Admittedly, I'm a technology-focused person, which is why in my initial post about SAP's news this week about its in-memory database, HANA, I dwelled on its superior performance. After all, when real-world customers are seeing 400,000 times improvement in database responsiveness -- well, it gets your attention.
But there was much more SAP brought to the competitive landscape than the fastest database available. It brought a well-conceived strategy to win customers and increase market share. Oh, and it brought money to implement the plan. Lots of money -- about a half billion dollars.
Businessweek's headline sums up the new database world nicely:
SAP Challenges Oracle With $500 Million Hana Incentive
Of course, how SAP spends the money is what will change the game. The company has devised a two-pronged strategy that, first, will help CIOs decide it's time to move off slow, legacy databases ($337 million) and, second, encourage startups to build applications on top of the world's fastest database ($155 million).
That seems like the right balance of investments. First, there are a lot of CIOs with tired, overworked databases undermining application performance. But they are always fighting for IT resources and need to pick their budget battles carefully. Merely showing CFOs how fast a HANA database infrastructure will be for a company is not always going to be persuasive. But revealing the partnership mentality SAP is bringing to the table in terms of its investment with customers will definitely help win over the keepers of the purse strings. As one observer summed up nicely: "The game plan: Push long-time database partner Oracle out of the way and take a bigger chunk of the enterprise IT spending pie. It's unclear how this adventure will turn out, but SAP has some cojones."
Step two is to increase the application portfolio on HANA by funding startups. With far fewer software startups by comparison to IT customers, fewer dollars are needed. But there's another reason less money is needed: software developers naturally gravitate toward the best, fastest, most advanced technology. They have a built-in desire to partner with state-of-the-art vendors. A little extra venture capital money, well, that's icing on the cake for many of them.
Beyond those investments, another area SAP thought through carefully is pricing. The company made it simple. As Information Week points out, in a similar ERP analytics environment with Oracle you would need three licenses. "With Hana there's just one license," the news source says.
Finally, training will be a top priority. As Computerworld reports: "SAP is also focused on making sure developers and database administrators have access to the best training materials for HANA, as well as development and test environments at no cost."
This is a complete strategy that over the long term threatens Oracle. That's why Larry Ellison recently said that SAP "must be on drugs" to consider competing against his company. But as Forbes magazine countered: "Well SAP is doing some really good performance enhancing drugs. SAP is standing tall shouting that they are indeed in the database market."