Lenovo DCG, SAP SAPPHIRE NOW and the Value of a System Portfolio

By Charles King, Pund-IT, Inc.  June 6, 2018

The concept of computing system “portfolios” is so commonplace in the tech industry that the term is essentially meaningless. At the bottom end of the scale are portfolios that consist of whatever servers happen to be ready for shipment on any given day. In the confusing middle ground are vendors that try to cover every single data center base by offering dozens of system SKUs and options that tend to confuse more than enlighten clients.

To my mind, top-end portfolios are provided by vendors that have both a solid lock on foundational technologies and a deep understanding of the issues crucial to their clients’ businesses. Lenovo’s recent quarterly earnings report and the news the company shared at SAP’s SAPPHIRE NOW conference this week highlighted why Lenovo’s Data Center Group (DCG) and its product portfolio remain top of mind for organizations aiming to maximize the value and performance of critical applications and processes.

DCG’s contributions to Lenovo’s success

First off, consider what DCG contributed to Lenovo’s recent report on its Q4 (and FY2017/18) earnings, when the company’s $10.6B in quarterly revenues saw 11% in year on year (YoY) growth, its first double-digit increase in eleven quarters. Of that total, Lenovo DCG delivered $1.2B in Q4, and $4.4B in overall FY2017/18 revenues (up 8% over FY2016/17 results).

Looking deeper, not only did DCG deliver its second consecutive quarter of double digit YoY revenue growth, it also achieved its best performance since Lenovo acquired the group from IBM in 2014. Growth was positive across all geographies, especially in critical U.S. and EMEA markets. Plus, Lenovo showed strength in Software Defined Infrastructure (SDI, with 130% YoY growth) and also solidified its #2 position in high performance computing (HPC).

It should be noted that IDC recently reported that Q1 2018 server sales were especially strong, which might lead some to say Lenovo’s ship simply rose on the same tide that lifted other vendors. But IDC’s Worldwide Quarterly Server Tracker data showed the company outpacing key rivals, including HPE and Cisco in terms of revenue growth, and HPE in terms of unit shipment growth.

In other words, Lenovo isn’t simply being pulled along by favorable circumstances—it is one of the companies driving positive market trends.

Lenovo DCG, SAP and the value of strategic partnerships


So, what about the Lenovo’s news at SAPPHIRE NOW? As context, it’s important to note that the two companies have been close strategic partners for years. In fact, SAP chose what were then IBM’s System x solutions as the reference architecture for its SAP HANA in-memory database platform, a practice it continues today with Lenovo systems. Plus, the company also uses Lenovo solutions to power its own internal HANA infrastructure.

Why is that the case? In part due to the Enterprise X-Architecture that came to Lenovo with the System x organization and assets from IBM. X-Architecture options enable Lenovo’s system solutions to seamlessly support and utilize greater memory capacity than competing vendors’ vendors’ products. That makes Lenovo solutions ideal for enterprise SAP HANA deployments, as well as for other memory-intensive applications and mission-critical workloads. That’s why Lenovo leads the market (with over 10,000 systems delivered) in HANA solution sales, and also supports SAP’s S/4HANA Enterprise Cloud services in China.

Lenovo DCG has continued to evolve the X-Architecture (updates to the sixth generation, X6, platform were introduced in 2016), but the company’s mission-critical SR solutions are also ideal for supporting numerous SAP applications and workloads. That includes the Data Hub solution announced at SAPPHIRE NOW as part of the SAP HANA business data platform.

Data Hub is a DataOps solution SAP designed to “connect enterprise data with big data” by enabling the sharing, pipelining and governance of all the data within a connected enterprise and allowing it to be managed as a single logical data set. That includes information residing in Hadoop, data lakes, cloud object storage, relational databases, enterprise applications and other repositories.

As it has for previous SAP HANA-based solutions, Lenovo’s systems provided the reference architecture for developing Data Hub. In addition, Lenovo introduced its own Solution for Data Hub consisting of: ThinkSystem SR530 for the Data Hub application and distributed runtime; ThinkSystem SR650 for DSS-C storage nodes; Data Hub-dedicated ThinkSystem NE2572 RackSwitch; and RackSwitch G7052 for network management.

Along with these offerings, Lenovo announced a new version of its solution for SAP HANA that leverages Intel’s Optane DC Persistent Memory technologies to expand memory capacity and reduce restart time. Lenovo also announced new hyperconverged solutions (leveraging Nutanix technologies) for SAP HANA (initially in non-production implementations).

Final analysis

Central to these efforts and announcements are the innovations that Lenovo has achieved and continues to deliver to customers via its DCG portfolio. Just as the company did with the 2005 acquisition of IBM’s PC division, Lenovo took solid, innovative commodities and substantially added to their value.

That isn’t to say that DCG’s work is done. There are numerous other opportunities to explore and market positions I expect the company will add to over time.

Just how that might be accomplished is underscored by the announcements and solutions coming out of SAPPHIRE NOW. Not only is Lenovo adding significant new offerings to its enterprise portfolio, it is also demonstrating how to gain additional value from and add further value to its longstanding strategic partnership with SAP.

That’s all to the good, but the shape and quality of these offerings demonstrate that Lenovo isn’t simply gunning for new market opportunities. Instead, it is looking for and regularly finding the sweet spot that connects and solves significant customer problems with a growing portfolio of thoughtfully-considered Lenovo solutions.

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