SAP's approach to the hyperscalers - AWS, Microsoft, and Google - is top of mind for both SAP's executive board and the tech community. It's also making its way up the business decision maker's agenda. During the SAPPHIRENow media event, Christian Klein, CEO SAP fielded several questions on this point.
The obvious first question asked whether SAP considers its apps position defensible against the hyperscalers. Unsurprisingly,, the answer came back:
Absolutely. And, of course, it's only defensible if we are doing a good enough job. We have to develop and engineer world class apps. When you do that then you have all the rights to win.
Alongside that, Klein was keen to emphasize the requirement to keep close to customers since, in his view, it is the customer who knows best what processes they need but to the specifics he added:
The hyper scalars are our best friends on the cloud infrastructure side because this is not a business where SAP wants to play in the future. They have huge scale, they have infrastructure, which provides our customer the elasticity they need and with that comes a low TCO. Partnering with them is the best decision we could have ever made. Now, everyone needs to be aware of what is the playing ground, and we want to go up the stack, we want to own that as we are very good at that.
SAP's Embrace program sent a message that Microsoft is the preferred infrastructure partner and led to the next obvious question about the relationship with Google and AWS. Referencing the Google relationship and the recently announced SAP/Google Cloud Frankfurt data center, Klein said:
We are in constant dialogues with all of them...We are in talks with AWS on industry cloud as they have a very strong foothold in some of the manufacturing related industries...we give choice so when a customer has a preference they don't get a no from SAP...we are really agnostic on that.
All good so far you might think but that still leaves open the question of how SAP will use its position to ensure its customers remain in lockstep with SAP's strategy when it is not a matter of if but when Microsoft, AWS and Google come forward with competitive solutions.
If you recall, Rob Enslin demurred on my question to him on that topic saying he prefers to think in terms of solutions rather than apps. The difference is subtle but important. AWS has (arguably) the best logistics functionality (and processes) on the planet. So far it's chosen not to share that with others in partnership. Why would they? If you're of the Amazon mindset then you go for markets you can own. For its part Microsoft, while relatively late to the infrastructure party, has compelling and scalable CRM capability for those businesses that are not interested in SAP or Salesforce's offerings.
Returning to Google for a moment, the company put out a release this week that hints at the direction it is taking:
There are more ways we’re innovating on behalf of our joint customers outside the data center. AutoML Vision is an intelligent, AI-powered solution that lets manufacturers automate the visual quality control process. Instead of relying on manual inspections—sometimes conducted under challenging conditions—customers such as AES and Kaeser Kompressoren are leveraging AutoML Vision, which is embedded into manufacturing and business workflows built around SAP, to perform quality controls efficiently and at any production stage.
There is more from Google:
Additionally, premium support for your enterprise and mission critical needs is now available, including a pilot program with supplementary support of SAP customers. The program layers Google Cloud premium support on top of the stellar support that SAP provides, and will roll out more broadly in the coming months.
Where does that go? How about this:
When Conrad Electronic, a B2B and B2C technology and electronics goods supplier, realized it could use its vast data set to optimize the company’s processes and offer more products and services with the help of Google Cloud, it decided to keep using its legacy SAP systems but consolidate all data on BigQuery.
In the same release, Google showcased Google Cloud partners that offer specialist skills and applications for SAP customers. These include Actifio, Avantra, Informatica, Qlik, Software AG and NetApp - names that will be familiar with at least some SAP customers.
My understanding in the field is that Google is easy to work alongside and actively helps its partners achieve success. The same cannot be said for SAP partners although you can understand why Google is playing nice at a time when it's trying to win market share.
The hyperscaler discussion will rumble on and rightly so.
Customers need to know they're making the right decision and that cannot be about a race to the compute bottom. It has to be about the package of solutions available.
While I hear SAP talking as the company with the 'right to win' that is not an entitlement and in the hyperscalers, it is up against far more difficult competition than its old nemesis Oracle.
Having said that, Klein's emphasis on the customer relationship is welcome but he knows it is vital for the future and especially the revived focus on industries where SAP has to win in order to remain relevant. After all, ERP in its vanilla form really is a commodity and who pays for that these days?