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Top 2016 stories: Digital business transformation leads the way for SAP

2016 was an eventful year for SAP, as it positioned HANA, S/4HANA and HCP as the core technologies for digital business transformation and introduced new products and partnerships.

SAP had no major product releases in 2016, but that's not to say that it wasn't an interesting or consequential year. Many announcements filled in pieces missing from SAP's product lineup and set the stage for 2017, involving areas like cloud with SAP HANA Cloud Platform, partnerships with the likes of Apple and Microsoft, and, of course, big data and IoT.

Digital business transformation appeared to be at the heart of almost every offering from SAP, as the vendor tried hard to position SAP HANA, and particularly S/4HANA, as the core of digital transformation efforts for organizations.

As we ponder what may be in store for the upcoming year, here's a look at 10 interesting stories from the SAP universe in 2016.

Big data has a human face

The documentary The Human Face of Big Data was a launch pad for discussion about the role of big data in the future of human interaction and commerce. SAP was a sponsor of the film, indicating the importance of big data in the company's strategic direction.

In this Q&A, SAP's director of big data initiatives, David Jonker, discusses how organizations should think about big data and the role it will play in digital business transformation. Spoiler alert: The business and IT sides of an organization must be aligned for a successful digital transformation.

Should their relationship nickname be SAPple?

SAP has not demonstrated a long or fruitful history of having an open platform for developers, but there are strong signals that this may be changing. SAP has been pushing HANA Cloud Platform (HCP) as a platform for developers and, last May, SAP announced a partnership with Apple for software development kits that will help to link Apple iOS and HCP. The jury is out on whether it will succeed, but some observers are intrigued with the possibility of getting SAP applications into the hands of Apple iOS developers. This is one relationship that bears watching in 2017.

Empathy for the user

Looking to build momentum for S/4HANA implementations and journeys to the cloud, SAP's annual Sapphire conference for partners and users dialed up a large dose of customer stories about digital business transformation. One theme that CEO Bill McDermott hit on was the company's desire to "have empathy for the end user." It's not quite the same as "Run Simple" as a marketing slogan, but it does indicate SAP's desire to understand its customers and figure out ways to solve their problems.

On the strategic front, McDermott said that SAP's "chess moves" are over, and the pieces are in place, so the company will now focus on more "organic" developments, like SAP Anywhere, a mobile platform for small retailers.

In this video recorded at Sapphire, SearchSAP Executive Editor David Essex and ComputerWeekly.com Business Applications Editor Brian McKenna discuss the happenings from Sapphire 2016.

Data at your service

The growth of data as a service as a viable business model will be one of the trends to watch in the next year. One marker indicating the prominence of this trend was the release of SAP Digital Consumer Insight, which was demonstrated at Sapphire 2016.

Digital Consumer Insight is a subscription service that allows brick-and-mortar businesses to generate the same kind of data analysis based on their customers' behavior as online retailers. Using digital mobile information for time and location, for example, Digital Consumer Insight enables physical stores to derive insights into what their customers are doing, which online retailers have been tracking for a while. Look for more focused data as a service products to come out in the near future.

S/4HANA helps Sabre become poster child for digital business transformation

Sabre Corp. started its corporate life about 25 years ago as a ticketing reservations system for American Airlines. Since that time, Sabre has morphed almost entirely to become an independent software developer that provides a wide variety of products and software as a service offerings for the travel industry. 

As a long-time SAP ERP Central Component user, Sabre upgraded that aging system to S/4HANA, which enabled a full digital business transformation.

S/4HANA might not be the answer to every organization's question, said Steve Strout, Sabre's vice president of corporate technologies, "but if you're really looking at how to drive both the data side of it, as well as the technology -- how to allow the technology and process to get deeply integrated -- and you become a digitized company, then S/4HANA helps you to drive all of those pieces."

Buyer's remorse from more than half of SAP customers?

SAP implementations are routinely derided as too costly and complex, but Nucleus Research caused a stir when it released a report that indicated a whopping 60% of SAP customers would not buy the same application if they had to do it over again. Even more worrisome for SAP, the report from the Boston-based research firm claimed that 90% of SAP customers were not interested in moving their core ERP to S/4HANA, and that they were considering moving to other systems going forward.

"Balderdash!" was, essentially, SAP's retort, as it claimed the report was based on flawed research, while touting its overall base of 300,000 global customers, as well as steady growth in S/4HANA implementations (both upgrades and net new) to refute the report's findings.

SAP says, "let's get small"

SAP has been working for the past several years to recast its image as a vendor suited only for large enterprises, and has been pushing its offerings for small and medium-sized businesses (SMB) and startups.

This was on display at an event in September in the heart of Silicon Valley, where SAP reported that it has acquired more than 60,000 SMB customers in the past three years, and that these businesses will account for more than 50% of company revenue by 2020.

The venue for the event was not coincidental, as SAP is intent on enabling HANA and HCP to be the technology core of innovative technology startups. To foster this, SAP established the Startup Focus program in 2012, which the company claims has grown from 400 companies in the U.S. that year to more than 4,500 in 65 countries today.

SAP stakes $2 billion plus in IoT

There seems to be little doubt that the internet of things (IoT) is going to generate big dollars as it consumes big data. SAP's announcement of its $2.2 billion investment in IoT-related research and development over the next five years is evidence of this.

SAP will be spending its billions on acquiring IoT-related companies, establishing research and development labs for IoT technology, and developing a portfolio of IoT-related products and services.

Shortly after the announcement of the investment, SAP unveiled three of its IoT products: SAP Connected Goods, SAP Dynamic Edge Processing and SAP IoT Application Enablement. Some analysts see these as necessary steps to SAP becoming a serious provider of IoT applications; however, the company needs a more coherent vision to pull it off.

Space case for SAP HANA 2

Late in the year, SAP unveiled a new version of SAP HANA that's intended to be consumed and digested in more manageable chunks. Dubbed SAP HANA 2, the platform's enhancements include new cloud-based microservices and data warehousing, which allow users to take advantage of HANA's in-memory capabilities without needing to implement the whole shebang.

One tangible example of this is Earth Observation Analysis (EOA), developed in partnership with the European Space Agency (ESA), which lets users consume, analyze and derive insights from ESA global satellite images and gazillions of bits of historical data. For example, reinsurer Munich Re uses EOA services to analyze wildfire incidents to better understand and predict the risks posed by them.

Some find SAP lacks support

Although the numbers are still small, some SAP customers have grown disenchanted with the high cost and poor quality of SAP support. Two companies, Rimini Street and Spinnaker Support, have stepped in to woo disgruntled SAP customers, and the companies are reporting steady growth in getting customers to jump over to third-party support.

This is not an easy sell, however, even if some of these customers report much better service at a lower cost. As it is, the vast majority of SAP customers stay on SAP support, which SAP points to as evidence of its quality and value. There's no single reason why a company abandons SAP support or sticks with it, but third-party options are available now that weren't there a few years ago.

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