Not a shocker: SAP puts HANA at center of new biz apps push

When you hear from SAP these days, the software giant always leads with HANA, its in-memory database. HANA is to SAP what Watson is to IBM — proof that just because a company is getting along in years doesn’t mean it can’t do great stuff.

So it’ s not a huge surprise that SAP’s “next generation” business software suite, S/4, will draw heavily on HANA and sport a single unified interface across the applications. The first of these to be delivered, Simple Finance, was introduced Tuesday with more modules to follow.

At a rollout event in New York on Tuesday, [company]SAP[/company] CEO Bill McDermott characterized this as “the biggest product launch in the last 23 years and perhaps the company’s history.”

No pressure there.

The rewritten S/4HANA applications are now available on-premises across industries and regions. Simple Finance is the first application to be offered via SaaS — it’s also available on premises now, according to a spokeswoman.

Update: An SAP spokesman said these new applications were built from the ground up to run on HANA and will not work with third party databases, which is sort of shocking. (So much for earlier reports that the applications would continue to  work with third-party databases if needed — but would work better, faster, prettier with HANA.)

[company]Oracle[/company] has a similar “better together” story around its database, middleware, analytics, Linux and servers — er, make that engineered systems. All of these vendors talk about being open, but also say they’re more powerful when running with the company’s full array of technologies.

Complicating this particular storyline is that SAP and Oracle used to be more friends than enemies, with the majority of SAP’s business applications running on Oracle databases. Then Oracle decided to dive full on into enterprise applications with its acquisitions of PeopleSoft, Siebel Systems and everything else that wasn’t nailed down, while SAP doubled down in databases, buying Sybase and creating HANA. SAP and Oracle also bulked up their respective SaaS rosters — Oracle buying RightNow, Taleo  and SAP snapping up SuccessFactors.

And of course you know, this means war.

This story was updated at 11:16 a.m. PST to add SAP’s statement that the new applications will not run with third-party databases. 

New procurement software solutions fit fast-paced innovation strategies

As enterprise IT priorities move beyond cost cutting to revenue generation, their use of procurement technology is also shifting. New technologies are enabling more strategic source-to-pay (as opposed to simply purchase or procure-to-pay) systems for both general and IT procurement. Complete supplier relationship management (SRM) is increasingly viable, and the optimization of supplier choice and management is now a strategic enabler for the quicker decision-making and deployment that is central to innovation. Some familiar tussles in organizational decision making are emerging with the new technology as well.

Procurement technology usage trends

There has been a clear adoption path in procurement IT from transactional spending analysis to mid-level procurement management and, ultimately, strategic sourcing, supplier relationship management, and asset life-cycle management. As one recent study shows, spend analysis, which tends to be an early investment in the procurement technology adoption cycle, has stalled at 69% adoption, with contract management not far behind at 64% adoption. But the more strategic e-sourcing and supplier and procurement management are now among the top priorities for procurement IT adoption, and e-sourcing has gained the most investment interest since 2012, at 11% (with spend analysis and contract management following at 7%). An earlier, 2012 study, shows this shift more dramatically, with transactional procurement and spend analysis dropping from #1 and #2 in rank for current and in-process implementations to #5 and #4 in rank, respectively, for planned or considering implementation. Vendor and contract management instead had led plans in 2012, with sourcing in the #3 position.

 New technologies

The new technologies driving this adoption include the usual cloud, analytics, and collaboration suspects, with mobile, at this point, not as impactful.

As seen in one case study this week, speed of deployment is a factor in the selection of cloud-based systems. More significantly, Armstrong World Industries’ implementation of a cloud-based solution from Coupa was recently reported to  have cut by more than 80% the time required to approve a supplier—from an average of 80 days to 13 days.

One recent study shows that data management and web-based/self-service tools for internal employees are tied as the top procurement technology priorities for 2014, at 55% each, with BI/analytics and collaboration tools not far behind (at 52% and 41% respectively).

New capabilities

New technology, capabilities, and ease of use are combining to drive a shift from traditional ERP (used by two-thirds of procurement organizations) or lower tech (e.g., spreadsheet, email) solutions to new, specialized, cloud-based systems.

The new capabilities that these procurement IT systems bring include greater agility, the analysis of prediction of procurement trends, new contract and supplier risk management tools, and improved ease of use and collaboration out to the end-user level.

Corporate dynamics

Not surprisingly, this new procurement IT is also factoring into corporate dynamics. Corporate procurement departments are looking to gain influence within their organizations. More than three-quarters of procurement officers surveyed listing the expansion of procurement’s spending influence as their top priority for 2014. (Supplier innovation was their second most frequently identified priority.) This is a shift from 2013, when cost reduction was their most commonly named priority. Moreover, 17% of the procurement officers reported that they plan to acquire cloud-based procurement technology without IT departmental approval.

Procurement problems writ large

Although all procurement within government has been notoriously inefficient, the government experience really only reflects the inefficiencies of bureaucracies writ large. Thus, it is not surprising that large bureaucracies have been especially bad at managing IT procurement and oversight as the recent debacle with the Affordable Care Act web site recently highlighted.

In an April 30th hearing, Senator Claire McCaskill vented frustrations with Department of Defense IT procurement when addressing the Pentagon’s head of procurement:

“You’re terrible at it, just terrible at it. I would use an unladylike term about how bad the Department of Defense is at acquiring IT, but I don’t want to do that as a United States Senator.” With an observation that most corporate employees could appreciate, she continued, “Your acquisitions process has so many steps, and it’s not flexible and it’s not nimble.”

IT procurement is especially challenging and the DoD is not the only agency with such problems. According to a report from the General Accounting Office, 30% of all federal IT investments show up on the Office of Management and Budget’s IT dashboard as needing attention or having serious concerns. Not surprisingly, therefore, the General Services Administration is looking to follow industry by leveraging new procurement technology.

IT department challenges

The challenges for enterprise IT departments are thus threefold. They must

  • Identify and deploy the right procurement technology to make supplier relationship management from sourcing through the asset management life cycle strategic, just as customer relationship management has become strategic on the other side of the business;
  • Work cooperatively and proactively with non-IT managements that are gaining influence and power with the use of the new, especially cloud-based, systems; and,
  • Assure that its own IT procurement processes enable the rapid tech selection and deployment, as well as continuing supplier relationship management, that is needed to provide nimble IT management in the current environment.

That is, procurement IT and SRM are not simply solutions to support through the enterprise, but also solutions that must be optimally used within the IT department to best support technology use across the enterprise.

Aviso launches to do risk analysis for revenue, raises $8M

Aviso, a startup from Zuora co-founder K.V. Rao and former JPMorgan Chase head quant Andrew Abrahams, launched on Wednesday with a new service for applying risk-analysis methods to corporate revenue. The company has raised $8 million in series A venture capital from Shasta Ventures, First Round Capital, Cowboy Ventures and Bloomberg Beta. In an interview, Rao explained that companies — like investment banks — should use machine learning to constantly analyze their corporate data and external data in order to spot potential shortfalls. That some people still use Excel as their primary tool for this, Rao said, “is a little appalling.”

Continued spending growth with a focus on new investment

Confirmation of growing investment in cloud and analytics, especially, comes from a new Morgan Stanley survey as reported by the IDG News Service. The 150 mid-sized to large U.S. and European firms surveyed plan a 4.5% increased in 2014 spending over 2013, with a greater emphasis on new investments than simple cost cutting. Those figures represent a slight slowing of growth (from 5.2% to 4.8%) in the U.S. and a slight acceleration (from 3.5% to 3.7%) in Europe.

Growing commitments to cloud and BYOD support translate into lesser relative spending on servers, storage and mobile equipment. ERP spending is expected to increase as attention moves from the front to the back office for updating systems. Security continues to be a concern as companies adapt to the cloud environment and to multiple, high-profile security breaches over the past year.

SAP buys Ariba and its online marketplace for $4.3B

Enterprise software giant SAP is buying Ariba in a $4.3 billion move that will give it control of what may be world’s largest online marketplace. Businesses worldwide use Ariba’s e-commerce and procurement services to buy and sell all sorts of goods and services.

Amazon and SAP put All-in-One in the cloud

SAP All-in-One business applications will now run in Amazon’s cloud — another step that could make Amazon Web Services more enticing to risk-averse businesses that stress over entrusting their life-blood applications to a public cloud.