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Supply chain analytics may find a home with SAP HANA

SAP HANA offers many analytics tools that can benefit a company's supply chain -- but choose carefully when considering supply chain analytics options.

In the mid-1990s, supply chain players adopted memory-resident technology for its processing speed, for its ability...

to process complex math and for its powerful optimization. SAP took 15 years to embrace this technology, but with much more ambitious plans. HANA has arrived, and it will ultimately replace many products across SAP's market segments.

At one level, SAP owns one of the largest supply chain portfolios in the market today -- by building or buying its way. Recent acquisitions include SAF, SmartOps and Ariba. In parallel, SAP acquired business intelligence (BI) companies such KXEN, Sybase and Business Objects.

SAP HANA analytics offerings

Analytics is, smartly, the first step in SAP's decade-long transition to all-HANA, because analytics can be sold as an add-on that won't disrupt the install base. Let's look at the offerings and then focus on the supply chain specifically.

SAP InfiniteInsight (formerly KXEN) is a business analyst tool for guided predictive analytics. With a wizard-driven interface, an end user needs no previous knowledge of statistics. Most use cases cross lines of business (e.g., campaign optimization, fraud detection, response analysis, workforce, management). Customers can gain access to an ever-growing R analytics library.

SAP Lumira has a clever adoption strategy with a freemium offering, for those who want to try before they buy -- with more than 500,000 downloads so far. Lumira is fairly easy to use and can be deployed by small or large companies as a standalone or as part of Business Objects. SAP's library gives users a broad set of use cases.

Visualization combines search, Lumira and other SAP Business Objects components, allowing end users to find, model and visualize data from multiple sources. This is very useful for scanning through unstructured data, which is important in retail and supplier-risk solutions

SAP IQ is a columnar database that is highly optimized for analytics. It works with SAP BusinessObjects BI and is included (along with SAP Data Integrator) in the SAP BusinessObjects BI Suite Analytics Edition for 20% more than the standard BI Suite price, making it an affordable database option for any size of SAP BusinessObjects BI deployment.

SAP Fiori provides a new user experience for SAP software. A number of Fiori-based applications are available directly on SAP HANA, and being HTML5-based, they can be deployed on a browser or mobile device. SAP analytics clients such as SAP Lumira can be fully integrated into the customizable Fiori applications.

Many of the SAP analytics today can be deployed in the cloud. This is particularly significant for big number-crunching problems. As users grow in the use of analytics -- and they will -- they gain scalability without IT intervention.

In order to "move" them, SAP has lowered the price significantly on these (and most of its other) products.

Is analytics what's needed for supply chain?

Fundamentally, supply chain is a number-cruncher. Old-style, multiple-level material requirements planning, or MRP, gave suboptimal answers. Decomposition, whether in material planning or distribution and transportation, leaves the problem not fully solved. Memory-resident server applications, on the other hand, can take a businesswide, multilayer approach. The ability to absorb so much data allows for accurate answers both for operational and strategic problems. Today, as users become more sophisticated about their queries, the information combinations from multiple sources continue to grow in complexity -- and size. Popular problems are optimization and trend analysis. The debate is whether you would call all of this analytics or simply supply chain business as usual. But standard applications, though powerful, do not provide the discovery and flexibility an analytics package may have.

Predictive problem solving -- when or if an event occurs -- is a common problem in supply chain. Often, BI solutions are marketed as predictive; however, performance may not mean the future. History with aggregated data reports is not predictive. Something more is needed -- more "real-time" sources. For example:

  • Predicting and scheduling equipment for repair and replacement -- Internet of Things data that can test wear, metal fatigue or other performance metrics is a key component of this type of predictive solution, already used in the automotive, airlines and industrial segments, as well as the Department of Defense.
  • Shopper insights -- location-based information that sees current and local events and can rapidly analyze whether or not to offer, promote, price or push merchandize in a certain way.

However, the question is, are the HANA analytics predictive out of the box? In actual use, HANA is combined with other applications to achieve these types of solutions. HANA is the big data sifter, and SAP or partner applications are the "logic" and math for forecasting, scheduling, pricing and so on. In other words, HANA analytics projects are custom integration projects.

SAP's analytics focuses on the end user or business analyst, not the data scientist. Choosing the right tool set is a concern because SAP probably still has too many products with too many confusing messages.

Recommendations for potential buyers of supply chain analytics: For customers seeking analytics

  • See which supply chain applications you already own. Do you already have analytics that can meet your needs? When we work with customers we often find they already own suitable applications they have not yet deployed. However, analytics addresses the discovery side of "the mind," and standard apps are usually too rigid, so, know what you are after -- a few reports or real discovery.
  • Do your homework. Compare the various SAP products before calling SAP, and be prepared to ask the many questions you need to ask, such as these:
    • Which solutions will solve our business problem?
    • Will there be integration code that will need to be built and maintained? How much will this cost? What relevant analytics do they have? Map these to your business requirements.
    • What level of sophistication do users need to have? Get hands-on demos for novice users before purchasing. If they are not happy, there's another failed project and unused software.
  • Analytics is an exploration area, and experienced users will conjecture, build scenarios and use the tools to gain new insights. So, ask about growth and expansion options.

For customers seeking a supply chain application

HANA alone is probably not the choice at this time. There is too much left for developers to create, whereas the market (including SAP's own) is full of excellent solutions. However, SAP plans to discontinue advanced planning and optimization, or APO, – and, I expect, some other supply chain apps -- and replace them with HANA-only within five years. So, if you are buying now and seeking a product with longevity, do your diligence in selecting appropriate ones.

SAP has been renaming, rebuilding and buying over the past few years, so the imperative is to talk to more people at SAP beyond sales. Ask what they could be doing next and how that might affect your plans. No doubt SAP and its partners are always innovating. But the fact is that most users need solutions that work now and need their investment protected for many years to come.

Next Steps

Is SAP HANA on the fast path to success?

Tips on planning for SAP HANA adoption

Features to consider from the HANA SPS 09 release

SAP Event Management boosts supply chain monitoring and control

This was last published in February 2015

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Ultimately, I think that SAP will replace many, if not all of its supply chain applications with HANA, which includes several bundled beneficial analytics tools.
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