The title is a play on words but one which will come clearer as I dig into a couple of public posts I've seen around SAP and its cloud(s.)
SAP's cloud strategy has long been a cause for discussion and a link to one of our stories brought this into perspective:
John Appleby discusses this in a story entitled: The 12 days of TechEd – my wish list for TechEd Bangalore that responds to Vishal Sikka's community request for input in advance of Bangalore TechEd. He retreads many topics that are well known in the broad SAP community but this one caught my eye:
Announce simplification to the HANA cloud strategy
SAP have a great HANA cloud strategy now with the HANA Enterprise Cloud, the HANA Cloud Platform, the HANA Cloud Enterprise Platform (no wait… did I make that one up?). It reminds me of the People’s Liberation Front of Judea! But it is confusing and Richard Hirsch nails it in his 50 First Dates post. Bjoern Goerke responds in the comments that these problems have been solved and if they have been, then the messaging needs to be improved to suit.
Winding the clock back a few weeks to SAP TechEd Las Vegas and Amsterdam, there wasn't a huge amount of substance on SAP's cloud offerings beyond that which has been swirling around for some time. That left a number of us head scratching because those engineers I've spoken with are becoming a tad anxious about the lack of detail. They end up speculating, an increasingly common sport in enterprise software.
Some are concerned that SAP has been focusing on technology rather than applications, a topic that has reverberated all the way back to the financial community. Why is this an issue? It comes in two parts:
- SIs and other implementers get paid to implement applications, not muck about with infrastructure. In the longer haul, they want to know how to prepare themselves for the next tranche of applications that are coming down the pipe or, if there is a genuine technology shift, then how to refresh skills to suit the changing landscape.
- The markets want a clear indication of where SAP is heading so they can figure out how to tweak their models. If the familiar applications model is changing without adequate clarity then that's a disruption that creates uncertainty. Also, those same analysts want to stack SAP against potential competitors.
Elaborating, Hirsch cranked out one of his thought pieces entitled 50 first dates for the HANA Enterprise Cloud: Ending the isolation. Now do you see where the genesis of my inspiration for the title comes? OK. Hirsch poses three possible scenarios for HEC. Those that don't know, HEC is SAP's take on infrastructure as a service (IaaS) but it is little more than 'private hosted' as in 'not public.'
This elicits a solid response from Bjoern Goerke, CIO Head of HEC and Global Cloud Delivery. If anyone should know, then it's Goerke.
Among Goerke's comments I see a couple of things that are curious. I'll explain why. He says:
HEC and HCP are coming together. We are bringing together ALL SAP Cloud offerings into a consistent data center strategy, infrastructure and cloud management strategy. HCP is THE Cloud extension platform for all our Lob Cloud portfolio and our classical Business Suite portfolio. Whether this "classical" portfolio runs on premise with our customers or is operated in our HANA Enterprise Cloud doesn't make a difference, of course. So clearly, HEC and HCP have come together for a date. In the works...
HCP is SAP's platform as a service or PaaS. This is the place wherre applications sit. The fact Goerke is signalling the conjoining of HEC and HCP is kinda OK. Why not awesome?
Where customers have made the strategic decision that SAP provides all their back office and administrative functions then provided SAP can make HEC/HCP performant it could be an attractive proposition. This will only apply to a modest tranche of the customer base. However, this is not a slam dunk.
If I put my broader market hat on I have to ask: what the heck is SAP thinking, playing in the IaaS space? It really has no direct experience of this end of the market. And as we've seen from IBM, lack of experience leaves you vulnerable to competitors. I would be far more impressed if I knew that SAP is prepared to actively undertake to do the following:
- Explicitly offer AWS for development and testing across the board. SI's like Cap Gemini already do this in smaller cases. SAP's Vijay Vijasankar has conducted what I am told has been a very successful experiment in offering SAP BW on HANA on AWS as a trial. More use cases of that kind would serve to prime the SAP buyer for more goodies.
- For production instances, signal that SAP will partner with IBM and Microsoft for HANA infrastructure. My various contacts concur that IBM is the natural bedfellow and an easy choice for many customers. Given IBM's recent posturing around AWS as competition, it cannot be that much of a jump to assume IBM should be in this game. Microsoft? My contacts there and elsewhere believe that Azure is (at last) coming into its own and is going into some seriously big accounts. Again, a no brainer for many SAP customers.
Why are you killing us?
Every conversation I've had this year with Vishal Sikka, SAP's board member tasked with innovation and technical renewal heavily implies that SAP has to be more open. If you're going that road then choice becomes an imperative. The way Goerke is talking, it doesn't sound that way to me. I could be wrong but if you want to sell more 'stuff' then you need to appeal to the broadest possible constituency. Those kinds of choice make sense for a market that has experience of operating cloud based systems, with Salesforce.com being the obvious benchmark.
There is no reason not to keep the HEC offering on the table as an option but customers will not want to believe they are at risk of cloud lock in even though SAP will persuasively offer the 'simpler' approach argument. And right now, the strategy as outlined by Goerke does have that whiff of lockin about it.
The logical step but one which is not explicit in the text is to provide an outline roadmap for which application suites across the board get the full HCP treatment and in what timeframe. That has to include All-in-One, ByDesign and BusinessOne.
We already know that ByDesign is being re-engineered so that's one piece out of the way though the timetable is vague. We also know that the BusinessSuite is in process of going over to HCP. What about the others? As an aside, we also know there is a slew of line of business applications like Sales OnDemand that are already there.
I am aware that given its past history of long delivery cycles, SAP will be reticent to adopt this course. However, they would not be doing anything that others are not already doing. Salesforce.com always uses Dreamforce to announce some big new thing that is some way off in the ditance - maybe even a year out.
Workday has said its customers want a longer refresh cycle so they can digest change more easily.
I don't see too many wiseacres giving those companies a bad time for lengthy delivery cycles. Why should SAP be treated differently and especially as it is hefting a huge amount of code?
SAP can still talk about the technology components if it wishes. It should do given that it is building a platform for the future that CIOs will need to understand. That build takes time.
The beauty of this approach is that it clearly signals that SAP is absolutely committed to the applications business. It's not as if any other vendor out there is going to come snatch all their market in the next year or two. And there is one heck of a portfolio of solutions they can bring to the table in the meantime, many of which are cloud solutions. So I see no reason to be timid on this one.
As long as CIOs clearly see that:
- SAP is building a platform for the future
- SAP is absolutely committed to applications
...then most should be satisfied and better equipped to plan accordingly. Right now, that's a tough call.
As an endnote, Appleby also talks to the topic of subscription licensing:
...SAP HANA is only available in the cloud for a 64GB SAP HANA One “starter” license. Why isn’t it available entirely as a subscription?
And if we’re going to go there, why can’t I buy my SAP Business Suite, in the HANA Enterprise Cloud, priced by the user… or transaction… or revenue I generate… or profit my company makes? This is the logical conclusion of the Cloud model, and if SAP wants to lead in the Cloud, SAP needs to lead boldly.
Why not indeed?
Image credit via Wikipedia
Disclosure: SAP, Salesforce.com and Workday are all premier partners.
Update: I subsequently learned that the Luis Salvador source was in fact a post by John Appleby on SCN. I have therefore changed the links.