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SAP: We'll Be No. 2 Database Player By 2015

At SAP Influencer Summit in Boston, SAP unveils plans for cloud hiring spree and Hana-led database push. Can it push by IBM, Microsoft, and Teradata in just 3 years?
You can't fault SAP for lack of ambition. Just days after announcing its hoped-for $3.4 billion acquisition of SuccessFactors, SAP revealed an aggressive new cloud-apps sales approach, and boldly predicted that it would become the number-two database vendor by 2015.

It's all part of a company goal to be the no. 1 or no. 2 player in every market that it serves. That mission, articulated at this week's SAP Influencer Summit in Boston, guides a new go-to-market strategy that led to the creation of a dedicated cloud sales team.

Where SAP salespeople previously sold all products, the new team will focus exclusively on cloud apps such as Business ByDesign, Sales OnDemand, and Sourcing OnDemand. What's more, the team will grow by more than fivefold, with as many as 500 new hires in 2012, according to Peter Lorenz, executive vice president of SAP OnDemand Solutions.

"We are very serious about on-demand, so we want to make sure we have people who are only measured by their success in the cloud," Lorenz told InformationWeek.

[ Want more on SAP's plan to break into the social sphere? Read SAP Tries To Leapfrog Salesforce.com On Social Analysis. ]

SAP also underscored its seriousness about the database market at this week's event, particularly its Hana in-memory database technology. Hana was introduced late last year in the form of an analytical appliance, a product that has since racked up $100 million in sales. But SAP is now promoting a wider role for Hana as a replacement for the relational databases running SAP BW data warehouses. SAP says it will eventually be able to run its entire Business Suite on Hana. But the technology must first be recognized as a mission-critical database.

"Hana is a full, ACID-compliant database, and not just a cache or accelerator," SAP CTO and Executive Board Member Vishal Sikka told InformationWeek, apparently weary of assertions to the contrary. "All the operations happen in memory, but every transaction is committed, stored, and persisted."

Appearing via videocast at this week's event, Sikka detailed Hana advantages including advanced compression and the ability to eliminate ETL, stored procedures, materialized views, and OLAP cubes while delivering sub-second performance. In the BW database role, Hana is routinely delivering 1,000 times faster performance than conventional relational databases, he said, while requiring lower-cost hardware investments.

Many customers just don't think of SAP as a database vendor. Perhaps that's why Steve Lucas, global general manager and senior executive, business analytics and technology, made the bold claim here (to the skepticism of many) that SAP would move into the number-two spot in the $20 billion database market by 2015. That total would include SAP's Sybase unit and it's ASE and Sybase IQ databases. But SAP would still have to surpass the current no. 2, no. 3 and no. 4 players, IBM, Microsoft, and Teradata, respectively, within just three years.

"It's a great big, audacious goal, but we want to aim high, and we think we can start in the data warehouse market," clarified Sanjay Poonen, president, SAP Global Solutions and Go-to-Market, in an interview with InformationWeek. Poonen, who is Lucas' boss, insisted SAP would continue leave the choice of databases up to its customers. But the company is clearly counting on selling Hana, as well as Sybase ASE and Sybase IQ, into its massive 176,000-strong customer base.

Sales to existing customers are also at the core of SAP's plans for cloud applications. SAP estimates that only about 15% of its customers have embraced cloud-delivered applications (whether from SAP or a competitor), so there's vast potential for hybrid deployments mixing on-premises software with cloud based apps.

SAP's boldest move to catch up in the cloud is its planned $3.4 billion acquisition of SuccessFactors. Under the terms of that deal, which is expected to close early next year, SuccessFactors will run independently as a subsidiary of SAP (following the approach used in the Sybase acquisition.) CEO Lars Dalgaard will continue to run SuccessFactors while also leading SAP's overall cloud strategy as a member of SAP's Executive Board.

With revenue of $332 million expected this year, SuccessFactors is far smaller than Salesforce.com, which is on track to surpass $2.2 billion in its current fiscal year. It may be a distant no. 2 in terms of revenue, but with 3,500 customers and 15 million users, SuccessFactors is the largest enterprise-cloud-apps vendor in terms of number of subscribed seats.

As it stands now, SAP won't be nipping at Salesforce.com's heels any time soon. And it has a long way to go to surpass Microsoft and IBM in the database market. But at the very least, competitors in both markets are surely taking SAP seriously.