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It all started with a Twitter from John Appleby

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Which got responded by Steve Rumsby

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I did not want to miss out on such a very good conversation and added my 5 cents of thought to it. I fully second the statement of John since it is really what makes most sense. Yet on the other side I have to agree with Steve that indeed “it isn’t that simple”. This shows that there is a very delicate line for many IT Managers and CIO between driving & adopting innovation and doing what is expected of them, keeping the lights on.

Keeping the lights on an maintaining SLA is probably not something that will drive big pay raises or promotions, yet failing them could be lever to loose the job, which clearly nobody wants.

John Reed has posted on posted a very interesting Blog CIOs in 2014 – disruptors or disrupted? He refers to the CIO study which has been conducted by IDC. There was one slide of the study that stuck me most and it was the 68% of the CIO state that they have difficulties to balance between operational excellence and innovation. There is clearly much more to the story than who has the better technology. It is not always the pure logic which drives decisions, after all we are all humans and have our very own agenda, needs, fears, POV etc.

The Twitter threat between John, Steve and then myself expanded and we got to some hard numbers.

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There is little to argue about this point but the fact, which was been lined out by Steve, that most customers have already an existing infrastructure and the shift to the cloud is not perceived as being that simple. There are many questions which a customer needs to ask himself and he should be well advised on this as well. A customer has typically a large variety of systems in place which need to be running either on-premise or they could be in the cloud.

The great advantage of cloud besides its costs is really the simplicity. You can start with a minimum and scale based o your needs. There has to be always a first step and HANA is a great opportunity to take this first step.

Some IT Managers have told me that they view cloud with a certain scepticism since they feel it takes their power away. For many (probably the vast majority of the 68% mentioned earlier) the fact of being able to say I have XXX number of Servers and YYY number of people is still a status symbol on how important they are. Fact is that if they do not adapt they are doomed to facing difficult times. LOB will not wait for them to take a decision and provide a solution, they will simply move to the cloud which would then really be a risk.

As people who either sell or advise (or both) it is important that we keep in mind not only what are all the advantages of a solution we want to sell but also what could be the objections and the why of them in order to be successful. Empathy remains important in the time of real-time & cloud 

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21 Comments

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  1. Uwe Fetzer

    To add just two points:

    • pro: don’t underestimate the electricity costs if you run your own server(s)
    • contra: the current NSA discussion doesn’t really help to convince the customers to go into the cloud. I don’t think my current customer is willing to put his “secrets” somewhere outside of his own “ground”.
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    1. Carsten Nitschke Post author

      Hi Uwe,

      you are right electricity cost is a mayor factor (mentioned by John as well) plus you need to have the full game of High Availability, Desaster Recovery etc…This adds even more KWh to your calculation.

      regarding the “own ground”. This is probably the perceived vs. real security that we see there. Who tells the the customer that there is no botnet active on computers on his own ground ? When was the last penetration test performed to see if people can enter the network ? I am not so sure that own ground is safer in case NSA is interested 😉

      In general the cloud service providers are probably much more security aware than many of the companies that we deal with IMHO.

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      1. Andy Silvey

        Hi Carsten,

        there are two sides of the fence here:

        . the view from the Hardware Vendors / System Integrators / Consulting Companies

        . the view from End Customers

        This actually goes deeper, I’ve done SAP at companies whose main business is high tech, and they were actually very innovative in their approach to SAP, always in rampup always having the latest to squeeze out every possible competitive advantage from running the latest versions. Then on the other side I have done SAP at companies whose main business is for example food and healthcare and who have been very much more conservative in their approach.

        If you were the CIO of a large stock exchange listed corporation what would you do ?

        Would you be an innovative leader in the IT world, or a conservative follower ?

        If you were an innovative leader in the IT world, how would you ensure, the approach does not put the business at risk ?

        This is the challenge.

        Best regards,

        Andy.

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        1. Carsten Nitschke Post author

          Hi Andy,

          thanks a lot for your comment. You are making a valid point. I have been on the HW side in my prior life so I can tell you that the Cloud scenario was rather grimmy and you can tell by the move of IBM to sell the X86 business that there will be still many changes in front of us.

          There is always different adoption rates and this is good.

          Important to consider the original point of John: For those who make a new implementation!

          Perhaps the question to what I would do is not a very fair one since I would clearly go for HANA and Cloud. You mention if I were a stock exchange listed company.

          I am quite sure that most of the stock exchange listed companies are already working with Cloud Solutions. To a higher or lower extend but they are using it and seeing the benefits.

          What I was trying to point out was that we need to find a better balance for keeping lights on and innovation and this is really in the hands of all of us. If CIO are “afraid” to drive more innovation we need to help them to overcome the fear and also drive their internal position.

          I am quite sure that SFDC for example never talk with a company CIO.. We can help the CIO to have a better position and yet keeping the lights on and keeping cost down !

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          1. Andy Silvey

            Hi Carsten,

            I agree, our job, in the engine room, is to make sure the CIO sleeps peacefully while balancing share holder value, end user productivity etc 🙂

            Andy.

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      2. Henrique Pinto

        Your own ground is safer in case you’re not an USA based company.

        The majority of cloud infrastructure (not SaaS) players nowadays are USA based companies (Amazon, Cloudera, Virtustream, IBM, HP, etc.), even if they do possess DCs abroad. That means they are obliged by the Terrorism Act to provide any piece of info NSA requires, no matter where in the world it is residing.

        That is indeed a huge blocker to adoption.

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        1. Carsten Nitschke Post author

          Henrique,

          I would be very interested in comparing the levels of real, not perceived security of Onsite vs Cloud of any of the above stated vendors.

          In my past I was working in IT / Network security and I have seen really amazing things there. There was for example a bank where some user has installed a solution call GoToMyPC on his workstation in order to be able to work from home… Just imagine what this could be mean to a corporate network. The by that time in place security mechanism were not able to detect it.

          Of course this is now a few years ago and there has been important improvements in security but still.

          NSA has done the Cloud vendors a lot of harm but are there statistics on how many people have deleted their accounts on GMAIL, Facebook etc ? This could be an argument but I see it not being a full stopper. I think that the the argument you have placed below on the Brasil specific example are much more solid reasons.

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          1. Henrique Pinto

            Hi Carsten,

            it’s not about security per se, but mainly political.

            Imagine you’re the largest Oil&Gas company in Brazil, the largest IT budget in the country, partly owned by the government. It’s announced in the media that the country’s president was being spied by NSA. How do you think these guys receive Amazon and Cloudera, from now on?

            That’s just an example, but everyone wants to keep good relations with the government.

            Best,

            Henrique.

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  2. Steve Rumsby

    Thanks for summarising this Carsten. I had to spend a few hours helping my daughter with Physics homework, or I’d have continued the conversation a while longer on Twitter!

    I think Andy has got it exactly right. SAP, hardware vendors and SAP partners always want to sell the latest and greatest toys, which is perfectly understandable. Customers don’t always want the latest toys, sometimes for good reasons and sometimes for not so good reasons. For any given customer the right answer won’t necessarily be immediately obvious, and may require a certain amount of analysis and investigation.

    One of the phrases John used in one of his tweets was “greenfield implementation”. In a genuine greenfield implementation it may well be foolish to think about an on premise implementation rather than a cloud implementation, from a cost point of view at least. However, how many genuine greenfield implementations do you see? There is always infrastructure in place to support existing systems, not all of which may be replaced by SAP/HANA/Cloud, so you can’t necessarily claim cost savings there. Plus, cost isn’t the only consideration. For some customers, control is important. Control over data, as Uwe mentioned, and control over some operations. For example, I can spin up a clone of my production ERP system in less than 30 minutes, should I need one. Can I do that with Suite on HANA cloud? (Maybe I can – I have no idea!)

    It is true, I’m sure, that some (many?) customers’ reasons for avoiding the cloud aren’t legitimate (including some of my own:-) and of course looking at those, and hopefully dispelling them, is part of any analysis process. But some are legitimate, and I react badly to statements like John’s original, that seem to suggest all such objections are wrong. Normally I let them slide, but I know John well enough to have a go and be sure he’ll take it in the spirit intended 🙂

    Let’s do this again sometime…!

    Steve.

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    1. Carsten Nitschke Post author

      Steve,

      I had a lot of fun with our Twitter discussion and I agree we should do this again some time. Of course we all know that John likes to provoke and it is obvious he did a good job with it 😉 Maybe it is just this sales things in me, the thing that I love technology … you name it but I think we have something very beautiful in our hands and there will be a massive change in the industry (again everybody with its adoption rate). We can shape it and this is the beauty of it. There are very few things in life to which there is just a single answer.

      Yet it is the passion the provocation has ignited in us to look for the right answer!

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  3. John Appleby

    Thanks for writing this Carsten. Mine was a deliberately provocative comment designed to cause a discussion, but like many things, it came out of a customer engagement.

    You can read my story about it here.

    There are many shades of gray for install-base customers like Steve Rumsby. Steve – I suspect you are a man who likes to have choice and maybe you think that SAP is taking away some of that by investing so heavily in HANA.

    I would answer that with yes, they are, but they are doing it because Oracle, Microsoft and IBM are not the competition. The new competition is Salesforce, Workday and whoever comes next and SAP has to compete with them to survive. The massive investment in HANA is SAP’s way to survive and the lesser investment in what will become legacy databases is collateral damage.

    If you choose to stay on a regular RDBMS then you will clearly continue to be supported for many years go come (and have the choice to move to HANA any other time) but SAP is making a decision based on survival instinct and I believe it is the right decision.

    And this means for net new customers, implementing on any other platform than HANA is a very poor decision.

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  4. Henrique Pinto

    There are two different discussions in this same conversation.

    One (I) is the ERP on HANA x RDBMS adoption; the other is Cloud vs. on-premise infrastructure (II).

    (II) is very dependent on geography for reasons I have already outlined. Talking specifically about Brazil, where most companies are not willing to have their data shared with NSA, where you have electrical energy shortages every other year and the telecommunications infrastructure is pitiful and a reliable internet link is the most expensive in the world, Cloud is often NOT the cheapest option, if you need to ensure a 99.95% SLA. It’s not uncommon to see very large companies in Brazil creating their own energy power plants and telecom infra, so why should they outsource their IT infrastructure?

    (I) is a more, let’s say, “standard” concept, since no matter where you stand or what business you do, you get the same Software from SAP (unless you in Iran or some other ME country 😐 ). And it’s undeniable the advantages you get when implementing SAP ERP on top of HANA instead of a regular RDBMS. However, unfortunately, being in the SW side, it’s painful to me that the SW is the easiest part of the equations. I’ve seen countless ERP on HANA Business Cases fail because of Infrastructure costs and, even more, implementation costs. It’s frightening when you get a quotation for ERP on HANA implementation services which is almost double the cost of a ERP on RDBMS implementation, for the same business scope. And that’s not rare. In practice, it means that most of the consulting companies have no clue what ERP on HANA is about and they are just doubling or tripling their risk margins.

    So, as sad as it is for me to admit, I have to go with Steve on this.

    Of course, if you’re considering to implement SAP ERP nowadays and you’re not even considering SAP ERP on HANA or a cloud infrastructure in your cost analysis, you’re a broken CIO. But in the end of the day, if you do the math and get a much better ROI with ERP on RDBMS in an on-premise infrastructure, no one can really blame you for taking that decision. It’s not that simple.

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    1. John Appleby

      Henrique… you are right, there are times when cloud is not the approach. There are some markets (both vertical and geographical) where the NSA has caused people to be more cautious, for sure. Plus other countries where people like equipment on-premise. And yet others where the infrastructure doesn’t yet support cloud well.

      However, the massive growth of cloud companies around the world tells us this is where the market is heading. It is simply a factor of the future being unevenly distributed.

      Serve your customers well and give them good advice based on their needs.

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    2. Vineet Gupta

      Ultimately ERP on HANA in cloud should be the popular choice of majority but the pricing of cloud model has to make it a nobrainer. Maybe more customers on HANA cloud will bring down the price. Cloud only companies like Salesforce are booming today because they are more focused on their solution. Although SAP model of choice between on-premise and cloud is a better offer but it does split the marketing dollar and sales effort.

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    1. Vivek Singh Bhoj

      Hi Steve,

      Thanks for posting it here too.

      I have also read that blog and all the comments

      I learnt many things from there

      The best quote for me was from John:

      Time kills deals and cloud helps deals.

      Regards,

      Vivek

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      1. Andy Silvey

        +1 thanks for connecting the two Steve.

        I’ve read the thread and despite what the contributors say (and Hasso, and with my humblest greatest respects for Hasso’s feedback) I still find the whole discussion lopsided towards the

             Hardware Vendors / System Integrators / Consulting Companies / Cloud Providers

        Where is the balanced feedback from the Customers/End Clients perspective, this whole discussion needs more balance rather than simply as Carsten put it over there,

        I am very happy to see that you have turned the situation around and besides the fact that it was a meeting of shepherds the sheep did survive

        And this is the question, who knows best, the shepherds from the Hardware Vendors / System Integrators / Consulting Companies / Cloud Providers, or the IT Leadership at the Customers ?

        Remember, on the Customer side, the IT Leadership’s raison d’etre is to enable end User productivity and keeping the enterprise running, applying new technologies where there is the best match towards the goals of the enterprise and while juggling costs and keeping in mind shareholder value.

        What are the cloud drivers from the Customers/End Clients perspective ?

        Amongst others…

             . If it works don’t fix it

             . What happens if the Cloud Provider goes bust ?

             . Where is the like for like cost comparison of an operational scenario running for

             example ECC on Hana in your own datacenter and running ECC on Hana in the cloud ? The whole calculation, operations, support, alm etc

             . Only this week, over here, cloud was compared to a hotel room , reading the other thread of this discussion, I am left wondering the analogy that cloud is a taxi or a bus and your own datacenter is owning a car – no matter how green I want my      credentials to be, car ownership still wins

             . Flexibilty – the most flexible situation is your own datacenter and your own      technicians, obviously these days the common approach is outsourcing the human      side of operating IT and replacing the flexibility of your own technicians with an      outsourcing partner. This strategy could reduce flexibility and manouverability. One of the mitigations to this is to have a multi vendor outsourcing strategy and therefore two or more vendors supplying technicians therefore enabling the Customer to have   flexibility to move from one vendor to the other at any time. Even these days, out      sourcing contracts have very clear exit strategies and short termination      possibilities.

             If we get rid of our datacenter and move to the cloud, I see this as big squeeze on   flexibility for the future and freedom of choice for the future. How to mitigate this, a      multi cloud supplier strategy, but you can’t just move business critical enterprise      systems from one cloud provider to another.  So, there is a really a question of      business freedom and flexibility when signing up to having your entire SAP      infrastucture in the cloud

             . Not all Customers are dedicated followers of fashion

             . There are more but these are a few

        Back to Hana,

        I totally agree, for new implementations, Hana should be the db.

        I totally agree, moving forward all Customers should have a Hana strategy and roadmap, ie, in the landscape lifecycle planning, when they plan to move each line of their SAP systems to Hana.

        This is a given, Hana is the future, and all companies need to be planning their road maps to moving to Hana.

        Cloud is a totally separate question and mixing the two in the same conversation is causing confusion and mystifying the Hana cause.

        Best regards,

        Andy.

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  5. Yeu Sheng Teo

    Eventually our customer will be the pay master… we do not need to take the decision on behalf of our pay master very hard 😉 Pay master is the king.

    What SAP, SAP Partners, SAP contractors have to do are to get all solution and our landscapes in the weaponry ready for easy consumption. That’s what simplicity is all about in a real world, from solution all the way to backend landscape consumption.

    It maybe happening in a future project implementation, pay master project team decides to migrate from on-premise to cloud (or vice-verse) during mid way implementation and still able to complete project within the original project timeline. This maybe something unheard of in present days. (I excluded the project cost for discussion since pay master has already decided what is best for him/her). The real value is here is when SAP and SAP community can react to their customers demand in the fastest possible manner for consumption.

    Now 1st important innovation, how to simplify the SAP solution and landscapes 🙂

    Regards.

    YS

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