Earlier this year, SAP reiterated its commitment to cloud-enable its applications. SAP customers now must decide the best way to move to the cloud. The most practical approach for many: race to the cloud, and use the cloud to pave the journey to HANA.
SAP customers should race, not walk, to the cloud, for the following reasons:
Money. Data-intensive activities such as predictive demand forecasting, prescriptive spend analytics, and transaction-level process efficiencies require more storage, compute power, and greater technology resiliency. Procuring and managing additional hardware, software, and staff internally to achieve these escalating requirements is expensive. The cloud typically saves companies between 20 to 40 percent on these costs.
Speed. SAP applications are complicated and require tremendous functional and technical expertise to manage. Most companies have trouble maintaining the needed expertise in house, and current staff is often overloaded. Functional consultants are expensive, Business Warehouse/Budget Planning and Consolidation experts are in high demand, and Basis/HANA administrators need frequent training to keep up with the technology. External cloud providers can provide on-demand infrastructure and SAP experience, extending the capabilities of internal teams to rapidly deploy new applications and eliminate technical issues.
Adaptability. SAP customers commonly run more than 25 modules and multiple layers of database, application, Web, and process servers. The cloud facilitates easier trial and add-ons of SAP and third-party software, including hardware upgrades. The more adaptable your applications, the faster you can capitalize on new business opportunities, which is why mergers/acquisitions are a common trigger point for moving to the cloud. It’s easier to combine, separate, or change application environments in the cloud.
Doing more with less.In many organizations, the business side is demanding more from the IT department, and IT’s inability to deliver can have a debilitating impact on the business. At the same time, budgets continue to be under pressure and unable to accommodate the demands from the business side. For these reasons, many companies are moving to the cloud and leveraging the savings to fund these new, critical initiatives.
Defining Your Road to the Cloud
The routes to the cloud are many, but there are common success factors for cloud-enabling your SAP deployment.
Consider the full application lifecycle.The cloud offers a predictable cost model and enables you to continually adjust your application environment as needed in a manner that is always current and supported. You’ll want to leverage this advantage at all stages of SAP deployment – implementations, upgrades, add-ons, customizations, technology refresh, and, of course, day-to-day management.
Select the right cloud provider for your business. When you ask CIOs why they’ve moved SAP to the cloud, you’ll often hear, “I am in the (manufacturing, healthcare, retail, etc.) business. I want my team to focus on managing the business, not technology maintenance.” For this reason, most companies outsource to the cloud rather than build one in house. Because SAP is core to your business, look for a provider with SAP expertise, an architecture that enables SAP’s stringent security and performance requirements, and can run not only SAP, but also the common applications that hook into it. Ideally, the partner should support the complete SAP application lifecycle to lock in your ability to continually adapt your SAP applications at the speed of the cloud.
Choose your preferred application order. Some companies move entire application portfolios to the cloud, while others take a phased approach. Many start with core ERP and transactional systems (e.g., Finance/Controlling, Materials Management, Sales and Distribution), then analytics (e.g., Business Warehouse, BusinessObjects, and Budget Planning and Consolidation), and next mobility or Web Services to extend to a wider user base and keep up with customer demands. This sequence is not set in stone and is driven by skillsets, age of infrastructure, project roadmap, and other business issues.
Avoid known risks.The terms Cloud and SaaS are now commonplace, but many risks lie in not understanding the scope of services included with the cloud offering. A cloud deployment should save you money. Your cloud provider should be able to articulate the typical costs and eliminate uncertainly around technology requirements. Also, make sure the provider can support your operational model, which often means 24/7 global support for companies running SAP. Finally, consider both SAP applications and third-party software in your move so application integration remains seamless and important functions aren’t left behind.
Transitioning to the cloud now can make implementation of HANA easier later, particularly if your cloud provider also runs HANA. Operational savings from the cloud can help fund the move to HANA, and HANA in the cloud is much less expensive than an on-premise version. If you already have decided to transition to HANA, it may be easier to move everything to the cloud at once.
Whichever road you take, define a strategy that makes sense for your business, but don’t delay the decision. The opportunity costs of not moving to the cloud are high because the benefits are many. To continue to make the most of your SAP deployment, race to the cloud and begin the journey to HANA.
Lee Blakemore is Senior Vice President at Velocity Technology Solutions, where he facilitates the company’s strategy for bringing application lifecycle solutions for SAP software to the market.
Lee came to Velocity after working at IBM for eight years. At IBM, Lee served as Vice President of Worldwide Sales for two software and infrastructure brands and, before that, as Director of European Sales, when he helped launch IBM’s Application on Demand business in Europe. Prior to IBM, Lee held various sales leadership positions at Corio, a cloud-based ERP solution acquired by IBM; Paymentor, a UK-based online accounts receivable solution; and Scala Business Solutions, a Swedish ERP software company.
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