Shedding More Light on SAP’s Cloud Strategy

Last week I visited SAP’s US headquarters in Newtown Square, PA for an analyst event. During that event Sven Denecken delivered an update on SAP’s cloud strategy. Sven is SVP of Cloud Strategy and Head of Co-Innovation. While he reports to Lars Dalgaard, former SuccessFactors CEO and now SAP Executive Board Member in charge of all that is “cloud” at SAP today, Sven comes from SAP proper (i.e. not from SuccessFactors) and knows the ERP game quite well. As you might recall from my previous post from May, I walked away from SapphireNow with questions and concerns about SAP’s cloud strategy and feared that perhaps SAP had sacrificed its ERP DNA for cloud DNA. After speaking with Sven, I feel better, even though the story hasn’t really changed all that much.

To summarize Sven’s presentation, cloud is not only hype, but a reality at SAP. The goal is to bring the next generation of cloud applications to market. Next gen means a consumer-like user experience, with “mobile first” development, rapid innovation cycles and customer co-innovation to support greater business flexibility and agility. Social collaboration is not viewed as a separate pillar but as an embedded, integral part of the product design. And for added measure, toss in real-time data and content, B2B exchanges and analytics.

In keeping with the Lars party line, Sven also talked about “loosely coupled” solutions. Yet somehow when Sven, an ERP veteran, talked about “loosely coupled” it came across less like breaking ERP apart and more like a portfolio of applications, including ERP, which could be consumed at an individual company’s own pace. This is familiar territory since growing ERP footprints have made it increasingly difficult to determine where ERP ends and other applications begin. These solutions would be connected through open, cloud-based integration. Integration would be tight (perhaps seamless?) for SAP applications but also available to connect to 3rd party cloud solutions as well as existing on-premise solutions.

Perhaps because in the days before Lars, SAP Business By Design had been declared the go-forward platform for cloud development, and the SuccessFactors solutions were obviously not developed on it, the question of platform was raised at SapphireNow. But Lars downplayed it, saying customers don’t care about the platform; they care only about the user experience. And he was setting out to make beautiful products more beautiful. But beauty has to be more than just skin deep and let’s face it: Products developed on different platforms are harder to integrate than those sharing a common platform. And while in a pure cloud environment the customer is shielded from worrying about such things as platforms, it makes the supported environment inherently more complicated.

So while SAP will not be in the business of Infrastructure as a Service (IaaS), and it already clearly plays in the Software as a Service (SaaS) game, it intends to offer a Platform as a Service (PaaS). While now it has multiple platforms, ultimately SAP will have one standard PaaS offering and it will be based on NetWeaver. Admittedly this will take time and acquisitions will continue to make this a challenge over time.  The platform needs to be open since customers have already invested in applications and these need to keep running. This has the potential of adding a huge degree of complexity for SAP, but it wants to “own” these connections in order to offer its customers one hand to shake for applications and platform, with end-to-end security, high availability and disaster recovery.

SAP intends to offer standard integration connecting cloud applications to the Business Suite (on premise), and also offer cloud-based (SaaS) fully integrated suites (ERP) for mid-market customers (with Business ByDesign and Business One).

A couple other points made that might be worth noting… Remember Sven referred to “mobile first“ development, meaning any new development must be able to run on a mobile device right from the get-go. This represents a big change for the development teams. If you initially limit the size of the screen, it forces the design team to simplify and think first about essentials. They can then add the complexities later, if at all.

The other point is hinted at with Sven’s somewhat unusual title. Not only is he SVP of Cloud Strategy, he is also the head of “co-innovation.” Co-innovation refers to the close relationship SAP has developed with its customers, along with the adoption of agile development methodologies. SAP’s promise of rapid innovation cycles and customer co-innovation translates to four releases per year, delivered through true multi-tenancy. That means customers all run on a single, shared instance of the software, and the solution provider decides when it will be upgraded. While some customers balk at this concept, preferring instead to control their own upgrades, in fact if innovation is delivered as optional features, there is little down-side to the forced march forward of a multi-tenant environment and a lot of upside. While the customer may not be entirely ready to adopt new features, the vendor bears most of the burden of the upgrade and innovation is there waiting when the customer is ready.

There are certainly many other facets to SAP’s cloud strategy, but this update was at least enough to lend more clarity to a cloudy solution.

 

 

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