4 cost considerations you can't afford to overlook when moving to SAP HANA

What SAP customers need to know before transitioning to HANA.

20160224 stock mwc sap booth sign
A booth sign at Mobile World Congress 2016 shows the logo of enterprise software vendor SAP in a file image captured on Feb. 25, 2016. Credit: Stephen Lawson

It’s impossible to decouple SAP’s vision for the cloud from HANA, its in-memory database and computing platform. The company aims to run its core solutions on HANA, while also migrating customers to use it as a cloud, application and innovation platform. 

But, for current SAP customers, transitioning to HANA is a complex and expensive endeavor. Several considerations should be taken into account when making the decision to migrate:

1. SAP doesn’t just want to run your enterprise applications; they want to capture your database spend. SAP has positioned itself to displace Sybase and Oracle database technologies in some customer environments. That’s opened the door to new revenues for application development and hosting, as well as data access.

It’s very important for customers to consider if their data will be locked into their SAP footprint and whether or not indirect access fees will be applied for third-party systems or applications to access that information. Customers moving to HANA should also be aware of additional license and maintenance costs.

2. The move to S4 will have significant cost implications. In February of 2015, SAP announced the S4 Business Suite, which is the first major customer release since R/3. Customers upgrading to S4 need SAP to clarify whether they will have to pay a license fee. Customers that are current on maintenance are allowed to upgrade the application for free – but that doesn’t cover the runtime database charge (S4 runs exclusively on HANA). This has a long tail impact on a client’s SAP spend as the runtime fee will be applied to future purchases.

It’s also important to consider the additional hardware, software and maintenance costs associated with S4. These could include costs associated with exporting data or building interfaces to HANA. Companies should have a clear picture of how much it will cost to migrate databases, and to re-train database administrators on the HANA platform.

3. Discounts probably won’t happen with HANA – and that makes choosing the right license metric that much more critical. SAP has two methods for licensing HANA’s enterprise edition – (1) by volume of data, or (2) as a runtime database charge. Given the exponential growth in data volumes that most enterprises are experiencing, many (if not, most) customers choose to license HANA as a runtime database charge. Also known as HANA Software Application Value (HSAV), this charge represents the total value of the applications running on HANA and the fee is 15 to 20 percent of the purchase price of those applications. This underscores the importance of negotiating a strong discount for all applications running on HANA. Subpar discounts on these applications could have a significant impact on the final price paid for the HANA platform. Also, don’t forget that annual enterprise maintenance charges of 22 percent still apply to both applications and the database.

4. It’s imperative you model indirect costs for projected growth in data volume. As mentioned earlier, there are additional hardware, software and maintenance costs to be analyzed when moving to HANA. It’s important to model out these costs as your data volumes are projected to grow over time. The transition to HANA is not a fast or easy one – and a long view of data-driven spend is the first step in keeping costs in check.

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