SAP Launches Biggest Software Product Overhaul in 2 Decades

SAP has launched the most high-stakes overhaul of its core software line in more than two decades, aiming to convince multinational corporate customers that its software can now run their most critical business applications much faster.

Europe's biggest software company said on Tuesday its widely used suite of corporate planning applications and newer cloud-based Internet software would work together using a single, modern user interface. Forrester Research estimates that could lead to exponential improvements in SAP data-crunching times.

The unified database platform, called S4 HANA, promises to cut the time it takes to compile business accounts and forecasts to minutes, instead of hours and days, by analysing vast amounts of data in local memory. This provides instant-access retrieval instead of the slower call-and-response method of pulling data from hard disks, CDs and tapes.

Established software makers such as SAP are battling to boost Internet software sales and fend off pure cloud-based rivals Salesforce.com, Workday and Amazon.com's Web unit.

According to some analysts, SAP has staked out a big, early lead in the market for real-time business planning software by signing up a chunk of its biggest customers to S4 HANA.

For most companies, accounting for sales performance, inventory levels and other key financial measures still requires an elaborate scheduling effort known as the quarterly closing process to synchronise relevant data, a snapshot in time that is often days or weeks old by the time it is ready.

SAP's newer approach, in development for four years and used in parts already by thousands of customers, is to combine its super-fast "in-memory" database with business analysis functions. This lets company planners drill down into actual financial transactions and draw on a range of both internal and external data instead of relying on statistical assumptions.

"It's about managing a business in detail rather than in the aggregate," Forrester analyst George Lawrie said. "That means looking through the windshield rather than the rear-view mirror."

At a product launch in New York, followed afterward by a capital markets day for financial analysts and investors, SAP executives will face questions over moves to deliver more of its software as cloud-based Internet services instead of packaged software running on customers' in-house computers.

Most analysts accept the industry shift to cloud software delivery. But they want SAP to disclose more financial metrics that can allow investors to track how the cloud business is performing relative to its classic packaged software business.

SAP has acknowledged the move to the cloud will force it to backtrack on long-promised profit margin gains that have been a big investor draw, in favour of potentially faster revenue growth.

All major database vendors including Oracle, IBM, Microsoft, Pivotal and Teradata now offer "in-memory" versions and dozens of rivals supply predictive analytics software in the cloud.

With the introduction of S4 HANA, SAP is looking to eventually bring all of its customers under one roof, a process that will entail further software development by SAP and complex decisions by customers about when it makes financial sense to convert organisational information from existing data formats.

© Thomson Reuters 2015