The News
On November 27 SAP
and Microsoft announced a new level of their strategic partnership.
Their key messages are that
·
S/4 is fully ready to run on
Azure
·
Microsoft is committed to SAP
and will upgrade its internal financial systems to S/4 on Azure
·
SAP will move a dozen
(unspecified) “key internal business critical systems” to Azure
·
SAP and Microsoft will
“co-engineer, go to market together with premier solutions and provide joint
support services to ensure the best cloud experience for customers”
·
SAP and Microsoft will both
provide documentation about their internal projects “to provide customers with
guidance and enterprise architecture for deployment of SAP applications on
Azure”
Of course it is not much of a surprise to
SAP “connoisseurs” that SAP is not running its business on just one instance of
their own S/4 systems – still, twelve is a fairly sizeable number to migrate to
Azure. It is also not much of a surprise that Microsoft is an important and
committed SAP ECC customer. As such Microsoft, of course, has plans to upgrade
to S/4.
All in all this is the long due follow-up
announcement to the 2016 SAP and Microsoft announcement
of “empowering organizations to advance their digital transformation”. Back in
the day I
wrote that this announcement shows a lot of potential for the customer and
that Microsoft likely will have more advantages to Microsoft than for SAP. In
2016 the announcement was also about Fiori. There is no word about it anymore today.
As an interesting aside, Microsoft announced
that it will use Azure AI (Cortana) and it’s analysis services for “more
efficient financial reporting and more powerful decision making”. This, of
course, offers them a cross-sell opportunity as Azure AI, if working on their
own systems, can be productized easily.
The Bigger Picture
I do not remember that SAP has made a joint
announcement to this depth with AWS. An additional swipe at AWS is that this
announcement got made on day one of AWS re:INVENT, which is one of, if not THE
premier AWS conference. This is a fairly clear sign that, while SAP pursues a
multi cloud strategy there are clouds that may be more important to SAP than
others. And vice versa, that there are business workloads that should be more
important to the IaaS providers than others.
Salesforce has announced a deeper
cooperation with Google as major news the recent Dreamforce 2017 conference, as
I covered in my analysis
of the event.
Oracle still prefers their own cloud
services, although it is possible to run Oracle on AWS.
While SAP runs its own cloud with sizeable
investments this announcement also sheds a light on SAP not being an IaaS
player at heart but having its core on the application level, meaning PaaS and
SaaS.
Yet.
The buildup of a global IaaS infrastructure
is not only expensive (as one can regularly see and hear in SAPs quarterly
reports and analyst briefings) but also takes time. While SAP runs data
centers all over the world the company is certainly behind the key IaaS
players. And I am not clear about whether SAP will (want to) run non-SCP
applications in its cloud.
All this indicates a continuing trend of
the software powerhouses away from AWS:
·
Microsoft, Oracle, and
Salesforce do not really need AWS
·
SAP and Salesforce are running
multi cloud strategies that do not seem to have a focus on AWS
And then we didn’t even talk about the
Alibaba cloud.
The build-up of camps has not only begun,
but also intensified. “Commonwealths of Self Interest” are emerging.
MyPOV and Advice
The announcement of SAP and Microsoft is
backed by not only one or two, but four joint customers of global reputation:
Coca Cola Company, Costco Wholesales, Columbia Sportswear, and Coats. Apart
from this being a fairly high number it also is a strong indication that this
announcement is not a shoot from the hip but well prepared and bases on (beta)
tested functionality.
An observation that almost has the quality
of a running gag by fellow analyst and friend Holger Mueller in his analysis
is that these customers’ names all start with a ‘C’ and hence may be only a
part of the full list of early customers.
But more to the topic it is certainly a
sign that SAP is migrating a good number of their key internal systems from
their own (or their subsidiaries!) data centers into Microsoft’s.
The sign is that SAP itself is convinced
that
·
The cost of running their
applications on Microsoft is not more expensive than using their own data
centers
·
There is no real focus on
becoming a key IaaS player themselves
·
Microsoft is a key contender
for the top spot of running heavy business workloads securely and in a scalable
way
SAP with this move basically confirms my
view that Microsoft will become the key IaaS provider for larger business workloads
in front of AWS.
Microsoft’s announcement of using its own
Azure AI to improve decision making opens a few interesting scenarios. First,
it offers options, after Microsoft connected Azure AI to S/4. Second, and more
interestingly, Azure AI can become a part of SAP Leonardo by embracing its
capabilities. Connecting Azure AI to SAP systems opens up a treasure trove of
additional data that SAP does not have access to. This data can be used in all
sorts of marketing, sales, and service scenarios – as well as in-house
scenarios. It will be interesting to watch this space.
SAP customers should now evaluate their
options and compare the associated cost, cloud viability and migration options.
·
No or private cloud
·
Public cloud, and if so, which
one
Especially businesses that are heavily
invested in both, SAP and Microsoft, could likely benefit from running SAP on
Azure.
We are no more talking about reliability or
security. Effectively cloud delivery is at least as reliable and secure as
running IT in house. With an emphasis on “at least”!
On the longer run companies should look at
whether they could leverage brokering systems that enables them to shift their
workloads from one cloud to the other depending on current pricing. Being able
to use different clouds also has an advantage in disaster recovery – it is
highly unlikely that two clouds go down at the same time.
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