SAP HANA EFFECT
Title: Episode 2 - SAP Drinks its Champagne, Part II (Duration:
20:41)
Publish Date: February 12, 2015
Description: Mike Golz, CIO of the Americas for SAP joins in this two
part episode to walk through SAP's internal journey to run all its
mission-critical systems natively on SAP HANA. Listen how SAP
"drinks its own champagne" and uses its own products to run better
and run simple with SAP HANA.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL
FORM AND MAY BE UPDATED.
JEFF:
This is the second of a two-part episode of The HANA
Effect with Mike Golz from SAP. Welcome to The
HANA Effect. I’m your host, Jeff Word, from SAP.
Each week, we bring listeners the real stories of how
companies are taking advantage of real-time
computing to transform their organizations and let
them share the lessons they’ve learned along their
journey. So, tell people just in general, what’s the
role of ERP inside SAP’s IT department? How does
that run our company?
MIKE:
The big systems that we have are really ERP, CRM, BW, to
some degree SRM; those are the big ones. Without those
systems, SAP can’t function. They’re all global single
instance systems. There are no regional systems, no
divisional systems. They are one and unique for their
purpose.
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 1 JEFF:
So, from the practice what we preach perspective,
single instance, global 100% up time, everywhere
on the planet and mission critical, what would
happen to SAP if our ERP system stopped working
for a few days?
MIKE:
Company’s down. Company’s down. I mean business
operations come to a halt.
JEFF:
Turn off the lights, lock the doors, we’re done.
MIKE:
Right. So, it’s really and that already starts with actually
with CRM. So, in 2013, we did two things. We did upgrade
the CRM system onto HANA in March. And we upgraded
ERP onto HANA in August.
JEFF:
So, no more sidecars. We went 100% natively on top
of HANA, retired those old disk based databases, and
now everything’s running natively on HANA. Right?
MIKE:
Right.
JEFF:
Looking back before we did the migration totally to
Suite on HANA, what was the perceived risk from an
IT perspective vs. what do we actually see?
MIKE:
Yeah. So, all of these things you have to access and watch
these things and look at these things in relation to the
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 2 time. So, in other words, if the product’s just out, like was
the case in CRM, the product was released in December
and we went live in March. Very short time span. We had a
timespan of about two and a half months to do the
implementation. The hard end date was Sapphire 2013,
May. So, you can see that a lot of our timetables are
dictated by the large events.
JEFF:
By the business, yeah.
MIKE:
Yeah.
JEFF:
Bill McDermott want something to announce.
MIKE:
So, you have a product that just comes out and you deploy
it in production and CRM is the single source for anything
customer. If CRM is down, we cannot create customer
master data. That customer master data is used in ERP to
create contracts and to do all the ERP processes. So, even
if CRM has a problem, we have downstream issues. So, all
these things need to work in concert. So, I would say that
CRM three months after release, go live production, global
single instance, perceived risk and load on the team
definitely something that at the time was pretty bleeding
edge, to use your words. When we did ERP on HANA, we
did this with the go live in August. We had five months’
time; definitely a huge upgrade in migration because of
the sheer size of the system.
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 3 JEFF:
So, how big was the database under ERP?
MIKE:
So, that ERP system started out with about 7.1 terabytes
and we did data volume measures and archiving to bring it
to a size that after the migration to HANA would fit into the
largest available blade at the time. So, we’ve heard here
on stage, SGI offers 24 terabyte of RAM on a single blade.
JEFF:
Single blade yeah.
MIKE:
And you can pick any vendor. They all come up with these
huge -
JEFF:
12, 16, 24 yeah
MIKE:
Whatever the number. So huge, right? But at the time, the
largest certified plate was four terabytes. So, we knew we
need to shrink the system, so that after the migration to
HANA—after we export and import—we are in the two
terabyte limit because we always have to take raw data
times two to size your blade. So, we brought it out down
to 3.9 terabytes and after the conversion, it dropped to
1.8, 1.9 terabytes.
JEFF:
Perfect.
MIKE:
So, other companies achieve a higher compression factor.
Our database was deep compressed, highly tuned.
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 4 JEFF:
We were already really optimized pre-HANA.
MIKE:
Right. That was not a lot of air in that database. So, when
we put it into HANA, we achieved another 2.1X
compression. We’re now running about 1.5 terabytes, so
we bring the number down through measures like, using
simple finance, which I’m sure we’re going to talk about
later. So, that system size is coming down further and
we’re optimizing that as we go.
JEFF:
We’ve got a huge benefit out of that, but you had a
really short time. You had five months. What was the
project like from an effort perspective, from a
resource perspective? I mean this is the mission
critical thing. I mean this is the Holy Grail of -
MIKE:
Right.
JEFF:
- of IT and SAP. What was, again, perceived risk,
actual risk? What was that kind of like?
MIKE:
Yeah. So, we knew that we had gained a lot of experience
by going through this CRM on HANA migration. So, we
knew to a large degree what to expect. Whenever you do
these migrations, there’s one step that’s important as you
migrate and that is looking at your custom code. There
may be statements, database statements, in the custom
code that are no longer optimal for HANA.
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 5 JEFF:
We have around 25,000 engineers at SAP. So when
someone in IT wants some custom ABAP code
written, we have few options, right? And they get
quite creative at times, don’t they?
MIKE:
Actually, I would say that we did a pretty good job over
the years to stay close to standard. But, here again, you
have a system with a 20-year, give or take, history. And,
every time you do a business implementation, there is
something that needs to be a hands customized or you
know worst-case modified. And while the team was really
doing, I think, a great job in minimizing the impact, it just
accumulates over time. So, what we did is we looked at
what portion of that custom code is even used anymore?
And we found out that more than 2/3 of that custom code
was irrelevant.
JEFF:
It just built up over the years and -
MIKE:
No longer used.
JEFF:
Yeah.
MIKE:
So, a process was implemented five years ago, ten years
ago, a reimplementation took place or we were using new
functionality that came with standard a year later, and that
wasn’t even relevant anymore. So, we deactivated all that
code. we deactivated something like I don’t know 3,000
custom objects, 1.5 million lines of code. We could
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 6 deactivate, which is a great exercise. By the way, my
recommendation would be if you embark on that journey
to do the migration, the business knows that there is a
certain impact on the project portfolio anyway because
you’re doing the migration. You can’t do everything at the
same time. Take a few weeks in that schedule. Reserve it
for IT and clean house.
JEFF:
Awesome.
MIKE:
Deactivate what you don’t need. Find those items that go
by the top 50 transactions, top 100 transactions, top 200,
descending order and say, okay, is there anything in these
transactions that has been enhanced over time that is no
longer the best way to do it in HANA?
JEFF:
So, it sounds like we’re in the exact same position as
every other SAP customer that’s going to go through
this. So, what was the kind of big big so-what
moment at the end of this?
MIKE:
Right. So, what we saw immediately was the acceleration
of critical business processes that weren’t previously
dependent on batch jobs, long running transactions, so
really things that take time, introduce latency in the
business. Whenever you have something in your system,
in your business process where somebody has to wait
hours or overnight for something to finish, that’s wrong.
These days that’s, that’s no longer acceptable. When I see
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 7 people doing business cases for this, I always wonder, are
people really looking at the cumulative effect of latency
and delay in their business processes? Tough to calculate.
JEFF:
Yeah.
MIKE:
What’s the exact, you know, dollar figure impact but once
you see it, you realize the additional potential -
JEFF:
Oh yeah.
MIKE:
by reshuffling work, by taking out peaks. If you have a
business process that requires a department to handle a
peak, say at month end, you have to have enough people
at peak time to work through this huge workload, which
means that in the time where you don’t have the peak,
you may be over allocated when it comes to resources. So,
it’s a massive simplification, and it goes beyond the
acceleration of an individual report or transaction, so
JEFF:
Yeah, it’s the net effect of all that acceleration right?
MIKE:
Right. It’s accumulative.
JEFF:
Well, I’ll have to tell you as an actual end user of the
ERP system we’re talking about that you provide for
us, thank you very much, great business partner in
IT, the one thing that I noticed, I don’t really do
anything that involves a whole lot of you know
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 8 processing. The one thing I’ve noticed, every time I
log into the system at the end of the quarter, I used
to get a little note that says, don’t do anything.
We’re closing the books. Don’t mess with it. Don’t
try to put in your expenses, any of that stuff. I
haven’t seen that since you guys went live with this.
MIKE:
Again, accumulative effect especially during these high
load times is significant. And just to give you an example,
the average German blue chip company takes 57 calendar
days before they can report earnings. 57. SAP reports
roughly on the 20th +/- a day. We’re the fastest company
or the earliest company to report earnings in the DAQ’s 30
Index. Even compared to U.S. corporations, we are very
early to report earnings. And we’ve basically collapsed the
time to finish a quarter into an 8 ½ day window. So, you
have your financial books open to allow for invoice to come
in and so on and so forth. At some point you say, that
posting period is closed. From that’s the starting point for
an 8 ½ day process to produce the external results that
you will communicate to the Street. We were days after
the industry titans like an IBM and a Microsoft, which
allowed them to set the tone for the industry, and we were
always behind. Right? And when you’re behind, you are
being measured against an expectation that has been set.
JEFF:
HANA Effect They’ve already set the mood, right?
Episode 3 – SAP Drinks its Champagne, Part II 9 MIKE:
Exactly. There a certain vibe already in the tech industry,
and you’re now no longer shaping the message. So, now
we’re early. We’re actually earlier than the other guys and
with that we’re able to really shape the message and get
our story out. And it’s very hard, I think, to put a dollar
figure to this. And I’m not financial analyst.
JEFF:
I bet you our Luka could, our CFO.
MIKE:
And I’m not a financial analyst, but I think conceptually
that must have an impact as to how you can manage,
again, your messaging.
JEFF:
That one isn’t a part of the business plans, but that
is a huge impact. So, all right, so you did CRM on
HANA. You’ve done all the other ERP on HANA.
You’ve done all this stuff on HANA. BW’s on HANA.
So, you’re done, right?
MIKE:
No, we’re not because now comes the real fun stuff.
JEFF:
Wait a second, so that was all just preparation
work?
MIKE:
No. Again, you always have to look at it against the
timeline.
JEFF:
HANA Effect Yeah.
Episode 3 – SAP Drinks its Champagne, Part II 10 MIKE:
It was all fun at the time we did this. Okay? There was no
exception.
JEFF:
Huge business value, but now that you’ve got those
base systems -
MIKE:
Right.
JEFF:
up and running on HANA; you’ve got the real-time in
those, now you can actually do some really really
cool stuff, right?
MIKE:
Right. So, now comes let’s say the next fun.
JEFF:
Yeah. The next wave of fun.
MIKE:
The next iteration of fun is that we have implemented the
Simple Finance add-on in ERP.
JEFF:
Explain Simple Finance to people that might not
have heard of it.
MIKE:
So the Simple Finance Add-On, what it does is it removes
all the tables and finance that are just aggregations of the
raw based data. And I give you an example. If you post a
financial transaction, theoretically, the only thing in the
database you should need is the master data about
accounts, vendors, customer and the actual financial
transaction. I sold something to somebody.
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 11 JEFF:
The ledger entry, yeah.
MIKE:
The ledger entry. So that, theoretically, that should be the
only thing you need. However, if you have large scale
enterprise application systems.
JEFF:
Running on an old disk based database.
MIKE:
Right. Built many years ago according to best practices at
the time yeah.
JEFF:
Yeah.
MIKE:
What you would have to do to run reports like P&L, like
balance sheet, you would have to aggregate this
information and keep a summary copy of the same
information in your database.
JEFF:
So you kind of pre-processing it and storing these
results in a table for when you need to access it from
the application.
MIKE:
Right, which leads to batch jobs to create these summary
tables, which leads to double, triple, quadruple entries.
JEFF:
HANA Effect Copies of copies of copies.
Episode 3 – SAP Drinks its Champagne, Part II 12 MIKE:
Let’s say you change a hierarchy, a hierarchy being you
know how you group your profit centers when you report
on let’s say a certain report. If you have a second
hierarchy where you say I want to look at my business
from this perspective, but I also have another one where I
have another perspective. Now, you’re sorting the data
twice, and you add that all up. And now you have I don’t
know how many hundred copies.
JEFF:
Huge explosion of data -
MIKE:
Right.
JEFF:
that’s just only used for performance reasons, right?
MIKE:
Right, which is all unnecessary. So, before you have HANA,
you have all that stuff in that database, which you really
shouldn’t have because let’s say you have that new
hierarchy to look at your business in a different way. The
only thing you should have to do which you know, which
now is really the only step you need to do is define what is
that hierarchy? And then run the report with the hierarchy
against the lowest level.
JEFF:
The raw data.
MIKE:
The raw data. The report comes back instantaneously
because it’s all in memory. And you don’t have to run a
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 13 batch job to roll it up into a summary table, which then
needs to be reconciled. I mean that whole process JEFF:
All those gymnastics around the data just disappears
in HANA because we do it natively.
MIKE:
Exactly. So, when you look at this in terms of new HANA
apps like Receivables Manager, our CFOs on the country
level, on the corporate level, work in real-time with the
colleagues in the field to look at the receivables and see,
okay, this invoice hasn’t been paid. Now, this used to be a
process where somebody does a report. That report gets
sent out, but there’s no real real-time collaboration
between finance and the field. And if you have an invoice
that doesn’t get paid, in most of the cases it’s not because
the customer doesn’t have the money. That’s not the
issue. It’s typically because there’s a question about the
invoice. That can only be resolved by the salespeople
working with the customer to find out what is the issue?
Maybe there’s a customer satisfaction issue that’s the real
problem. So, by having these real-time collaborations with
the new HANA based apps, that’s what you get. And you
now have this throughout the finance functions, finance
controlling, all the accounting functions. You can work
along those lines, along those principles and, again, the
KPIs that the business is committing to as part of the
business case are really significant.
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 14 JEFF:
So, if you want to look at it one way, you could say
the first kind of half of our journey—SAP’s journey
towards HANA—was all about doing the same things
we do faster, better and cheaper than we do them
today with HANA powering everything. Now, we’ve
kind of crossed a threshold where we’ve taken care
of all of that stuff, and everything that we’re
supposed to do that we’ve always been doing is
being done faster and better and cheaper. Now,
we’re entering a new phase where you guys get to
do entirely new stuff smarter. Right? Not, just faster
and better and cheaper but it’s faster, better,
cheaper and smarter.
MIKE:
Right.
JEFF:
So, we’re really becoming a much smarter business.
We’re allowing people to innovate in the way that
we process things, the way that we engage with
customers that’s completely different than the way
we’ve done it in the past because we don’t have that
boat anchor of a database slowing down everything.
MIKE:
So, when you look at it from the inception of a sidecar,
what you can do there is very specific. It is like the one
thing that you accelerate, and that’s good. And that’s, for
many customers, that’s already a great step forward
because they can -
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 15 JEFF:
Huge value, yeah.
MIKE:
they can solve a specific business problem. Now fastforward, now you have a business suite system that
entirely runs on that paradigm. And every area that’s
affected by the old shortcomings is not only accelerated,
but, you know, you can reengineer your business
processes. And all of a sudden, you take out all the store
and forward, all the latency, all the batch, all these
processes and sometimes I wonder it sounds so technical;
sometimes when we communicate that. We’re reduced
batch, what does that mean? But if you talk in terms of
well, you can collapse your reporting cycle into an 8 ½ day
window, and you can report your earnings faster by X, I
think those are the tangible business benefits where you
can say, wow, this is something that we should really look
at.
JEFF:
So, this is a phenomenal example of IT using some
new technologies to completely change the way that
value is delivered to in the business and what they
can and can’t do. That’s phenomenal. So, we’ve got
all these new cool things. What I’m going to do now
though is I’m going to give you some more work
because I’m going to tell everybody.
MIKE:
HANA Effect Oh boy.
Episode 3 – SAP Drinks its Champagne, Part II 16 JEFF:
You are the best reference customer at SAP, right?
And you talk to customers all over the world all the
time. Your team does, right?
MIKE:
Right.
JEFF:
So, the team at SAP that’s actually got their hands
bloody doing these projects is out there helping
other customers understand what we’ve done, so
that they can follow in our footsteps.
MIKE:
Right. All kudos to the teams that do these
implementations. The most authentic conversations we can
have with our customers are the ones where we bring the
experts into the conversation. When we have the database
administrator from SAP who did the database conversion
talk to this the peer on the customer side to talk about
what was hard? What was easy? Would we do it again this
way? What’s the risk level? How has that changed over
time? That’s the best value we can provide. And those the
best conversations, and that’s where we get the best
feedback.
JEFF:
And you love getting questions on Twitter
@mikegolz, right?
MIKE:
HANA Effect Correct, yes.
Episode 3 – SAP Drinks its Champagne, Part II 17 JEFF:
Mikegolz. I’ll put that on the website. I think it’s just
an absolute value. I’ve heard from so many
customers that have talked with your team. You’re
absolutely right. They love hearing from the guys at
SAP that did this from those bleeding edge early
adopters that really have to make it work—not the
sales guys, not even the developers but you know
your team that actually has to make our company
run faster, better, and cheaper than it did before.
We’re on the same treadmill that all of our
customers are on.
MIKE:
Right.
JEFF:
So, that’s phenomenal. One last thing: any advice
you have that you’ve kind of distilled after all of
these HANA projects that you think customers really
need to think about to get the right perspective on
how they’re going to start their HANA journeys, you
know, and kind of follow in our footsteps?
MIKE:
So, I think that most companies if you ask the line of
business executives and you sit down with them, spend
some quality time, half an hour, hour, most of them know
what is the area that needs the most improvement?
Improvement not necessarily by implementing an entirely
new process with redesign, reengineering that takes over
for a long time, but really going back and say, if I could do
this in a more intelligent way and faster, and run things in
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 18 real-time, how much benefit would I get from that? That’s
the easy part. The second part I think that’s important is
get people to imagine new scenarios that they haven’t
thought about. Ask them in a perfect world, what is it that
you would like to have? And then map it against the
capabilities that you get when you move to real-time.
JEFF:
So, it all starts with the business. Talk to the
business.
MIKE:
This conversation is way beyond TCO.
JEFF:
And it’s not about, you know, the bits and bytes and
the speeds and feeds and all that other stuff. It’s
about the business. How’s this going to transform
the business?
MIKE:
Right.
JEFF:
And those are the stories we like to tell on The HANA
Effect. If you’re interested in more information
about how SAP runs SAP, there’s a whole lot of
information on that at saphana.com. So, please stop
by and learn about that. Please also subscribe to our
podcast on iTunes and SoundCloud and for any more
information you can follow us on Twitter as well
@thehanaeffect. So with that, I want to say thanks
again, Mike.
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 19 MIKE:
Thank you.
JEFF:
Many many more successes on our continuing HANA
journey.
MIKE:
I’ll keep you updated.
JEFF:
Thanks. [END]
HANA Effect Episode 3 – SAP Drinks its Champagne, Part II 20