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.

Source: Company Press Release

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