IBM/SAP Ink HANA Cloud Partnership

By Charles King, Pund-IT, Inc.  October 15, 2104

IBM and SAP announced a new premier partnership that aims to help customers quickly and securely run business-critical applications in the cloud. The SAP HANA Enterprise Cloud is immediately available as a service via IBM’s 40 cloud data centers and will eventually expand into every major global market.

According to the two companies, the new service demonstrates their relative strengths:

  • SAP brings the power of real-time analytics via the in-memory computing capabilities of SAP HANA combined with the ability to run mission-critical business applications, like SAP Business Suite, on the SAP HANA Enterprise Cloud.
  • IBM brings enterprise depth and the open architecture of IBM Cloud Managed Services and SoftLayer – enabling customers to securely manage SAP workloads from trial to production on a consistent infrastructure, with transparency and control over where data resides.

Customers should also benefit from the technology and services solutions offered by from both companies, including IBM consultants who offer industry-specific best practices.

The Pitch

IBM and SAP partner to spread the benefits of HANA in-memory analytics worldwide.

Final Analysis

There’s certainly no shortage of “Eureka!” moments in technology. Indeed, the industry claims enough such events to fill Archimedes’ bathtub to overflowing on a monthly basis. But the process that leads a new technology from inspiration to commercial success is far more prosaic, and typically involves a host of individuals and organizations not present at the original splash-a-thon.

The new premiere partnership between IBM and SAP centering on the latter’s HANA in-memory database/analytics solutions is a good example of this. It’s certainly not the first time the pair have found synergistic ways to work together. In fact, as two of the industry’s largest enterprise-focused vendors, IBM and SAP share thousands of customers and mutually support dozens of one another’s products.

But SAP HANA is something of a special case. It’s no secret that IBM has numerous in-memory and analytics offerings of its own that compete directly with HANA. In fact, the company has invested more than $24B in analytics (both acquisitions & R&D) over the past decade, and says it is on track to exceed $20B in annual analytics-related revenues by 2015. But IBM also provides the x86-based reference architecture (though it will become Lenovo’s property soon) for SAP HANA, and is also in the process of developing HANA solutions for its Power Systems platforms.

That makes the SAP HANA Enterprise Cloud a great example of the creative “co-opetition” the IT industry loves to brag about. That is, the ability of competing vendors to work together harmoniously and successfully. But a unique point of the deal is its sheer size. Both IBM and SAP are major enterprise IT players – some would say the biggest in their relative markets – and have the global scope and experience to make the new service a success.

The deal should deliver substantial benefits to both companies. For SAP, the partnership is designed to present HANA in its best light, an important point for a technology and related processes that are still something of a mystery for many organizations. As such, the partnership should help clients better understand HANA’s potential business value. The deal should also offer SAP access to new global customers and markets, including many that are interested in HANA but unwilling to pony up the cost of a dedicated solution.

The partnership offers IBM immediate validation of its cloud services solutions and strategy. Many questioned the value of the company’s $2B acquisition of SoftLayer which provided the foundation for IBM Cloud. But the additional billions the company has invested in cloud infrastructure and related solutions (like its Bluemix PaaS based on CloudFoundry) substantially increased the scope and reach of its offerings. Practically speaking, the SAP HANA Enterprise Cloud should payoff for IBM financially but that success will also likely result in significant competitive advantages.

For SAP customers or companies that have an interest in trying out HANA, the new service should be a no-brainer. That’s because it offers a simple on-ramp for determining HANA’s technical/business benefits with far less risk and upfront costs than buying/deploying a dedicated system. If a CIO’s organization isn’t already working with SAP, it’s probably worth looking into SAP HANA Enterprise Cloud to see how its costs/benefits compare to existing solutions. Many will be glad they did.

The deal is also likely to be problematic for competitors. SAP noted that the IBM partnership is not exclusive – that it has and will continue to work with other hardware and services vendors. But few if any have the global infrastructure or reach of IBM and no others are delivering multi-platform HANA solutions. Frankly, we expect IBM will be the only vendor to do so. HP is centering its own HANA efforts on Intel’s Xeon CPUs, and the possibility of Oracle developing a HANA-based solutions seems as likely as Larry Ellison giving up competitive sailing for needlepoint.

Overall, the SAP HANA Enterprise Cloud partnership seems likely to bring commercial success to IBM and SAP, significant benefits to their customers and substantial discomfort to the competition. So far as IT industry “Eureka!” moments go, it seldom gets better than this.

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