Main content

SAP and Azure - a marriage made in heaven or a Trojan Horse bound for hell ?

Owen Pettiford Profile picture for user owen_pettiford March 6, 2020
How is SAP's Microsoft Embrace program working out?

azure trojan horse

In October 2019, SAP and Microsoft announced Project Embrace — "a go-to-market partnership from conceptualization to sales to help customers adopt S/4HANA and SAP Cloud Platform on Microsoft Azure" — so says the press release.

I can see the benefit to Microsoft in the above partnership driving many Azure workloads and for SAP increasing the adoption of S/4HANA by reducing the re-platforming risk. However, many customers I have spoken to on this topic have missed (or chosen to miss) the part about SAP Cloud Platform on Microsoft Azure. Instead, many have jumped straight to considering using the plethora of native Microsoft Azure services to build on top of their SAP and non-SAP systems. Is Embrace a Trojan Horse from Microsoft — a deadly embrace?

If you look at the SAP Cloud Platform services and Microsoft Azure Service, you can see a massive overlap between the two offerings. Even if the SAP and Microsoft sales teams work together to sell SAP Cloud Platform together (not that I see that behavior), customers are looking at this partnership as a way to deliver commodity business features via SAP and innovate using Microsoft Azure.

SAP ERP on Azure

The first part of the partnership is straight forward. Microsoft is creating machine types and out of the box architectures that are specifically designed for SAP ERP, SAP S/4HANA and SAP HANA workloads so that it is easy for an SAP architect to understand how they can run their classic estate on Azure. All the other hyperscaler cloud providers offer similar things. Project Embrace ensures that SAP positions Microsoft more often and in a more favorable light than AWS and Google. A big win for Microsoft. This is not without problems and, here I have identified five in the current environment.

Customer confusion

Customers I speak with get confused between running native Azure services and SAP Cloud Platform services on Azure infrastructure, often seeing the latter as more cumbersome to trial and buy.

Service availability

Some of the services in the SAP Cloud Platform are either not available to run on Azure, or even if they are, they are not available in the Azure data center the customer wants to use. This will get fixed over time, but it only needs one service to be unavailable for customers to abandon ideas around SAP Cloud Platform.

Adoption of open standards

Many of the issues that would have put a spanner in the works of using Microsoft and SAP products 20 years ago, no longer exist as both companies have adopted and contributed to open standard for security and integration. The days of needing specific adaptors or software to 'talk to SAP' are mainly behind us, or at least they are at the architecture and sales stage. But this is not complete. 

Microsoft sales teams

I may have met the wrong salespeople from Microsoft or perhaps the ones that haven't had the memo about Embrace, but the ones I have met are:

  • Focused on selling their part of the Azure services. As an aside, Microsoft seems to have one salesperson for each service offering.
  • Know little or nothing about the SAP Cloud Platform or are selling against it.

Skills availability and costs

Finally and this may be the biggest problem for SAP, the availability and cost of skills or at least people who say they have expertise in Microsoft Azure vs. SAP Cloud Platform is very different, with Microsoft seen as a commodity skill and SAP Cloud Platform seen as niche and more costly. 

A customer example

How does this play out in a real customer environment?

An SAP customer in the UK undertook a successful proof of concept with a nimble innovation partner in two areas.

  1. A proof of concept to move their SAP ERP system from Oracle to HANA running on Microsoft Azure. This was a great success, demonstrating that they could enjoy a 50% smaller database footprint and a 40% increase in performance. Everyone was delighted.
  2. A proof of concept to show that by using SAP Cloud Platform the clients of the customers could understand the status of their complex orders in real-time and in the context of events that had an impact of their orders plus all of this data (millions of items) could be summarized in real-time and reported to regulators. This too was a success and showed the art of the possible.

Roll forward to the actual project 12 months later and all the fancy stuff that was being done in SAP Cloud Platform is now being done in Microsoft Azure and the SAP ERP system is being moved to Azure. So a double win for Microsoft and some HANA run-time for SAP.

How did that happen? In this case, it was concerns about skills availability and some good work by the Microsoft sales team that won the day.

Open questions

As I look at what’s happening in the market, questions are raised for which there are no clear answers today.

  • In how many other accounts is that happening?
  • Following the departure of SAP Cloud Platform champions at SAP's board, perhaps SAP doesn't mind as long as it gets to keep its SAP ERP installed base maintenance?
  • Longer term, if SAP is content with this emerging arrangement, then isn’t it better for SAP to devote development resources towards the hyperscalers that offer commodity serves at scale rather than continuing with SAP Cloud Platform?
A grey colored placeholder image