In the last 20 years, SAP has gone from an ERP software vendor to a modern-day technology powerhouse. Analysts point to SAP HANA as the linchpin to its transformation.
SAP HANA Database-Twenty years ago, enterprises may have turned to SAP for back-office business enterprise software. But these days, SAP wants to be much more than that.
A big part of SAP’s strategy has to do with SAP HANA, an in-memory database the company initially released in 2010. It is now the gateway to what SAP calls the intelligent enterprise, where data is used to improve business processes and develop new business models.
The first part of this two-part series looks at how SAP, which has been around for 47 years, has transitioned from a company that focused primarily on back-office business enterprise software to one that endeavors to transform organizations into intelligent enterprises.
Broadening the scope
SAP’s story in the last 20 years has been one of continually broadening scope, according to Lloyd Adams, managing director of the East Region at SAP America Inc. He joined the company in 1998.
In the late 1990s and early 2000s, “we were known more as an ERP company — perhaps back office only,” Adams said. “But through the years, both through organic development and a combination of development and acquisition, we’ve positioned ourselves to bring the back office to the front office to help provide the intelligent enterprise.”
Anchored by SAP R/3, its pioneering client-server ERP platform, SAP entered a period of dramatic growth in the late 1990s. It rode the wave of Y2K fears, as businesses scrambled to consolidate IT on back-office ERP systems.
“The upgrade fever that Y2K created was really enormous and a lot of folks were pushing to use Y2K as a way to rationalize IT spending,” said Joshua Greenbaum, principal at Enterprise Applications Consulting. “Also the Euro changeover was coming, and there was a lot of interest in looking at SAP because of how it could help manage European currency changes. So those two phenomena were really operative in the late 1990s, and SAP was right at the forefront of it.”
At the same time that SAP’s ERP business was growing, however, it faced threats from the rise of internet-based business systems and on-premises best-of-breed applications like Siebel Systems, which created a popular CRM product that Oracle acquired in 2005, and Ariba, which sold a procurement product that SAP eventually acquired in 2012, according to Jon Reed, co-founder of the ERP news and analysis firm Diginomica.com.