Stumping The Innovator’s Dilemma

SAP founder Hasso Plattner and disruption expert Clayton Christensen discuss how the in-memory database is revolutionizing computing and may even help resolve the dilemma plaguing big companies.

Yesterday in Orlando, SAPPHIRE NOW morphed into the meeting of the minds when two renowned professors from business and computing shared a keynote stage on the topics of in-memory computing and The Innovator’s Dilemma. Harvard Business School’s Clayton Christensen, author of numerous books on business theory, and Hasso Plattner, professor of computer science and chairperson of the SAP Supervisory Board, discussed possible ways out of the conundrum.

Plattner was quick to explain that he was speaking on this occasion in his capacity as professor at the Hasso Plattner Institute in Potsdam, Germany, not as head of the SAP’s overseeing body.  With his usual directness, Plattner commented on the company he cofounded: “SAP is the model candidate for the Innovator’s Dilemma; I see the Dilemma everywhere.”

Plattner mentioned the times that the company was faced with the choice between sustaining innovation – those changes which carry incremental improvements but don’t promote growth – and disruptive innovation, which lower the cost of a product or service to enable a much larger number of people to begin using it.

The Audacity of “Zero”

Cloud computing is perhaps the most recent example of disruptive innovation. “We can only part of the transition to the cloud from on premise, accelerate the speed, and take advantage of it,” he admitted. Plattner provided the rapid move to mobile devices as another example. Both technology trends, he said, are examples of the triumph of simplicity over complexity: “It is not just a marketing slogan to be simple; simplicity beats complex functionality.” he emphasized.

In 2007, Plattner – to the criticism of his academic peers – dared to imagine what business software would look like if systems response times could be eliminated altogether.  His idea was born out of the dramatic hardware improvements witnessed over the space of the past 20 years, enabling 6,000 times greater memory capacity and 1,800 times more computing power for the same investment. “This led us to a completely different design objective,” he explained, which ushered in the conception of SAP HANA.

And although “zero” response time is not entirely accurate, Plattner said that SAP’s in-memory database is designed such that 90 percent of queries are answered within one second, and more difficult queries are answered within three seconds. “Studies show nobody will even wait for a response of eight seconds,” he added.

Free the Data!

By storing the most critical data in main memory, SAP HANA is able to circumvent the need for aggregates, which are compilations of database results pre-calculated and stored based on how users anticipate they will query the data in the future. According to Plattner, this was the truly radical change that SAP HANA is bringing to companies.

In-memory computing therefore effectively eliminates crutches put in place because of the technical limitations imposed by legacy systems. By freeing up the data, users without specific training in data analytics can run models and algorithms directly against all the data running in a system to get insight into a business.

Not only does this reduce the data footprint (a reduction of between 15 and 25 times was predicted), it also gives companies the freedom to run the company completely differently because of the opportunity to perform predictions and simulations. “This is what business software should be all about,” Plattner surmised, adding that if users get meaningful insights, then they also have the option to do prediction and simulation.” Plattner went so far as to call this “biggest step forward in the history of enterprise systems,” saying it is “so minimalistic that it cannot fail.”

A New Business Theory Is Born?

Clayton Christensen built on Plattner’s example of the eradication of aggregates to the next level by relating them to the hierarchical and static structure of large organizations. Such “aggregates of people” in organizations ultimately create complexity, cause the loss of focus on the customers’ problems, and prevent differentiation with respect to the competition, Christensen said.

By dismantling the aggregates, or teams, in the organizational chart – which is inherently static, an organization could be transformed on the fly in response to jobs to be done could transform the way innovation happens. Christensen said that he was excited that this analogy “might provide one of the most important concepts of management that I have ever seen.”

Combining Disruptive and Sustainable Innovation

For existing SAP customers, said Plattner, the “disruption” of in-memory computing is implemented in a “nondisruptive” way to their businesses. “We keep what they had before, but do it differently, and users can decide when they want to do the migration,” he emphasized. Using SAP as its own case study, Plattner said it had taken only four hours to move the company’s own ERP systems to SAP HANA.

According to Helen Arnold, member of the SAP Global Managing Board and CIO and head of cloud delivery, all of SAP’s mission critical systems are now running on SAP HANA Enterprise Cloud. In April, SAP went live with SAP Smart Finance, which is now serves as a “single source of truth for financial and controlling information,” says Arnold. She also noted that “it is now possible to navigate directly from a dashboard to line item details. And when the organization changes, we can apply historical data to new business realities on the fly.”

Two other early adopters of SAP HANA stepped up on stage to tout the benefits for their businesses.

Larry Brewer, Director of Global Information Technology at John Deere, noted that with SAP HANA, the company can identify problems in running machines two to three months faster, resolve problems faster, and also significantly reduce downtime.

Mindy Simon, VP of Information Technology at ConAgra Foods, explained how her company is using SAP HANA to simulate the manufacture of the products and the profit and loss of products to discover constraints that were never known before in order make better decisions. “Open your minds to reinvent how you do your business processes,” she urged conference attendees. “When you play around with the data, it will open up how you can innovate within your industries.”