SAP's Hana Speeds the Database Race

(This story was updated to include information on the software's speed.)

When SAP's co-chief executives, Bill McDermott and Jim Hagemann Snabe, took over in February, they promised a nimbler company that would deliver compelling software faster. On Dec. 1, the German company will announce one of the first fruits of that effort, a new set of programs for analyzing sales and workforce data that can yield answers to complicated questions in seconds.

SAP (SAP) Chief Technology Officer Vishal Sikka, at a conference in Bangalore, India, will unveil software that can hold hundreds of millions of database records—say, 10 years' worth of sales data—in a computer's memory instead of retrieving them from disk drives. In some cases, the software has been able to analyze hundreds of billions of records within seconds, SAP said.

The distinction can make it easier for users to get quick answers to such queries as the best-selling U.S. cars by dealer, or the average amount of electricity consumed by British households. Users can run calculations from computers that include Apple's (AAPL) iPad and see tables and charts containing their data, fed over the Internet, from servers running SAP programs. "You can process a staggering number of records and get transformational kinds of results," says Jim Shepherd, an analyst at Gartner (IT). "An analysis that might have taken 30 minutes with conventional technology you can now do in seconds, or subseconds. It changes the whole character of the decision-making process."

The software, which comes loaded on servers from IBM (IBM), Hewlett-Packard (HPQ), Dell (DELL), Cisco Systems (CSCO), and Fujitsu, is the result of a "feverish" drive since February, says Sikka, who joined SAP's executive board in February, the same time that McDermott and Snabe replaced former SAP CEO Leo Apotheker, who is now chief executive of HP. For SAP (which is headquartered in Walldorf, Germany), the new High-Performance Analytic Appliance software, or "Hana," underscores an attempt to penetrate a new market as it copes with competition from Oracle (ORCL) and slowing growth at its flagship business of selling applications, which help companies handle such tasks as ordering goods, planning inventory levels and deliveries, and managing sales.

"The Bad News First"

McDermott and Snabe have banished some bureaucracy from the company to encourage faster decision-making and vowed to quicken the pace of product introductions, in part by assigning engineers to small teams that can turn out rapid iterations of products and incorporate continual feedback from customers. Sikka's database development group has adopted the approach, holing up in conference rooms for quicker give-and-take and sending "no-nonsense e-mails" with "the bad news first," says Sikka, drinking green tea in an office overlooking SAP's Palo Alto (Calif.) campus.

SAP is capitalizing on a trend in the computer industry to pre-integrated hardware and software "appliances" that can analyze terabytes' worth of data, driven by companies' need to glean insights from the reams of information they're storing, and more capable chips, such as Intel's (INTC) Nehalem processors, which can quickly pull large amounts of data from memory. Other appliance designs use specialized chips and hardware for fast performance.

SAP's Hana software faces plenty of competition. Oracle on Sept. 19 announced a new version of its Exadata computer for data analysis. At a Sept. 23 meeting with financial analysts in San Francisco, Oracle CEO Larry Ellison said the company also is working on database technology that works in a machine's memory. IBM said on Sept.20 it would acquire data analysis appliance vendor Netezza for about $1.7 billion. SAP's in-memory database software and its Business Objects branded applications that run on it will also compete with products from Teradata (TDC).

Improving Sales Growth

SAP is also dealing with slower growth of its core business applications, used by companies such as Unilever, Shell, and Wal-Mart Stores (WMT). SAP revenue is expected to increase 7 percent this year, to about $16 billion, according to the average estimate of analysts surveyed by Bloomberg. That's better than last year's 13 percent sales decline, but slower than the double-digit growth the company posted from 2003 to 2008.

And SAP has a spotty record introducing innovative new technology. After an initial version of online applications, called Business By Design, failed to garner a large following, SAP released a new version this year, and McDermott said in a recent interview he's more interested in customers who are pleased with the product than in raw sales numbers.

SAP has been quicker to deliver compelling technology and more open to customers' needs since the management change this year, says Thorsten Poetter, a vice-president at Bayer responsible for data analysis. "SAP wasn't very open to listening to what we said. That has changed dramatically."

The first version of Hana still requires too much extra work to load financial information from Bayer's databases, and the company is waiting for an improvement next year that speeds the process, Poetter says. Bayer may use Hana to give its salespeople more current information as they head into customer meetings. "The general performance of a business intelligence system can't be fast enough," says Poetter. "I always compare it to Google. It has to be as fast as typing."

Sikka, SAP's CTO, recalls that company co-founder Hasso Plattner last year challenged him to "intellectually renew the company." Accomplishing that will include enticing customers to buy new kinds of software as their appetite for the company's bread-and-butter products wanes.

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