of time. And the fact is that today the limitation is on data transmission and not on data processing like it was 20 years ago. So, who knows how long it will take for this balance to chance again.

This will also bring some questions like: how do we scale these systems to ensure we don’t fall again on the problems that led to separate OLAP and OLTP in the first place? How do we avoid these systems to become so huge that become unmanageable or that making them resilient becomes simply unaffordable.

          Big Data generated by Social and IoT

The last topic we want to touch is the growth of importance of unstructured data.

There has been processing of unstructured data for many years. For example, in the manufacturing industries, machines brought automation systems that generated files with logs of their activity. And in the 90’s there were already organizations that integrated this data in to business systems, for example to have automatic information of the produced quantities of goods.

The challenge with this data, generated by machines or by social media, is that it usually is not structured, unlike the business data we are used to process in the SAP world through tables and field definitions.

In this new world of Social and IoT we may be talking about images, audio files, videos and log files.

Being able to act upon these types of data, and integrating the knowledge extracted from them with the structured business knowledge we have on our transaction processing systems, may enable organizations in many industries to achieve cost savings and develop business innovations that set them apart from their competition.

The challenge for SAP architects is that the volumes and variety of data involved here are massive compared with what we were used to deal on the SAP Netweaver ABAP type of reality.

Just as an example, in the Netweaver world, to ensure performance, availability and resiliency on a database of 50 to 100 TB was a nightmare, noteworthy as most organizations work hard to contain growth and only very few in the world reach such volumes. In the non-structured data world, we may easily reach volumes in the “Petabyte scale”.

So this brings questions like: if it was challenging to ensure performance, availability and resiliency to SAP Application Landscapes in the Netweaver world, how to we respond to these needs when dealing with petabytes of unstructured data? And what is the most affordable way to store and process this type of data? Can it be in-memory? Will its volume overwhelm the transaction processing so impacting business operations?

          The challenge for SAP Architects from S/4, HANA and IoT

It is clear that there will be new challenges coming up to the hands of SAP Architects, and challenges that involve variables that most SAP Architects haven’t dealt with up until now.

There is then the need to make sense of all of this, and understand in what ways S/4 systems, and in general SAP HANA systems being or not in IoT scenarios, need to be architected to respond to the ever challenge of architects: design systems that respond to the business needs in a sustainable and affordable way.

The contraints are the same IT architects have been asked to respond to so far:

• Cost (of implementation, of operation and of change);
• Performance / stability;
• Availability;
• Security / recoverability.

Then the question is: what solutions respond to these constraints in the reality of S/4, SAP HANA and IoT?

Let's continue this discussion on my next blog post.

EMC Acquires Virtustream, the leader in cloud for mission critical apps like SAP HANA

EMC has signed a definitive agreement to acquire Virtustream!

This will dramaticaly improve the value of the EMC Federation in the SAP space, and will further simplify the deployment of SAP Workloads, including SAP HANA, for all those organizations looking for an Hybrid Cloud environment, that has the flexibility to adapt to each company's specific constraints in terms of Risk, Compliance, Technical and Financial conditions.

This is a BiiiG topic for SAP customers around the world and for service providers as well, and for that, let me spend some time to share my own personal perspective on why this matters to you.

The news came out yesterday, and you can read more about it, or subscribe to listen to the recording of the press conference at: http://www.emc.com/about/news/press/2015/20150526-01.htm

Virtustream, being already quite known in the U.S. and in particular in the SAP World for providing Cloud Infrastructure as a Service, for enterprise, mission critical, high workload applications, isn't yet a familiar name in many other parts of the world.

To better understand Virtustream's current capabilities, have a look at the following charts from some of the Market Analysts:

Forrester classified Virtustream as the clear leader in "Hosted Private Cloud Solutions", and Gartner recognizes Virtustream's leadership as a niche player. Now with the EMC Federation on its back, Virtustream's (and the EMC Federation) position in Gartner's analysis, will only improve.

The relevance of the names already in Virtustream customer list also confirm their strength: http://www.virtustream.com/customers/list

So, let me share some words to explain my own personal perspective on what is the value for SAP Customers, from having Virtustream joining the EMC Federation as an independent company.

          What kind of applications (workload profiles) Virtustream specializes on ?

First of all, it's important to understand what kind of SAP Workloads Virtustream has been hosting.

So, let's imagine that you have two applications in your datacenter: one to support your "order to cash" process, including billing and accounts receivable, and another to do career planning and performance appraisal for your employees.

Both applications are important, but the impact of instability or even unavailability of these two applications on the ability for your company to keep operating, are significantly different.

If you loose your career planning and employee performance management system for a couple of days, your company will not stop to operate and generate revenues (and some employees may even be happy about it), while if you loose your "order to cash" system, money stops coming in and your company will go into serious trouble.

This is why, most companies can easily buy into the idea of running the "career planning and performance management" system in a public cloud environment (where they have NO span of control on the architecture stability and resilience), and hesitate a lot (not to say that won't even consider) to run their "order to cash" system in the cloud.

So, let's agree at this stage to call the "order to cash" system, a mission critical workload, in the sense that without it, companies loose their ability to keep operating and fulfill their goals, or even if those systems see their performance and stability decay, it will imply an important negative impact on business.

It's all a matter of risk evaluation. For organizations to consider running mission critical applications in a cloud environment, they will need to ensure a set of conditions: availability guarantee, performance guarantee, and ability to audit (and for the service provider to demonstrate) capability to operate such an environment in a stable and predictable way.

The majority of public cloud offerings do not offer such guarantees.

Well, Virtustream having been born by the hands of people coming from the SAP ecosystem, that had experience setting up and managing these mission critical systems, do fully understand the implications of hosting and operating such environments, and have build their offerings to address specifically the needs of the Global 1000 (the 1000 largest organizations in the world) in regards to cloud offerings for their most critical business systems.

Also Virtustream, understanding well the reality of these large global organizations, also understands that for some systems, those organizations - not wanting to engineer and manage them - may want to keep a significant span of control on them. Meaning, having them be operated in a "hosted, managed, private cloud environment". So, it's having the systems under their span of control (or even under their own property), but hosted and managed in a cloud model in the same way public clouds are managed, to reap all the benefits in terms of business agility, operational risk and costs that a cloud model can offer.

These companies may want as well to dynamically choose what systems run on their own private cloud, and which run on a public cloud, dynamically moving (and controlling the movement in real time) of these systems between their private cloud and the public cloud.

          What are the business benefits of the Virtustream model ?

Such a model enables them to manage risk in the sense that they decide which systems are 100% under their span of control, and which ones are not, by being able to dynamically move systems across boarders between their private cloud and the public cloud.

It enables them to manage cost, by ensuring the same efficient management model that exists in the cloud for a better utilization of their assets, while being able to leverage the public cloud for peaks in demand, avoiding the need to over provision capacity for projects, and keeping their "private systems" provisioned just for average workload needs, and so maximum utilization.

Here Virtustream is really unique as they charge by utilization, and not by allocated capacity like most cloud companies do, making them way more cost effective for that reason, and boosting the benefits for organizations from operating in a Hybrid Cloud Environment. This is a part of the Virtustream secret sauce, where they have come up for example with the concept of microVM.

It enables customers to be more agile, as Virtustream has embedded in their Cloud offering and orchestration software, way more than just provisioning of virtual servers. Coming from their SAP background, Virtustream founders have build in as well automation mechanisms for things like systems cloning and refresh (fundamental and usually labor intensive for most SAP customers), making it simpler for IT organizations to keep up with the demands from their business units.

And again, with the beauty of all of this, in having the private and public cloud resources managed through the same tool set, and both able to bring in the same benefits > complete transparency.

Don't want here to explain what is Virtustream, as you can have it explained in 5 minutes in the words of its founder and CEO "Rodney Rogers" at http://www.virtustream.com/blog/2015/05/24/virtustream-technology-overview/

          How Virtustream joining the EMC Federation, benefits SAP Customers in general ?

So, why is this so important for SAP Customers: Virtustream joining the EMC Federation as an independent company.

First of all, Virtustream has been working very closely with SAP (having SAP been one of the early investors in Virtustream) to drive cloud adoption for SAP applications, and SAP HANA in particular. There is a lot more to the collaboration between Virtustream and SAP, which you can read about at the Virtustream site and blog.

On the other side, Virtustream having started as a "Venture Capital Funded Company", would need at a certain point in time to expand their financing capabilities in order to scale and be able to keep up with the significant demand increase.

Also, to expand its reach it would need further access to the supporting technologies of their business model, and access to markets by means of a broader sales force generating demand for them.

Being today the collaboration between Virtustream and the SAP Community inside EMC already very close, being SAP one of the top strategic partners for the EMC federation of companies (EMC Information Information Infrastructure, VMware, Pivotal, VCE, RSA) and running Virtustream most of their operations on top of technologies from the EMC Federation (VCE VBlock, VMware, etc), all of this aligned to the partnering model the EMC Federation of companies fosters, I truly believe that Vistrustream was a perfect match for EMC.

So, joining the EMC Federation as an independent company will provide Virtustream the robustness of belonging to this amazing groups of companies, enabling it to accelerate their growth, expand their reach, and extend their coverage way further from their current market reach and portfolio. By being an independent company within the Federation, it will enable Virtustream "not to get dispersed or diluted" like it happens on many acquisitions in the IT world, and so keep focused on its unique business strategy. That is why it is referred on the announcement that Virtustream is now "EMC Strong".

As I meet with CIOs and their direct reports all over the world (just landing now coming from a CIO Summit in Prague), they all agree with my own experience that, what works for SAP Applications, will work for almost everything else as well. So I would say, that coming from an SAP background, it shouldn't be hard for Virtustream to expand their reach into other application areas.

With Virtustream, EMC completes its vision for an end-to-end cloud offering, from the "Federation Enterprise Hybrid Cloud" which aims to cover the private on-premise needs of customers, with Virtustream covering the on-premise and off-premise managed private clouds, and vCloud Air providing a completely public cloud environment (customer has no span of control on infrastructure architecture/operations), having these three working seamlessly.

In summary, for end customers: this acquisition of Virtustream by EMC, will enable you to implement an Hybrid Cloud model today, with out of the box, ready to use architectures for your private cloud, leveraging all the best practices from operating a public cloud, being able to leverage Virtustream's expertize also to manage your environment up to the SAP Basis layer, including if needed performing the projects to migrate your workloads to the cloud, all with the assurance of a robust global corporation recognized for its strength in the "mission critical world" like EMC.

          How about companies with technical and legal limitations to use U.S. based clouds?

There are 2 additional key aspects to which I'm very aware, as I do also work a lot with customers in Latin America, Eastern Europe, Middle East and Africa, that are very important in regards to customer decisions about any "cloud plans": technical and legal limitations for cloud in these regions.

One of the key limitations of the "U.S. born and based" public cloud offerings, is that they were born to be "public cloud only" and most of the times hosted only on a very limited number of datacenters, mainly in the U.S.

Well, for a U.S. based company, or a company operating mainly in the U.S., this only represents advantages. Even for most truly global companies, this does not represent a problem.

But there is a lot more world than the U.S., and the geo-political environment in other parts of the world, associated with technical limitations like the access to cheap, stable and reliable broadband communications, makes it impossible for certain organizations to consider the possibility to host any of their business critical systems outside the borders of their countries. More, in many countries in the world, there are "data sovereignty regulations" that forbid local companies from placing their data from outside the physical borders of the countries.

There are also the cases of Global Corporations, that having operations in certain countries, are also obliged (either due to legal or technical reasons) to host their systems closer to their operations.

The consequence here is, even if the existing public could offerings based out of the U.S. were reliable enough to host "in-production" business critical applications like SAP (which most are not), due to the technical and "data sovereignty" constraints, those offerings would not be an acceptable (or even possible) alternative for many companies in the world.

One possibility would be Virtustream "managed cloud services", enabling the systems to be in the location of the customer, but being fully managed with all the cloud best practices up to the SAP Basis layer.


          EMC, Virtustream and Service Providers

But there is another perspective here, where both EMC and Virtustream share one common understanding, that they will not be able to reach to the whole world, and maybe it isn't at all a good idea to try and do it all themselves. In most cases there are already local service providers who are building their own local public cloud offerings to attend to the needs of those companies limited either by technical or regulatory limitations in regards to hosting their business critical data outside the country.

Virtustream, apart from providing their own "Infrastructure as a Service" public cloud offering in the U.S.  and Western Europe, and their "managed cloud services", also licenses their software to power Service Providers all over the world.

EMC also has a strong program to equip service providers around the world with "cloud enabled infrastructures".

So, here both companies come together to provide a comprehensive "hardware and software" solution, ready out of the box, either to power service providers or large enterprises looking to build their own private clouds.

Check here the EMC Cloud Service Provider Directory

Having Virtusteam's own IaaS offerings in a Public Cloud model, as well as their managed services targeted at those customers wanting to have a managed private cloud, together with a vast and strong network of service providers all around the world operating on the same architecture, along side with customers having their own private clouds running on this architecture as well, will truly enable IT organizations and their CIOs to become "IT service brokers" for their businesses, procuring the right IT services, being from their private cloud, a local cloud provider or a global cloud provider, according to their financial, technical and regulatory context policy (needed span of control) applicable to each application environment, knowing that they have partners in the public side ready to host and operate their most critical business applications.

          Conclusions

So, I believe these are truly amazing news for the SAP ecosystem (SAP themselves, customers, system integrators and service providers), as the acceleration of the expansion of this model all over the world, will further simplify things like migrating to SAP HANA, and reducing the operating costs of running SAP Applications (including SAP HANA) while improving the performance and agility of existing business systems.

For example, with Virtustream operating as an independent company within the EMC Federation, a Global Company will now be able to have a truly global cloud strategy, that fits its legal, technical, financial and risk model, for their most critical applications (SAP and non-SAP, as what works for SAP will most likely work for everything else), managed through the same model, using public, private, managed or hosted-managed as appropriate without getting locked-in, truly making justice to the principle of "think global, act local" within a Global Hybrid Cloud.

I would invite you also to have a look at the blog Virtustream's CEO, Rodney Rogers published at the time of this announcement with his own personal perspective.

Adding to this fact that I already have some very good friends at Virtustream, it will be truly a pleasure to bring the Virtustream value to my conversations with IT leaders all over the world.

Know more about Virtustream at: http://www.virtustream.com/