SAP Customers: The Cloud Is Your Future (and the future is NOW)

Blog /SAP Customers The Cloud Is Your Future and the future is NOW

A cloudy future for enterprise IT

As the primary driver for cloud adoption shifts from economics to innovation, leading-edge companies are stepping up their investment in cloud services to accelerate their digital transformation and lay the foundation for re-imagined business processes and new competitive offerings. Over 90% of businesses are already using cloud technology in a public, private, or hybrid cloud environment, according to SAP. And by all accounts, the pace of cloud adoption will quicken markedly in the years ahead.

As reported by Fortune, according to one leading analyst firm overall demand for cloud computing in all its guises will grow 18% in 2017 to $246.8 billion in total worldwide revenue from $209.2 billion, with SaaS, in which business applications are delivered to customers over the Internet, growing about 20% to $46.3 billion. Fortune reports another leading firm estimates overall cloud services growing 24.4% year over year in 2017 to $122.5 billion, with SaaS remaining the biggest piece of the pie, capturing 60% of total cloud spending through 2020.

For a thorough, recent roundup of cloud computing forecasts, check out this article in Forbes.

SAP’s impressive cloud traction

SAP’s commitment to the cloud is indisputable, and the soundness of SAP’s cloud strategy is reflected in the company’s remarkable year-over-year growth in cloud revenue for 2016. As reported in CRN, cloud subscriptions and support revenue for 2016 grew 31% to $3.21 billion. SAP expects cloud subscription and support revenue to grow as much as 34% in 2017 to between $4.15 billion and $4.37 billion. By 2020 SAP expects cloud revenue to reach $8.74 billion to 9.28 billion.

While SAP’s acquisitions of SuccessFactors, Ariba, Hybris, Fieldglass and Concur are vital components of the company’s cloud offerings, these acquisitions should not overshadow the organic growth of cloud in the SAP ecosystem both from leading SAP service providers and SAP itself.

Today’s offering of traditional on-premise SAP solutions now available via cloud includes core ERP apps (S/4HANA), all LOB apps, BI/analytics apps and more. Delivery options include public, private and hybrid cloud and span the entire cloud-model spectrum — SaaS, PaaS, IaaS and MCaaS.

For example, the depth, breadth and flexibility of NTT DATA’s cloud offering enables customers of all sizes and across diverse industries to embark upon or accelerate their cloud journey with infrastructure hosting or even SAP software and hosting packaged together as part of a Partner Managed Cloud (PMC) solution.

Cloud complexity and the rise of hosting and cloud managed services

Migration to the cloud is not a question of ‘if ‘but a complex riddle comprised of when, what, which order, how much and what flavor. There is no cookie-cutter template for cloud migration — each organization must map out a holistic, strategic plan for migration that best suites their specific IT needs and business goals.

Given this complexity (and the resulting confusion), an increasing number of businesses are looking to service providers with the requisite expertise, experience and resources to guide their cloud migration strategy, host their applications and provide the end-to-end managed services needed to accommodate dynamic business requirements and aggressive growth goals.

Pundits concur on the growing market for cloud managed services:

  • MarketsandMarkets predicts the cloud managed services market size is estimated to grow from $35.54 billion in 2016 to $76.73 billion by 2021, at an estimated CAGR of 16.6%.
  • According to Technavio, the market for cloud-based managed services will have a 20% CAGR from 2016 to 2020.

Findings from a recent study conducted by 451 Research (as reported in Forbes)

  • 64% of IT leaders predict they will buy cloud management platforms from service providers in 2017.
  • The majority of IT leaders plan to adopt and deploy hosted private clouds (66%) this year.
  • 57% of IT leaders expect to partner with Managed Service Providers (MSP) and Managed Hosting Providers (MHP) for both hybrid cloud and multi-cloud initiatives.

An IDC study, commissioned by SAP, highlights the demand for select SAP partners such as NTT DATA delivering SAP solutions by OpEx consumption model through a private hosted cloud.

  • By 2019 40% of all software revenue will be on a subscription basis.
  • Customers plan to devote 30% more of their IT spend to cloud services in 2016 compared to 2014, and allocation of funds to private cloud has doubled in the last two years.
  • The vast majority of customers (80%) have either fully embraced using cloud to power their business applications and infrastructure or are in the process of deploying cloud solutions.
  • Almost 70% of companies that are already embracing cloud prefer using private cloud services.
  • Worldwide spending on private cloud services will reach $18.8 billion in 2016 and is expected to grow to $40.5 billion by 2019 (31.5% CAGR).
  • By 2017, 80% of large organizations will commit to hybrid cloud architectures that encompass public and private cloud infrastructure, middleware, software, and non-cloud IT assets.
  • The majority of buyers (66%) believe the best route for adopting cloud is to stick with a single major cloud provider.

As presented in a 2014 IDC infographic sponsored by SAP:

  • The SAP partner ecosystem is forecast to make $11.3 billion of revenue related to SAP cloud and managed services in 2018.
  • From 2014 to 2018 SAP partners around the world will earn $33.6 billion (USD) in revenue related to SAP’s cloud & managed services products.

A service provider with the right stuff for your cloud migration

Not all service providers are the same, and the core processes your SAP landscape powers are too vital to gamble with. Here’s a run down of key capabilities and characteristics to look for when selecting a service provider for your SAP cloud migration:

  • Flexibility — You need a service provider that offers a full range of cloud hosting services across all cloud infrastructures - private, public, and hybrid, enabling your organizations to match cloud configuration with application needs, including secure private clouds.
  • Freedom of choice — Find a provider that supports all three primary cloud models (SaaS, PaaS, and IaaS) so that you can seamlessly migrate each application to whichever model makes the best sense.
  • A holistic offering — A service provider that supports the full lifecycle of cloud needs, including advisory, process design, integration and technical design, implementation, migration, custom development, and ongoing management. This holistic approach ensures that your migration to the cloud is smooth and seamless.
  • SAP expertise — Experienced consultants with deep understanding of SAP solutions past, present and future — including products acquired through acquisition — and the knowledge-transfer skills that ensure customers fully utilize the software products offered via cloud delivery and take full advantage of integration possibilities.
  • Security, security, security — Across the board, data security reigns as the top concern for cloud adoption, with security concerns growing in direct proportion to the mission-criticality of the business app (and the data they contain) migrating to the cloud. Businesses today migrating core processes to the cloud need a service provider that delivers advanced and innovative technology solutions and services that empower clients’ business ambition by combining industry insight, IT and applications know-how, and telecom and security expertise.
  • Systems integration expertise — Proven systems integration experience and the ability to wrest strategy and value from complexity is vital. Given the proliferation of the hybrid cloud model, the vast amount of integration inherent to cloud computing, and the growing importance of connecting myriad applications, a cloud services provider’s value proposition stands in direct proportion to their depth of integration expertise.
  • Business process expertise — Agility is tantamount to success in today’s fast-paced, hyper-competitive business environment, and it is made manifest through business process innovation. Speed-to-rollout and clear communication between a business and cloud services provider are indispensable to achieving sustainable agility through continual business process innovation. Your cloud services provider must combine a mastery of enterprise technology architecture with deep expertise in global business process design and execution to eliminate any friction and ensure continuous delivery of meaningful business value.
  • Datacenter expertise — Ever-increasing data volumes are pushing the data center into the cloud. If your cloud services provider does not possess datacenter expertise, realizing full value from your cloud migration is far from certain. Select a service provider with multiple data centers and full data replication and disaster recovery capabilities.
  • End-to-end capability — While there is a plethora of service providers who provide SAP cloud-based solutions, customers want to work with a service provider who can cover the entire stack — SAP Cloud Infrastructure, SAP Basis/Security and SAP Application Management. The benefits of this end-to-end capability include having a single point of contact for the entire engagement to eliminate ‘finger pointing’ and a single pane of glass for triaging all incidents, which ensures operational transparency.
  • Mobile expertise — As mobility cannot be cleaved from the cloud, today’s popular mantra “mobility-first” presupposes a sound cloud strategy. As the applications exposed via mobility extend deeper into core, mission-critical systems, such as ERP, it becomes increasingly imperative that your cloud services provider is as competent with all facets of mobility — infrastructure, app development, user interface, etc. — as they are with cloud delivery, and vice versa.
  • Research and development — For your SAP cloud migration, you want a service provider that has invested heavily in SAP cloud and related technologies, which will reduce migration timelines and ensure your organization capitalizes on the very latest innovation possibilities. In connection with this, your cloud services provider should have a demonstrable history of building and bringing to market industry-specific, out-of-box solutions pre-configured with best practices that integrate SAP and non-SAP solutions; and a state of the art facility where customers can gain first-hand knowledge of the very latest SAP solutions, build business cases for investing in SAP cloud solutions, test enhancements to their existing SAP landscapes, and experience how SAP Cloud Platform can drive process improvements, efficiency gains, competitiveness and profit.
  • Global reach / Local intimacy — As your organization expands across the globe, including into developing countries, you need a cloud services provider with the reach and scale to ensure ubiquitous network performance across all your locations. This means having carrier-grade datacenters across the globe, supported by local, expert staff, and a resilient, high-capacity network that can satisfy stringent SLAs.
  • Change management expertise — Cloud technology will not deliver the desired return on investment without addressing all of the people and processes that are needed to manage effective systems. To help ensure your organization realizes positive short- and long-term results from migrating your SAP applications to the cloud, make sure you are working with a service provider that has a deep, understanding of how people and processes might change as a result of this migration, and can help you structure a communications and action plan that covers the entire migration process.

Contact NTT DATA today to learn more about our SAP cloud migration, hosting and managed services offerings.

Post Date: 5/11/2017

Tim Clark - NTT DATA Tim Clark

About the author

Tim is a Vice-President with NTT DATA with responsibility for SAP Consulting and the global HANA COE. He has 20+ years of experience in the SAP space with a focus on leading large scale global transformation programs and outsourcing engagements. He has worked across 30+ countries and a variety of industries, including Wholesale Distribution, Semiconductors, Building Materials, Consumer Products and Oil Field Services. Previously, Tim was a Vice-President at Neoris/CEMEX and a Partner at Accenture.