‘Don’t ignore on-premise’, user group tells SAP over cloud push

Cloud SaaS

by Joe Curtis| 22 January 2014

SAP user group chairman says highlighting on-premise importance is “a constant challenge”.

SAP's UK & Ireland user group has urged the firm not to neglect its on-premise core as it accelerates innovation in the cloud.

The enterprise resource planning (ERP) giant yesterday pushed back operating margin targets by two years to 2017 in order to invest in developing its HANA cloud technologies to leap ahead of competitors.

But UK & Ireland SAP User Group chairman Philip Adams told CBR that it would be a mistake for SAP to leave its on-premise customers behind.

He said: "We all constantly ask them not to ignore the existing [software]. Some people aren't ready to move to the cloud or want a mixture of cloud and on-premise.

"We welcome new innovation; we also welcome how SAP can work with us so we can leverage that new innovation, but please don't ignore the installed base."

Adams revealed that he has spoken with co-CEO Jim Hagemann Snabe about the matter, admitting it is a "constant challenge".

Snabe is set to step down in May, leaving colleague Bill McDermott at the helm of the German company.

The American told media yesterday that SAP's operating margin goal of 35% by 2015 would be delayed two years to 2017, as the company looks at building on its HANA offering.

He told Bloomberg: "We're going to invest in market sharing gains against all competitors in the cloud space. The core will still grow, it's just that the cloud will grow much faster."

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

Adams used his keynote address at November's UK&I SAP User Group conference to push SAP on making future solutions commercially attractive to existing customers.

Last year saw SAP allow customers to swap on-premise solutions for their cloud equivalent without paying for new licenses, and Adams said he would like a similar policy on future technologies.

"The majority of these new innovations will be cloud-based," he told CBR. "So for existing cloud products we must ensure the model is extended to future cloud products."

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