Freya Purnell looks at the latest developments in SAP’s cloud strategy, and what it might mean for its competitive position and customers.

At SAPPHIRE NOW 2013, SAP announced its unified cloud strategy, based on the SAP HANA Cloud Platform – providing a foundation for the full portfolio of cloud solutions, including all line-of-business cloud applications.

According to SAP, the platform will enable maximum scalability for all cloud-based SAP solutions, including line-of-business cloud applications, cloud-enabled business network and social collaboration solutions, and a managed cloud environment for SAP HANA.

In addition, just prior to SAPPHIRE, SAP launched SAP HANA Enterprise Cloud, a managed cloud offering designed to deliver applications powered by SAP HANA, Business Suite on HANA and SAP NetWeaver Business Warehouse.

In his keynote at SAPPHIRE NOW, SAP co-CEO Jim Hagemann Snabe said, “The benefits are obvious – you get speed, maximum flexibility, and we drive a radical simplification of infrastructure because it is a HANA-based cloud.”

Customers now have the opportunity to access multiple deployment options – in their data centre, the public cloud, the managed cloud or a hybrid environment.

“Our message to customers is simple: You can have your cloud, your way in real-time, with a beautiful user experience, from the trusted leader in enterprise business solutions,” said co-CEOs Bill McDermott and Snabe in a statement.

As announced last year, SAP now offers public cloud solutions for an organisation’s four most critical assets and relationships:

• People: including HCM solutions from SuccessFactors.
• Money: including SAP Cloud for Financials (formerly SAP Financials OnDemand), SAP Cloud for Travel (formerly SAP Travel OnDemand) and SAP Business ByDesign.
• Customer: including SAP Cloud for Sales, SAP Cloud for Service and SAP Cloud for Marketing, which leverage the underlying technology available in SAP Cloud for Customer (formerly SAP Customer OnDemand).
• Supplier: Ariba combines cloud-based procurement and invoicing applications with the world’s largest web-based trading community.

The announcements at SAPPHIRE also revealed that SAP’s Jam social software platform will be integrated across all SAP solutions powered by SAP HANA, and the SAP Afaria mobile device management solution will be available in a cloud edition, through the new SAP Mobile Secure solution portfolio.

Snabe said last year, SAP had made a commitment to bring all solutions into the cloud within three to five years, but this goal has been achieved only 12 months later.

At its heart, SAP is banking on cloud as a way to deliver customers speed and to eliminate complexity, which acts as an inhibitor to innovation.

“We believe with HANA in the cloud, we have a huge opportunity to simplify this landscape, and that’s why we are so committed to the cloud,” Snabe said. “We innovate in 90 day cycles in the cloud, sometimes in 14 day cycles, which means you get innovation at speed. And with new technology, more importantly, you get the benefit instantly, because we manage the upgrade.

“We take your line-of-business solutions into the cloud so you can simplify that part of your landscape, and now with the HANA Enterprise Cloud, we take the Business Warehouse and your Suite into the cloud. With that, we achieve the radical simplification we need to drive the speed of business that you need… To combine that with the Rapid Deployment Solution approach, we are able to accelerate not only the build phase, but also the run phase,” Snabe said.

As part of the push towards a cloud strategy, internally SAP has grouped all of its cloud development activities, and placing them under the control of Dr Vishal Sikka. Lars Dalgaard, former SuccessFactors CEO, stepped down from his role on the management board to become an investor, though McDermott said he would still act as the company’s strategic cloud adviser.

Getting the jump on the competition?

Telsyte senior analyst Rodney Gedda says as one of the big four vendors which are primarily reliant on on-premise revenue – a group which also includes IBM, Oracle and Microsoft – SAP is under pressure to provide “a compelling cloud path for customers”.

“We can’t just slap a cloud brand on everything and expect customers to jump on board. The in-memory computing of HANA may appeal to customers looking to go to the cloud and not just take a load off infrastructure management, which is a key driver, but also to have a high-performing system and be able to make business decisions better than they could on the on-premise infrastructure,” Gedda says.

The big four are all still struggling to find their feet in the cloud, he added, so if SAP can execute this vision, it could gain an advantage in this race. However, the real competition in the cloud comes from those who have actually built their software for the cloud delivery model – Salesforce, Netsuite, Amazon Web Services and Google.

“What that means for SAP is that it needs to sharpen up its go-to-market essentially, so by offering in-memory computing in the cloud, it positions itself as a leader in that space, and it can take on other in-memory cloud services being offered by Amazon and others,” Gedda says.

What does this mean for organisations of various sizes?

According to SAP, this unified strategy would allow companies of all sizes to “gain the flexibility, choice and lower cost needed to innovate for growth across their entire business in the cloud. This will help companies of any size create entirely new experiences for their customers, empower employees at scale, optimise the use of resources or unlock value for their business”.

Forrester cloud analyst Stefan Ried recently wrote that with the HANA Enterprise Cloud, SAP is targeting the very large enterprise customers, but said its licensing model, following a ‘bring your own licence’ format, may still prove a barrier to the acceleration of the adoption of HANA.

Gedda agrees that it is still the top end of town that will find the most appeal in the unified cloud strategy.

“The beauty of the cloud model is that it allows smaller sized organisations to tap into features that they probably wouldn’t be able to afford otherwise. So it might be an opportunity for some of SAP’s smaller customers to take advantage of some of the enterprise applications that it has available,” Gedda says.

It may also extend the appeal of HANA into the midmarket, for whom the on-premise version may have been out of reach.

“It’s an exciting move for in-memory computing and big data analytics as well, so that’s one of the opportunities to be looking at for mid-market players and what they could get out of these on-demand models,” Gedda says.

This article was originally published in Inside SAP Winter 2013.