The path to SAP HANA for most SAP customers is now clear. At some point soon, all SAP clients will have to implement HANA if they want to use SAP’s latest and greatest software versions. However, moving to SAP HANA can be very costly if you are not familiar with all your purchasing options. In terms of purchasing the SAP HANA platform, there are three major categories of cost. Software, Hardware and Implementation services. In this blog I will discuss some of the options I have seen customers choose over the last 6 years and include some of my own opinions. Hopefully this will help you save the most money when implementing SAP HANA.

Software licensing

Software licensing cost can be a very significant portion of the initial SAP HANA implementation cost. While each situation is unique and individual contracts can differ, SAP does seem to offer a lot of different ways to purchase HANA.

• One way is based on the total memory allocation. Such licenses are often offered in increments of 64GB of total RAM allocation and can cost anywhere from $20,000 – $160,000 USD for each 64 GB increment. With this type of license, there are three subcategories of available additions. Standard, Enterprise and Express addition. Note that the SAP HANA Express software is free of charge if you are willing to register with SAP. Each edition has a price point and list of usable functionalities. Overall, this type of “full use” license is desired by organizations that want to use the SAP HANA platform directly without any limitations. For example, it is often used where SAP HANA is the data warehouse or central data hub for reporting and visualization.
• As an alternative to the “full use” versions, I would also ask your SAP Sales Representative for limited runtime licenses to support your SAP Application servers running on an SAP HANA Database. In some cases, the license cost for SAP HANA can be very competitive compared to the full use license and compared to what you might be paying today for Oracle, MS SQL, DB2 or other SAP supported OEM databases. Such licenses do have restrictions in how you access and use SAP HANA, but they do allow you to get SAP HANA at a more affordable software license cost.
• In addition to SAP licensing, you must also consider paying SUSE or RedHat for operating system support and licensing. Using the SAP distribution is highly recommended because you will need access to their SAP specific update repositories and SAP HANA specific support team. In addition, you might have to purchase Virtualization licensing, OEM software to support HANA hardware and backup software licensing. These costs all add up require that you pay multiple vendors.

For more information check out this blog by Owen Pettiford

Hardware

Example SAP HANA Appliance – Image from https://blogs.saphana.com

Hardware cost can be a significant portion of the overall SAP HANA implementation cost. However, there are several ways to reduce or limit your overall hardware costs. Here are a few ways I have helped clients reduce their costs:

• Tailored Datacenter Integration (TDI) gives clients and implementors the flexibility to “custom” build an SAP HANA server that leverages existing certified storage, networking or servers already in their landscape. It is an alternative to the appliance model where a hardware vendor builds and delivers a complete system that includes compute, storage and network devices in a prepackaged and pre-certified build. Often these appliances are also delivered with components that the client cannot easily administer with existing staff. In my experience this often leads to an appliance with outdated firmware and software. Such components can also be redundant and underutilized leading to a waist of capital. Take for example, many scaleup systems often require multiple disks to achieve the required IOPS. This leads to large (multiple TBs) of diskspace that will never be fully utilized by SAP HANA. I often see the same issue with network switches and fiber channel switches. Only a few ports are populated to support the SAP HANA cluster, leaving several open but never utilized. Therefore, in many cases, the TDI rules can be leveraged to reduce hardware redundancy, maintenance and overall cost.
• Entry level systems are another way to reduce overall hardware costs. Such systems are typically based on the intel E5 generation CPU and such CPUs are often significantly cheaper than the Intel E7 alternative. As you can see, SAP has listed multiple vendors platforms as “supported” for SAP HANA workloads. https://www.sap.com/dmc/exp/2014-09-02-hana-hardware/enEN/intel-systems.html. Such systems are not as scalable nor powerful as those certified and running on the Intel E7 CPU, but again they are often much cheaper than the alternative. I have built many of these systems over the years and can personally recommend them for clients that have less than 512 – 756 GB of compressed data within their SAP HANA system. They are also great at running non-productive workloads in SBX, DEV and QAS.
• Reconditioned hardware is also a way to save a lot of money. HANA systems have been around for over 5 years and we are starting to see a lot of used hardware available in the aftermarket that can run SAP HANA 1.0. You know the old saying, “one man’s trash is another man’s treasure”. To give you some perspective, you can often get a Dell R910 systems with 1 TB or RAM, 4 x E7-4870 10-Core CPU and 7 TB of SATA SSD for around $11,000.00 in the aftermarket. This includes a 6 year NBD parts replacement warranty and 10GB SFP NIC cards. Compared to a shiny new system, costing well over $60,000, this is an amazing alternative. Such systems are great at running non-productive workloads and can also be virtualized under the TDI rules.
• Running SAP HANA in the cloud IaaS style can also save you some money while converting the cost to a monthly operational expenditure. This is sometimes more attractive when compared to a large initial capital expenditure that can be underutilized or alternatively, might become quickly obsolete. In addition, you can reduce other operating costs by shifting and subsequently reducing hardware energy and maintenance costs to a cloud vendor. In general, the cloud argument is not only about the potential for cost savings, it also offers great flexibility in terms of scalability, high availability and disaster recovery. Hybrid cloud deployments can also be leveraged allowing an organization to move a portion of the landscape to the cloud. With AWS specifically, they offer Reserved Instance Pricing at a discounted rate. For example, you can purchase a 3 year, all up-front convertible SAP HANA x1e.2xlarge instance for just under $15,000.00. This is an outstanding price for companies that only need a 244 GB instance of HANA.

Implementation

Implementation costs are another significant factor for most clients. Implementation costs in this case refer to the cost you pay for a person to install your SAP HANA appliance or TDI landscape.

• When choosing the appliance model, these costs are often built into the package. I have seen them range anywhere from $10,000 – $40,000 depending on the appliance. In most cases, the services provided here are limited to deploying the appliance with little to no post installation configuration. I would argue that most clients need a lot more knowledge transfer, security setup, backup setup and other key items that are often not included in the appliance model services.
• You can expect the TDI implementation costs to range from $180 – $275 per hour. The price depends on many factors. For example, those seeking someone with the skills to deploy the computer hardware, shared storage, software and virtualization software can be more expensive than those needing a simple SUSE Linux OS on a single node server. TDI implementation services are often overall more competitive, tailored more to your environment and can include add-ons like training, post implementation support, security setup, backup and DR testing and other practical items. In my experience, clients tend to get more value when using a certified TDI implementer.

If you need further consulting help, do not hesitate to contact me via LinkedIn Jonathan Haun or via Twitter @jdh2n