Friday, March 9, 2018

Deciphering SAP's Amazon strategy

With its multi-cloud strategy, the burden of proof is on SAP to demonstrate that its platforms and databases are optimized the cloud that the customer chooses. In recent years, SAP has significantly ramped up its engagement with Amazon to deliver better fit for purpose.


A year ago, we made note of SAP's opportunity with the Google Cloud. At the 2017 NEXT conference, SAP stood out as one of a bare handful of strategic sponsors, and the only one from the enterprise software side. We believed that Google's advanced AI technologies and cloud automation could potentially provide SAP customers a 1 + 1 = 3 value proposition.

But the reality is that the Amazon AWS cloud has a decade of facts on the ground. If the SAP is going to have a critical mass cloud presence, it must also have the presence on Amazon, not to mention Azure. The engagement was tactical in the early days; a typical scenario would involve individual SAP Business Objects customers lifting and shifting some of their data warehousing workloads to Amazon EC2. But in recent years, the relationship between SAP and Amazon has been steadily formalizing.

Of course, to put it all in perspective, SAP has not played favorites with the cloud. Besides its portfolios on Azure and Google Cloud, SAP has also been working with IBM Cloud, Alibaba Cloud, and Huawei Cloud.

To date, SAP's AWS engagement has been mainly around certifying Amazon cloud infrastructure for SAP Cloud Platform (Platform as a Service) and SAP databases. SAP Cloud Platform has been certified to run on AWS from May 2017 (it also supports Cloud Foundry and Microsoft Azure, with Google Cloud Platform under public preview).

For SAP HANA on AWS, it has been certifying various editions of the in-memory database. With SAP Cloud Platform support for AWS, SAP's Database-as-a-Service (DBaaS) is available on AWS. Additionally, the express edition of SAP HANA, a free edition with 32GB memory use limitation, can be deployed to AWS and Azure via SAP's Cloud Appliance Library.

For databases, SAP hasn't stopped with HANA. In recent years, SAP has certified Sybase platforms (now branded SAP) including IQ and ASE, while the Hybris e-commerce application is now certified for Amazon's RDS Aurora database. Selected SAP platforms are now also available as Amazon Machine Images (AMIs) on the AWS Marketplace, including the single instance HANA One; IQ; and ASE.

In turn, Amazon and SAP have collaborated on designating the infrastructure instances for running SAP applications and databases on EC2. That means prescribed recipes for processor, memory, storage, and network bandwidth. The first step in the process was working with SAP to downsize HANA from the original 4-socket motherboard specifications to the more cost-effective 2-socket variety that has become the de facto standard for cloud data centers. (Even Oracle has embraced Intel 2-socket configurations.)

Today, Amazon offers three families of instances recommended for SAP, including general-purpose computer based on M4 processors; compute-optimized featuring the C4 family; and memory-optimized (suited for HANA) with X1 (for high-performance databases) and R4 (for memory-intensive applications. For HANA on X1, AWS and SAP collaborated on developing a range of instances with different size memory footprints to deal with an issue that many original HANA customers over-provisioned X1s to get enough memory to run HANA. In the coming year, Amazon plans to introduce even larger in-memory X1's for the scale-up configuration of HANA that is suited for running ERP or other transaction applications, with 8 and 16-TByte instances planned.

For the most part, these efforts are aimed at SAP customers running their own applications on Amazon as Infrastructure as a Service (IaaS). SAP does have a managed SaaS option, but with the exception of SuccessFactors, where Amazon and SAP plan to offer a managed instance to public sector customers on AWS GovCloud (US), SAP takes charge of the customer relationship and hosting. At this point, you won't find SAP SaaS applications offered through AWS Marketplace.

For instance, HANA Enterprise Cloud (HEC) is offered as a private cloud service that runs either at SAP's own data centers or co-located at selected public cloud locations (including Amazon). HEC is largely a lift and shift service for SAP enterprise applications. By contrast, S/4HANA cloud is a more transformational service; it is sold directly by SAP and runs on the public cloud.

As noted before, SAP is trying to be cloud-agnostic. But there is one exception looming in the shadows: Oracle. In brute terms, one could characterize the SAP-Amazon pairing as the enemy of thy enemy; we're sure that both would have friendlier terms to describe their partnership.

Oracle's strategy is making the Oracle Public Cloud the place to run Oracle software. By contrast, SAP's strategy is partner-driven. That's entirely consistent with its heritage, dating back to its successful wooing of enterprise systems integrators that were key to entrenching SAP as the ERP leader back in the 1990s. The same holds for HANA; unlike Oracle, SAP does not make hardware and therefore licenses third parties to make HANA database boxes. In the cloud, SAP has a few of its own data centers, but the predominant mode is either certifying or co-locating in third-party public clouds. And that's the key to SAP's cloud Switzerland strategy.

The upside of a multi-partner strategy for the cloud is it provides customers the choice. For instance, with a large base of enterprise customers in retail, SAP would be poorly advised to rely exclusively on AWS. The flip side, however, is the degree of focus: when SAP manages a multitude of relationships, can the customer be assured that their cloud of choice offers the most optimized SAP implementation? SAP's recent work with Amazon on the jointly-developed service for testing migration to HANA on the AWS is proof that neither party is simply working on autopilot.




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