SAP on Hyperscalers driving innovation - who is gaining the plot?

Our industry does not respect tradition – it only respects innovation. - — Satya Nadella, CEO, Microsoft

The article SAP on Hyperscalers accelerates due to the on-going crisis mentions the value preposition Hyperscalers (cloud providers) present to the customers and the flexibility in selecting the right path for ERP transformation. They provide customers the ability to realign their workforce to become more proactive and nimbler to changing business priorities. I ended the article with a question left unanswered. Is this the right strategy, and who is losing the plot?

Let's first understand the benefits of this partnership between SAP and Hyperscalers, the beneficiary, and the motivations to run SAP workloads on the cloud.

Often in the SAP landscape, we notice post facto that system design is flawed, size is causing the performance issue, input-output processing speed is not up to the mark. The right level of security design is not considered for all components. With the onset of Azure, AWS, and GCP in this space, they can 

• Simplify and modernize the landscape at the same lower infrastructure costs
• Run cost-optimized Disaster recovery (most of the customers keep hardware unused in another site for DR, and it is like having two expensive Ferrari and you are using only one at a time)
• Enable selection of right to hardware by guiding a clear cut definition of machine types
• Drive best practices with a well-defined industry reference architecture for SAP workloads for maximized performance and
• Provide unexpected scalability and agility for the entire landscape.

We can undoubtedly debate all these existed before as well, over a period, they got fine-tuned, but the real differentiation which Hyperscalers bring is Innovation. I often refer to these differentiations as Below the cloud (which is at the infrastructure layer). Examples of those are

• HANA brought in the concept of certified hardware, meaning more complexity in terms of make, build, compute, TDI/Appliance. To solve this Azure, provide infrastructure for all the SAP workloads, and in some cases, they are very purposeful built. The M Series offers 192 GB to 12 TB SAP HANA certified VMs in more regions than any other public cloud provider
• Another cool feature is the concept of "Live Migration" from Google cloud – it allows enterprises to keep the SAP instances running when the hosts undergo downtimes such as during software or hardware update. Think of a scenario where a customer needs to move away from AMD to Intel, without hassle they can easily do it now
• A couple of days back, I saw an exciting feed on LinkedIn "Fast Restart by the numbers: A night-and-day difference" HANA system restart from 40 minutes to less than 4 minutes. Beginning with SAP HANA 2 SPS3, SAP has supported the use of persistent memory (PRAM) to help reduce restart times

And Above the cloud (which is beyond your SAP application). Some of the great use cases-

• Being able to harness the power of the internet of things, whereby you can make all the physical assets function more intelligently. These can generate insights which are converted into meaningful actions within the ERP system
• Leveraging AI/ML capabilities from these cloud providers to solve a significant problem that even next-generation ERP also doesn't address. Processing of manual orders leveraging Vision API enhances productivity, reduces lead time and cost significantly
• Leveraging prebuilt ML models designed for Product demand predictions helps in Data Ingestion from multiple sources (ERP being one) and in real-time, help maximize sales and reduce excess inventory

The level of innovation and transformation technology companies brings is enormous. The competition among cloud providers fuels the innovation engine at the brisk pace, and the clear beneficiary is CUSTOMER. In turn, it further delays the decision to move to S/4HANA (as they are grappling with the idea of why I should be moving?). The organization's imperatives are changing; they can reduce Opex, reduce risk, get better insights, and innovation capabilities from Above the cloud narrative without moving to S/4HANA.

Partnering is often seen as a zero-sum game, and time will decide the course in this case. Intelligent Enterprise is a compelling message, but SAP needs to make this more specific and compelling in order to convince customers to spend millions on another ERP transformation. Intelligent ERP gets challenged more often due to the lack of strong platform capabilities from the technology perspective. It might force customers to use SAP as a yard and augment services/capabilities from Hyperscalers to identify and solve business problems. There is an exciting read around a comment made by Christian Klein, CEO SAP, "Owning the application layer."

It gives me Déjà vu when a customer used to ask, shall I be using Enterprise Portal or SharePoint or Liferay? The best of breed vs. Best of suite debate remains always. Least what SAP can provide is a robust technology capable platform for customers to integrate application, data, and processes; at the same time, provide them the flexibility to Rapidly build and run new cloud SAP apps, business services, and APIs to solve new problems (to engage new customers, and drive new revenue). We hope in the coming months or quarters, a refreshed strategy from SAP comes, which is not focused around the infrastructure layer but built around the core strengths around the business process, engineering & industry cloud.  

Interesting Reads -

Google Analytics and Machine Learning Benefits for SAP Customer

 9 Different ways to back up your SAP Workload on Google Cloud

Six reasons customers trust Azure to run their SAP solutions

Optimize costs and increase agility with the latest SAP on Azure offerings

Personal Note: The opinions expressed here represent my own and not those of my employer. Feedback and comments are most welcome and help in improving.