SAP cloud strategy takes shape at Sapphire

SAPPHIRE NOW REPORT – SAP AG made its cloud software strategy more clear at its annual Sapphire conference in Orlando today, identifying a line of business strategy that would provide services for people, customers, money, and travel.

HANA is SAP’s in-memory database platform designed to quickly parse big data. Because the data doesn’t need to be stored on disc and retrieved, it improves the speed of transactions. Not only is it the new basis for SAP’s software in the cloud, but being supported by on-premises applications too. At this morning’s keynote, SAP co-CEO Jim Snabe announced general availability of Business Suite on HANA, ahead of schedule.

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“HANA is ready to be your innovation platform for everything you do. It will increase business value and reduce complexities in IT, the perfect combination,” Snabe said on stage, in front of a large group of Sapphire’s 20,000 attendees. “Once you have the data available in real-time for your business, you can do things you never did before.”

SAP may be putting its money into cloud acquisitions and building out its platform there because it senses the winds of change in the software market. Analyst firm IDC Corp. reported the software market grew just 3.6 per cent year over year, less than half the growth rate for the previous year. SAP topped the list of software firms based on revenue and showed the strongest growth at five per cent. But certain segments of SAP’s business are quickly moving to cloud solutions – such as in the human capital management and customer relationship management space.

“A lot of focus is shifting to cloud, and the reality is that a lot of things are running in a hybrid environment,” says Oliver Conze, global vice president of product portfolio strategy for SAP. “The same is true of our business model we’re offering both on-premises and cloud.”

A hybrid environment fits the description of the IT mix at Regina-based The Mosaic Group, says IT manager Jeff Renwick. The potash mining company just finished an on-premises implementation of SAP Business Objects. But it is musing about the cloud for several of its software products and has already adopted Salesforce.com for its CRM. But Mosaic can’t go to the cloud for everything, Renwick notes, some data needs to be kept on-premises – such as historical transactions that are sometimes required for legal reasons.

“We’d have to be able to access that data just as well as if we owned it,” he says.

Many of SAP’s customers are in industries that are the least likely candidates to move to cloud delivery models for their software – the financial industry, for example. It will take time for customers to move over, says Jorge Garcia, a senior analyst with Technology Evaluation Centres in Montreal. But SAP has to be there ahead of them.

“They have a lot of acquisitions, just like Oracle,” he says. “Are they moving quickly enough? I’m not sure. It’s quicker than other companies. But it’s in the right direction.”

SAP claimed to the world’s largest cloud provider at today’s keynote speech. Snabe pointed to having 29 million users , many from SuccessFactors and Ariba. But users of applications aren’t the only measure of how big a cloud company really is, Garcia says, other cloud offerings like infrastructure as a service must also be considered.

“It’s hard to diminish giants like Amazon and even Microsoft,” he says. “I’m not sure just considering the number of end users would be the ultimate metric to consider.”

The cloud strategy unveiled by SAP today signals a road map of its product consolidation and intention to put products in the cloud, and it’s made clear HANA will be the platform to support that. What hasn’t been outlined is a time line for when all that work will be completed.