SAP Cloud Effort Pushes Forward Despite Exec Turnover, Official Says

By Jeffrey Burt  |  Posted 2014-05-11 Print this article Print

SAP's key target for the cloud is its extensive installed base, he said. The company is offering a strong and growing set of integrated capabilities, is automating a lot of the processes, and is including integrated analytics in its cloud offerings. At the same time, SAP is maintaining the software codes for its customers, taking that burden—which Brown said can costs businesses as much as $50,000—off those companies.

The result is a very good user experience that rivals any that Oracle or can offer, he said.

Going forward, one goal for SAP's cloud unit is to focus on particular industries, ensuring that the cloud offerings offer the particular capabilities that are important for any market segment, from financial services to health care, Brown said.

Moving to the cloud has not been easy for SAP, a company that—like Microsoft and Oracle—had made its fortune on licensing its enterprise software for on-premises deployments. SAP executives have made cloud computing a central focus within the company, and the numbers from the first quarter are "showing the momentum we've been gaining with the customers," he said.

"It's been tough to change" to a more cloud focus, Brown said. "We're addicted to big license deals. Everybody is. But times are changing. Cloud is difficult and hard for an enterprise software company. It's not easy to make this change."

But the change is coming. For example, this year, the company's sales teams' cloud quotas are larger than their on-premises quotas. Brown is confident that SAP can continue to grow its cloud business, pointing to the success the company has seen over the past several years in expanding its mobile capabilities. Before moving to the cloud side of the business in March, Brown spent more than three years helping to direct SAP's mobile strategy.

The combination of strong mobile and cloud efforts will help the company not only within its current customer base, but also to open new markets. For example, the company is seeing new opportunities in the sports entertainment field, which Brown noted is "not an SAP market."

The work SAP is doing around cloud is going to be needed as Microsoft and Oracle continue their push to the cloud, and continues to innovate. Oracle, for example, has expanded its cloud capabilities in recent weeks, including enabling customers to swap on-premises software for cloud applications and beta testing Solaris 11.2, which includes a complete OpenStack cloud distribution.

Pund-IT analyst King said that while there may be concerns about SAP fueled by the recent executive turnover, it shouldn't been seen as a significant setback to SAP's cloud efforts.

"We're earlier in the cloud game than I think a lot of people assume," King said.

In addition, it's not as though SAP's competitors have completely ironed out their cloud strategies. For example, Oracle's cloud strategy "just seems to be all over the place. … It seems like they're trying to develop a cloud strategy that does not disrupt its traditional software business, which is somewhat contradictory. How can you develop a strategy for a disruptive market without being disruptive?"

A key for SAP will be creating a more coherent and high-profile message around HANA as a cloud platform. When it was introduced, HANA offered strong performance as an in-memory database technology and included a strong slate of partners, including IBM, Dell and Hewlett-Packard, King said. Now SAP is looking to expand HANA's capabilities for the cloud, but "that story has not quite been told yet," he said.

Making that story known will be important for SAP as it continues to push its cloud initiatives, King said.



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