Thursday, July 01, 2010

WIll In Memory Change ERP Implementations? I Think So

SAP is set to announce a shift in the company's approach to transaction systems this year- from systems based on relational databases to those based on holding all main transaction data in a system's Random Access Memory (RAM). SAP is calling this technology "In Memory" and it could signal a big change in the environment for enterprise IT systems.

The argument for his technology is speed. RAM is very very fast. Relational databases stored on storage networks are slow. If you hold all major transaction data in RAM, your ERP system can become incredibly fast and responsive to queries. You can easily parse and present data in near real time and respond to queries.

If companies actually shift to In Memory ERP systems, the result could be a big change in the enterprise IT landscape. For a start, most BAO systems that extract data for analysis might not be needed. Why extract data for faster analysis, if you can do almost any analysis you want in near real time? Similarly, most advanced planning and scheduling systems, including SAP APO might no longer be needed. Most APS systems are in-memory systems that extract only a subset of enterprise data needed for quick supply chain analysis.

As the price of memory declines, the possibility of this vision coming true increases. While traditional hard drives have proven resilient for consumer use, enterprises have a proven willingness to pay for performance where they can find a true ROI. The power and speed afforded by an in memory ERP would generate just such a return. Is it possible. Larry Ellison, now a hardware guy and a software guy thinks not. Certainly, for it to work, companies will have to learn to exercise some restraint over their transaction volumes- and learn to use the archiving functionality in the ERP.

If I had to place a bet, it would be here. APS systems were the first big IT systems to use a purely in memory model, and the result was a powerful new set of analytical and business tools. To make APS work, you had to carefully select the data you would pull from the ERP into memory. That was ten years ago, probably 5 cycles of Moore's law. Today, why not just use it all?

If this vision of the future comes true, then there are profound implications for leading software companies. Databases and BAO offerings might need to be rethought. There would still need to be BAO, but now, instead of working on our database, we would need to access the ERP in memory through an API, giving much more control to SAP. In services, we would need to work much more closely together between ERP implementation and BAO and supply chain planning, since all activities would draw upon the same system.

The rise of in memory could also lead to another enormous ERP implementation boom. It is likely that current ERP systems will need to be reimplemented or restructured to take advantage of this technology. This is no simple technical upgrade and it could also require huge amounts of new hardware. When i worked at i2, I installed demand planner at Compaq. In the quarter we completed the install we needed so many high end servers with maximum memory, we reduced their revenue for the quarter by taking up those servers. And that was just demand planning.

Such an enormous demand for hardware might further accelerate the transition to cloud computing, as companies look for ways to get in memory ERP benefits without spending too much up front. It's a long chain of events from the first in memory ERP to global re-implementation of ERP and a shift to the cloud. Right now, it's all speculation, but if we ignore it, we risk finding ourselves unprepared for a very different future.

The Economist Article. Photo from Creative Commons:


Recommend this Entry No Ratings 0

No comments:

Post a Comment