NEW YORK—Dell Inc. and SAP AG are extending their eight-year alliance via enhanced services and support offerings, the chief executives of both companies said Wednesday at a press conference here.
Talking to about 60 reporters and analysts, Dell Chairman and CEO Michael Dell said that software products from enterprise applications market leader SAP offer the same value proposition to customers that his own companys products offer on the hardware side—lower cost of ownership and greater performance in an industry that is increasingly turning to industry-standard technologies.
“The enterprise is at an inflection point, where we are seeing things turning to a standards-based platform at an increasing rate,” Dell said. “We want to accelerate that.”
Henning Kagermann, chairman and CEO of Walldorf, Germany-based SAP, said customers are looking for the same proposition out of their software, a key reason for the companys NetWeaver integration layer, which brings together the myriad enterprise software offerings from SAP. “We [provide] mission-critical applications, so we have some customers that can run 90, 95 percent of their business on SAP,” Kagermann said.
The two companies already have worked together in offering customers SAP software on Dell servers. Dell said there are more than 5,000 businesses worldwide that run SAP on Dell hardware, and that he expects that number to grow in the coming years, with about $1 billion in revenue coming to Dell from SAP implementations over the next three years. At the same time, the two operate three joint competency centers, where customers can test SAP-on-Dell offerings, in the United States, Germany and Japan.
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In extending the partnership, Dell and SAP are more closely linking the support for Dell systems running SAP, Dell said. If customers have questions, they can contact either company and their respective support staffs can work together to solve the problem. In addition, Dell, through its professional services unit, is offering migration help for those customers looking to migrate their SAP applications off Unix-based systems onto Dell hardware running Linux or Windows.
Dell, of Round Rock, Texas, for several years has offered migration services, but not down to the application level, said Paul Gottsegan, vice president of enterprise marketing. Dell has been promoting a scale-out vision of the future data center, where businesses take two- and four-way standards-based systems and link them together, creating a scalable computing environment that can run large back-end applications normally reserved for large SMP units. That vision is playing out, Michael Dell said.
“The market for eight-way servers and above is in double-digit decline, while the market for four-ways and below is in double-digit increase,” Dell said. “Customers are speaking with their wallets.”
As the industry slowly climbs out of it economic troubles, enterprises will continue looking for cost-effective ways to create flexible and dynamic infrastructures, he said. That is where the combination of Dell and SAP will work, Dell said. About half of SAPs 70,000 implementations are looking to transition from proprietary platforms to standards-based systems, Dell said. He also touched on a recent benchmark that showed two four-way Dell systems outperforming eight-way RISC and Intel Corp.-based systems from Hewlett-Packard Co. and IBM.
In an interview with eWEEK, Kagermann said the Dell alliance will be important for SAP going forward, given Dells growth in the server market. Customers continue to take advantage of the competency centers, and many are becoming more comfortable with the idea of running back-end applications on clusters of smaller systems.
“As the customers start moving onto it, they ask, Is it reliable enough, is it robust enough?” Kagermann said. “And they see that it is.” In addition, partnerships with companies like Dell are key to Kagermann being able to follow through on his promise last year to reduce the total cost of ownership of SAP products by 20 percent to 25 percent, he said. While SAP can help reach that goal with NetWeaver on the software side, the company needs alliances on the hardware side. Still, there always are enterprises that will want to keep their applications on larger systems. The key for SAP, he said, is to ensure that it offers choice, enabling customers to run the software on any system.
Looking forward, Kagermann said he would like to see expanded use of the Dell/SAP centers. At the same time, he said the two companies could enhance their offerings to the midmarket, possibly by bundling SAP software on Dell servers.