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I saw this Blog post on the SAP experts site http://sapexperts.wispubs.com/IT/IT-Blog/2012/May/Today-in-SAP-529 and had to comment.  John Wookey has been getting a boatload of press from some of his comments on SAP (and Oracle) related to the Cloud and thought he needed to be set straight.  I respect John and did a lot of analysis on the Cloud for him back when he was here, but my opinion is that his direction is skewed a bit.

What is wrong with buying your way to the top of the Cloud?  Growing a Cloud based business takes time – look how long it took Salesforce.com to get to $3billion in revenue (10+ years).  With the Cloud, time is critical and obviously, SAP saw that the time is now.

Time to set the record straight – SAP is not transitioning its entire business model to the Cloud.  On premise software is not going away any time soon (see the post from Gartner) http://blogs.gartner.com/robert-desisto/2012/05/25/death-of-on-premises-vendors-greatly-exaggerated/  Hybrid (on premise + Cloud) might be the way for the next 2, 3, 4 years.  Large companies are not prepared to rip and replace their on premise ERP systems……yet.   

John Wookey has made some comments over the past few days suggesting that SAP cannot make the transition to the Cloud which I would take exception to.  SAP is acquiring to “get in the game” but if you believe that customers will embrace a “hybrid” model, then how can you argue against the acquisition of SuccessFactors and Ariba?  The injection of additional ‘Cloud’ DNA into SAP is a good thing and under Lars’ leadership the best is yet to come.

Perhaps the “real” issue is integration between Cloud and On Premise apps. There is plenty of opportunity here for services companies with the right tools to act as the plumbers.  Look for offerings/partnerships/arrangement with companies like Accenture, Dell (Boomi) and Informatica.

SAP Business ByDesign is getting traction, SAP Sales OnDemand, SAP Travel OnDemand, and SAP Sourcing OnDemand are relatively new offerings that many customers have embraced (just take a look at some of the Cloud based customer discussions at the recent Sapphire event in Orlando.
http://www.sapvirtualevents.com/sapphirenow/sessiondetails.aspx?sId=2258) .

There is still plenty of time to get into the Cloud and SAP’s diverse customer base provides an advantage as it accelerates into the Cloud.

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  1. Michael Mankowski Post author

    Just to follow up on this post, Forrester has the same perspective for on premise & cloud software. 

    James Staten, an analyst at Forrester, says in a report: “Not everything will move to the cloud as there are many business processes, data sets and workflows that require specific hardware or proprietary solutions that can’t take advantage of cloud economics. For this reason we’ll likely still have mainframes 20 years from now.”

    See Full Article Here

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