IBM, SAP Cloud Deal a Major Step for Enterprise Cloud Adoption

By Darryl K. Taft  |  Posted 2014-10-17 Print this article Print
IBM cloud SAP

Moreover, IBM invested $7 billion in 17 key cloud acquisitions including the $2 billion acquisition of SoftLayer and 100+ SaaS properties to serve every business role across the enterprise. In the second quarter of 2014, IBM cloud revenue was up more than 50 percent, with the “as a service” business doubling while the SoftLayer business contributed about one point to IBM Global Technology Services’ revenue growth in the quarter.

Meanwhile, IBM’s new cloud partnership with SAP expands existing relations between the two enterprise IT providers. “IBM and SAP have had a long running partnership around running SAP’s apps on DB2 or around running SAP’s middleware on IBM’s hardware,” said Al Hilwa, an analyst with IDC. “We are seeing here an important decision on SAP’s part to use IBM’s cloud infrastructure which represents a strong endorsement of what IBM is doing in that space. It also highlights the growing traction SAP is getting and its need to expand beyond its own data centers for its customers.”

Pund-IT’s King noted “The agreement qualifies as a great example of the creative ‘coopetition’ the IT industry loves to brag about. That is, the ability of vendors that compete in some areas to work together in others. It’s no secret that IBM has numerous in-memory and analytics offerings of its own that compete directly with SAP HANA. Yet the pair has found a way to leverage complementary technologies in ways that should benefit themselves and their customers. If the SAP HANA Enterprise Cloud service and partnership succeed to the degree that IBM and SAP hope, it should give food for thought to vendors focusing solely on homogeneous, proprietary analytics and in-memory solutions.”

King also said he believes that for SAP customers or companies that have an interest in trying out HANA, the new service is probably a “no-brainer” because it offers a simple on-ramp for determining HANA's technical and business benefits with far less risk and capital expenditure costs than deploying a dedicated system. “If a CIO isn’t already working with SAP, it's probably worth looking into SAP HANA Enterprise Cloud to see how its costs/benefits compare to his or her organization’s existing solutions,” he said.

For his part, Constellation Research’s Mueller added that SAP customers concerned about SAP’s expertise to build out data centers can now rely on a proven vendor with more than the SAP load. “Concerns about SAP not having local data centers maybe addressed by the IBM existing and planned data center locations,” he said. “Enterprise loads that may not have moved to the cloud because of data residency and privacy concerns may now be moved, if IBM Cloud can provide in-country or economic region-based data centers.”


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