Pricing for NetWeaver Cloud was recently announced and I wanted to take a closer look at the packages offered.

Here are the different offers.

Footnotes:

*EURO pricing – local prices available from your SAP representative, price per month does not include tax

1: Virtual Machine configurations

Lite = 1 Core / 2GB RAM

Professional = 2 Cores / 4GB RAM

Premium = 4 Cores / 8 GB RAM

Premium Plus = 8 Cores / 16 GB RAM, available in “à la carte” configurations

2: Connection using the cloud connector for SAP NetWeaver Cloud

General analysis

Audience

Based on the characteristics of the different offers, it really isn’t clear to whom the offers are being directed.

The marketing fluff for the pricing doesn’t help:

A cloud platform for business of any size! Choose the configuration that best fits your business needs. You can start small – for instance with the developer package – and expand from there as you need. To add additional resources to your package or for an “à la carte” configuration, tailor-made for your needs, please contact an SAP sales representative.

Is it partners who want to use NetWeaver Cloud to sell the applications that they have developed?  Or is it existing customers – primarily the IT departments – who want to develop some of their internal applications in the Cloud?

This distinction is important in that the business requirements and technical needs (tools, etc) of each group may be quite different. 

If these offers were more associated with partners, I would assume that there would be some reference to the new NetWeaver Cloud Partner program on the page but I never found one there.

Perhaps the most telling indicator of the focus is included in the “Terms and Conditions” which is available in all offers in the SAP Store but which I doubt very many potential customers will read.

1. 2. USE OF THE CLOUD SERVICE
2. a. The Service includes the platform hosted in the SAP Cloud (the “Platform”) on which the Customer Applications (as defined in Section 1.b below) can be uploaded and accessed by Customer and Customer’s authorized end users (“End Users”). End Users must be employees of Customer or Customer’s Affiliates, or business partners of Customer accessing the Customer Applications solely in support of Customer’s use of the Customer Applications for its internal business operations. Customer may not otherwise make Customer Applications available to third parties, including, without limitation, as part of a software-as-a-service, outsourcing or similar commercial arrangement with the End User. [My emphasis].

My reading of this legal clause suggests that the main focus is on existing and – to a lesser degree- new customers who use the platform to improve their own internal processes. Although not a lawyer, the legal restriction “Customer may not otherwise make Customer Applications available to third parties, including, without limitation, as part of a software-as-a-service” sounds very much to me like the typical activity that a partner might provide.

Recently, I read an interesting forum post that might explain this clause.

Note: As Kaloyan Raev states, his forum post is not an “official” SAP statement but I thought it was quite useful to better understand the relationship between partners and customers.

The Starter Package is the minimal (3 VMs, 10 GB storage, etc.) paid package of cloud resources that you can buy. If you are a partner, you get 1 Starter Package included in the annual fee. If you need more resources to develop your app then you must buy additional packages.

When a customer of you buys your application from SAP Store, he needs to also buy a package of cloud resources (like the Starter Package) in order to run your application. So, the customer pays twice – once to you for the application, and another time to SAP for the cloud resources.

Currently, this is the only legally approved selling process we have. We are working on the legal aspects of another model where the customer “subscribes” to the partner’s application. In this case the customers does not need to buy their own cloud resources, but the application they buy still runs in the partner’s account and the partner is billed for the cloud resources.

If the application is targeted for only one customer then there is no sense to publish it on SAP Store. In this case I believe the partner program doesnot apply. The customer should just buy a package of cloud resources to develop and productively run the application

After reading Kaloyan’s post, the legal clause mentioned above makes more sense.

Different storage types

There are three different types of storage that are mentioned: HANA Storage, unstructured data and relational DB storage. 

To be truthful, I’m surprised that the unstructured data storage is described separately. It appears that the reason is that CMIS is still using MongoDB. I’ve been waiting for CMIS to transition to HANA for a while now (since Sep 30, 2011!). If HANA can be used for unstructured data, it would appear to be a perfect fit.

The fact that there is also a transaction limit for unstructured data but not for other types of database usage is also a bit strange.

Tracking usage

Pricing in NetWeaver Cloud is based on certain metrics (such as transactions to unstructured data storage, etc). I have never seen any tools on the platform that allow developers / customers to know when they are approaching their limits. If I’m getting close to using up all my bandwidth from my application to the Internet, I’d like to know about it before-hand.

There are also no indications what happens if I go beyond the limits established by my package. Do I have to pay extra? Is my access restricted in some fashion following such “violations”?

Focus on interaction with SAP on-premise systems       

The fact that all three NetWeaver Cloud packages include unlimited connections to SAP on-premise systems shows that SAP has great interest in using the environment to integrate with SAP on-premise assets.  Connections to non-SAP OnPremise systems, on the other hand, are restricted. I assume that the Cloud Connector is the primary means with which these connections will be implemented.  I’ve never seen any tool that might administrative metrics of such connections and I have no idea how the different types of connections might be tracked. Connections to OnPremise assets that don’t use the Cloud Connector might be more difficult to track inasmuch as such connections might be indistinguishable from other connections (for example to cloud-based assets)

This metric is linked with SAP’s broader emphasis on hybrid (OnPremise / OnDemand) scenarios – especially regarding the LOB SaaS applications (Customer OnDemand, Travel OnDemand, etc).

Here is a simplified table with the different variations:

If I’m a developer, such restrictions make an application design even more complicated inasmuch as other competing PaaSs don’t have such limitations. 

Furthermore, if I’m a customer who has purchased the Premium package, supporting various applications and having all three levels (Dev, Stage and Prod) running on NetWeaver Cloud then the number of provided connections  is extremely limiting.

There is still another question associated with these connections:

• Are the number of connections listed per CU or for all CUs in the package

Comparison with pricing of other Cloud PaaS vendors

I’ve just provided a quick analysis of NetWeaver Cloud pricing but what about other vendors? What sort of metrics do they use in their pricing?

There are a variety of cloud vendors with different types (IaaS, PaaS, etc) of offers. It is the most useful to compare the NetWeaver Cloud prices with other PaaS vendors – in particular those vendors which concentrate on Java-based applications. 

Note: My intention isn’t to suggest that one vendor is better, cheaper, etc than the others but rather to compare the pricing metrics that each vendor uses. I’m also not going to describe all the details from all pricing characteristics but rather just provide a rough outline of these elements.

Oracle

A direct comparison is a little difficult, because Oracle has different prices for its Cloud Database and its Java Cloud PaaS and every Java Cloud Service User requires a Database Cloud Service.

Analysis:

• The Oracle Java PaaS offers are primarily associated with number of Weblogic servers used. In the SAP offers, more emphasis is provided on the underlying technical architecture (number of cores and number of compute units) rather than the underlying server count.
• If we compare the maximum number of Weblogic servers vs the maximum number of compute units provided, then there are large differences between the two vendors.  The SAP offers (especially at the high end) have many more compute units than are offered by Oracle. The Premium package contains over 60 compute units compared to just 4 Weblogic servers in the largest Oracle offer. The prices for the respective offers are accordingly quite different as well. This difference means that the use cases customers can cover with each offer are different.  I also assume that the Premium offer from SAP would only be ordered by the largest customers. Oracle customers might be able to order multiple S3 packages but the fundamental difference still exists.

CloudBees

CloudBees pricing is largely split between a free version and an enterprise version.

Analysis:

• Although I’ve just included screenshots from the multi-tenant offer, there is also an  offer for dedicated servers (a model that is similar to that provided by Oracle)
• Compare the most expensive offer from CloudBees to this SAP’s Premium and becomes clear that SAP is focusing on a difference audience than that of CloudBees.  This isn’t a bad thing – the cloud market is large and growing rapidly – but it is critical to understand that NetWeaver Cloud is focusing on a different market than many other vendors.

Conclusion

When choosing a PaaS, there are various criterion that influence such decisions. Pricing is just one factor among many.  Indeed, the relative importance of pricing may be different based on the use case involved. A developer looking at an option to rapidly create a few POCs will look at pricing differently that a member of the IT team looking to outsource multiple apps to the cloud.

Pricing metrics between PaaS vendors are actually quite similar to one another – the main factors usually involve various configurations based different amounts of memory and storage. If SAP is indeed focusing on its customer base as the primary users for the platform, then I think it has the right pricing strategy. I’d be curious, however, to see if users progress through the various packages. Ideally, a customer would start with a developer package and then move on to other packages – perhaps as they purchased other partner apps.   As only the first NetWeaver Cloud partner app has just been certified and, besides two NetWeaver Cloud Portal offerings, there are currently no NetWeaver Cloud applications in the SAP Store, I think the motivation of customers to move to platform to use externally produced apps is still limited.  As the number of such applications increase, then I expect more customers to look at the platform.