Customers ‘ready to shift half their SAP applications to the cloud’

Cloud SaaS

by Joe Curtis| 13 June 2014

Security and integration challenges are concerns for firms however.

Large enterprises plan to shift half of their on-premise SAP deployments into the cloud over the next two years, according to a firm responsible for managing SAP systems.

Companies are expected to overcome concerns over security and integration to migrate $39bn worth of SAP infrastructure into the cloud, found a survey of 100 large enterprises by HCL Technologies.

It revealed that 45% of those businesses have increased their SAP cloud investments over the past year, while they expect that spend to double in the next 12 months.

But while cost savings played a part in the motivation behind the shift to cloud, the most common drivers cited were greater agility and speed, at 59%, closely followed by access to new technologies, at 46%, and better customer satisfaction, at 43%.

Steve Cardell, president of enterprise services at HCL, which manages companies' SAP infrastructure, said: "Improved business agility and speed is undoubtedly a big driver, as is the growing maturity and availability of new cloud-based technologies."

He added that the SAP users also want to access apps using SAP's fast data processing power provided by its in-memory database, HANA, with 56% of respondents planning to use it in the cloud.

Oracle released its own HANA rival, In-Memory Database, this week, but analysts said it may struggle to attract new customers due to SAP's dominance in the space.

However, nearly one-third of respondents said integration issues with existing systems was a barrier to shifting applications to the cloud, and 36% expressed concerns over security.

HCL's head of SAP, Mark Hirst, told CBR that "it's a hybrid type approach which is emerging".

"In some areas cloud has already won," he added. "In HR and procurement and sales, cloud-based applications were very much dominant and were taking a significant spend."

While firms are keen to use cloud in those instances, some on-premise applications will need to be redeveloped for the cloud, he explained.

"It's not a question of just picking up what you've got at the moment and dropping it into the cloud, it's a question of re-architecting what you've already got because it's for a different platform."

But three-quarters of respondents now find the cloud a more attractive prospect since last year, when SAP allowed customers to partly terminate existing on-premise licenses and maintenance costs when switching software to the cloud.

CEO Bill McDermott delayed SAP's operating margin goal of 35% come 2015 until 2017, as the company looks at building on its cloud offerings.

He estimated that revenues will total €22bn by then, with cloud contributing between €3bn and €3.5bn.

Comments
Post a comment

Comments may be moderated for spam, obscenities or defamation.
Privcy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.