Fire-Side Chat: It's time to "hana" cost metrics

SAP HANA Architecture

SAP HANA is an in-memory, column-oriented, relational database management system designed to accelerate data processing and analytics. Its architecture includes:

• In-Memory Computing: Data is stored in RAM, allowing faster access and processing than traditional disk-based systems. This facilitates real-time data analysis without data transfer from disk to memory.
• Columnar Storage: Data is organized by columns rather than rows, which optimizes data compression and speeds up data retrieval for analytical purposes.
• Hybrid Transactional/Analytical Processing (HTAP): SAP HANA merges Online Transaction Processing (OLTP) and Online Analytical Processing (OLAP) into a single system, enabling real-time analytics on live data.
• Scalability: Can be deployed on-premises, in the cloud, or hybrid environments, offering flexibility based on organizational needs.
• Advanced Analytics: Built-in engines for predictive analytics, text analysis, spatial data processing, and more, supporting complex data operations directly within the database.

Future Advantages for Legacy SAP and Other ERP Customers:

• Performance Boost: Transitioning to SAP HANA can significantly reduce the time needed to process and analyze large datasets, leading to quicker business insights and decisions.
• Simplified Data Model: SAP HANA's architecture simplifies the data model, reducing data redundancy and complexity, which can be particularly beneficial in transitioning from legacy systems that might have accumulated over time.
• Real-Time Insights: Legacy ERP systems often rely on batch processing for analytics. SAP HANA allows real-time data processing, enabling businesses to react quickly to market changes.
• Digital Transformation: For companies looking to modernize, SAP HANA is a core component of SAP's S/4HANA suite, designed to integrate IoT, machine learning, and other Industry 4.0 technologies, facilitating digital transformation.
• Cost Reduction: Although there's an initial investment, the long-term benefits include reduced hardware requirements due to efficient data compression, lower maintenance costs, and potentially less need for additional analytical tools as many capabilities are built into HANA.
• Unified Data Platform: For organizations with disparate systems, SAP HANA can act as a central data hub, providing a single source of truth across the enterprise, which can simplify IT landscapes and reduce integration costs.
• Future-Proofing: With SAP ending support for older ERP systems like SAP ECC by 2027, moving to HANA is about performance and ensuring ongoing support and updates, keeping your ERP solution up-to-date with the latest business practices and technologies.
• Cloud Readiness:?SAP HANA supports cloud deployment, aligning with the trend towards cloud ERP solutions. It offers scalability, reduced IT overhead, and easier access to data from anywhere.

For those integrating with or transitioning from other ERP systems, SAP HANA offers a platform for migrating, analyzing, and managing data in ways legacy systems might not support. This provides an opportunity to leverage new technologies like AI and advanced analytics for competitive advantage.

These advantages underscore the value of adopting SAP HANA for businesses still using legacy SAP or other ERP systems, highlighting performance improvements and strategic benefits regarding technology integration and business agility.

To discuss Total Cost of Ownership (TCO) and Return on Investment (ROI) metrics when migrating from legacy systems to SAP HANA, we need to consider both the immediate costs and long-term benefits. Here's a breakdown with sample metrics:

TCO Metrics for Migration to SAP HANA:

1. Hardware Costs:

• Legacy Systems: High maintenance, multiple servers for OLTP and OLAP ($500K/year for hardware refresh and maintenance).
• SAP HANA: Centralized hardware with in-memory technology reduces physical footprint and maintenance ($300K initial for new servers, $100K/year for maintenance).

2. Software Licensing:

• Legacy Systems: Continuous license fees for multiple software stacks ($1M/year).
• SAP HANA: Single license for transaction and analytics, potentially lower with cloud options ($800K initial, reducing to $600K/year after migration).

3. Migration Costs:

• Data Migration: Consultants, tools, and man-hours ($500K).
• Training: Educating staff on new system functionalities ($150K).

4. Project Management:

• Consulting Services: For planning and execution ($300K).

5. Downtime and Operational Disruption:

• Loss of productivity during migration (Hard to quantify but significant; let's estimate $200K in lost revenue).

Sample TCO Calculation:

• Year 1 TCO (SAP HANA): $300K (hardware) + $800K (license) + $500K (migration) + $150K (training) + $300K (consulting) + $200K (downtime) = $2.25M.
• Subsequent Years TCO: $100K (hardware maintenance) + $600K (license) = $700K/year.

Legacy TCO (Annual): $500K (hardware) + $1M (software) = $1.5M/year.

ROI Metrics:

1. Performance Improvements:

• Reduced Processing Time:?Faster data queries could lead to productivity gains, estimated at 20% improvement ($300K/year in labor savings).

2. Operational Efficiency:

• Automation and Efficiency: Reduction in manual processes, saving 10% on operational costs ($150K/year).

3. Data Analytics:

• Better Decision Making: Real-time analytics potentially increasing sales or reducing costs by 5% ($250K/year in additional profit or savings).

4. Reduced IT Infrastructure:

• Consolidation: Lowering the IT footprint and associated energy costs, saving $50K/year.

5. Maintenance and Support:

• Lower Support Costs: The streamlined system reduces support tickets by 30% ($100K/year).

Sample ROI Calculation:

• First-Year ROI: With an initial investment of $2.25M and benefits starting to accrue, the ROI might not be positive in year one due to the high upfront costs.
• Year 2+ ROI:

Considerations:

• Risks: Potential for unforeseen costs, resistance to change, or project overruns.
• Intangibles:?While enhanced customer satisfaction, brand perception, and employee morale from modern technology adoption are more complex to quantify, they contribute to ROI.

This sample calculation simplifies many aspects but provides a framework for understanding how TCO and ROI might look when migrating to SAP HANA from legacy systems. Each organization must tailor these metrics based on its specific environment, legacy system complexity, and strategic goals.