Stepping into the new decade, the fight for SAP cloud ERP workloads among hyperscalers like AWS, Microsoft and Google continues to scale up. AWS recently brought some changes with the introduction of new EC2 instances packed with large amounts of RAM, which is critical for SAP’s S/4HANA ERP software.
Last year, AWS EC2 instances with 6, 9 and 12 TiB of memory were made available. The new one goes considerably further with 18 TiB and 24 TiB options. AWS announced in its blog post, that the 8 socket instances with 2.7 GHz Intel Xenon chips run on bare metal and are optimised for AWS’s Elastic Block Store service. They are obtainable in the Dedicated Host form and come with the three-year contract duration.
Like other SAP applications, S/4HANA runs on top of the HANA in-memory database and was first rolled out in 2015. A wide range of SAP customers remain on the previous version, like Business Suite 7, but if SAP maintains its position that eventually only HANA will be a supported database for its apps, then all users will need to either upgrade or switch ERP Cloud platforms.
In general, moving ERP systems to the cloud is a challenging job, as the applications tend to be quite monolithic. They are not cloud-native and thus, are hard to scale out in tradition IaaS fashion. Powerful, larger, RAM-filled instances have been the main answer from AWS, Google, Microsoft, and other IaaS providers so far, with the prospect of ERP apps broadly refactored for containers and micro-services still some time away. For financial reasons, AWS and its other rivals want to attract as many SAP cloud ERP workloads as possible. Being the only largest application workloads, they are also connected with many other IT assets, creating stickiness.
Holger Mueller, an analyst with Constellation Research in Cupertino, Calif stated – “Next to Oracle database workloads, [ERP] is the prime thing to hunt”.
Joshua Greenbaum, an analyst, principal of Enterprise Applications Consulting in Berkeley, Calif said AWS and others have yet to meet some important needs of SAP’s ERP customers. Greenbaum further added that they are extraordinary in terms of speeds and feeds. Further, he said, they are going to continuously announce the changes done, but it makes them less strategic.
Microsoft and Google will strictly adhere to AWS’s new instance releases with similar updates of their own, Greenbaum continued. According to him, Newtonian physics is getting implemented. This means, today, AWS can do anything, and same will be done by Azure and Google tomorrow. He added, it is very important for vendors to offer ERP customers these instance types, as it gives them more choices as they deep dive into the cloud.
“[But] what I understand is, customers need at a strategic level is services that look at some of the more complicated issues they’re facing,” said Greenbaum. “Having a large memory is always good, but it doesn’t provide strategic value to the customer.”
SAP moved to another direction in the month of May, when it launched a Project Embrace, a partner program between itself, AWS, Microsoft and Google, that will offer reference architectures, services and other guidance in-order to adopt S4/HANA on those hyperscale platforms.
ERP goes into the cloud era
It is the very beginning for ERP in the cloud, apart from few of the native cloud ERP applications, such as Plex Systems, Inc. and NetSuite. In conflict to this, HR and CRM software have the largest presence in cloud, through SaaS vendors such as Salesforce and Workday, as well as products from Oracle and SAP.
From a long time, the on-premises ERP world has been marked by implementation projects that struggle or even fail altogether. According to Greenbaum, related stories have not cropped up remarkably, with respect to cloud certification deployments, but without any doubt, they will soon.
Greenbaum said, “The same previous practitioners of cloud are bringing the same old worst practices to the cloud.” Still, some SAP customers, like the U.S. Navy, have announced a huge success after moving and consolidating complex workloads to AWS. On the other hand, some essential improvements have been made on a complex level. Greenbaum quoted Microsoft’s effort to move its ERP applications onto Azure. When Dynamics was put on Azure, it led to great stress. “There’s no doubt, that [ERP is] very complicated. Hyperscalers know, that it is the thing that they need to do it well.”
Oracle has taken a novel move through a partnership with Microsoft using its own IaaS. Under the contract, customers run their application logic and presentation layers on Azure, while sticking back to an Oracle database running inside Oracle Cloud Infrastructure on an Exadata machine.
SAP’s tie-up with Google seemed to be nourished strong with the departure of longtime SAP sales executive Rob Enslin for a similar role at Google Cloud back in April. Enslin has been tasked with building out the massive enterprise sales organisation at Google Cloud, a person with which he presumably helps seed through his longstanding history with SAP.
Alternative, effective options are also available. For some period, SAP has also offered HANA Enterprise Cloud (HEC), which provides a private cloud foundation for ERP. Not long ago, Deloitte signed on as an HEC partner and will use hyperscaler infrastructure on the back end, combined with its managed services. SAP also announced the general availability of HANA Cloud and Data Warehouse Cloud. Both the services are available in separate form and as an extension to SAP customers’ on-premises environments.
There are some SAP customers interested more in having direct relationships with hyperscalers, specifically to play one against the other for an economic edge, said Jon Reed, who is an independent analyst and co-founder of Diginomica.com. He also added that other customers don’t have that sophistication and commitment to do that.
SAP customers think a lot about their cloud ERP journey
ASUP SVP Chris Crone provided the information that The Americas’ SAP Users’ Group (ASUG) has conducted face to face events throughout the year with customers who were trying to figure out their upgrade path to S/4HANA.
The recent survey conducted by ASUG states, today, AWS and Microsoft share fairly equal market share of SAP customers. Around 34% of respondents are identified as Azure’s current customers, while 32% are AWS customers, and 15% are Google Cloud customers. It is found that HEC has only 11% current users.
For the adoption of S/4HANA, an ASUG survey discovered that 16% have gone live on the software and another 16% are in the process of doing so. From the remainders, 12% don’t have any plan to upgrade and 56% have plans to upgrade in the future. Supplementing to the mix, there was confusion for customers that S/4HANA Cloud, a SaaS-based, somewhat scaled downed version of the app suite that is based on the same code line as the main version.
Crone said, SAP customers are facing problems in understanding the difference hyperscalers pose compared to on-premises environments and traditional hosting in terms of things like economic models and security. She added that ERP cloud will not just to move the workloads over. Instead, you will still have all these application management things that have to happen. The SAP must take responsibility to figure out the way roles and responsibilities change with a move on to AWS and its link.
Eventually, it is not necessary that SAP customers only want to be first to make the leap.
Crone asked, “You might be aware of stories of the well-known brands that made the shift. But have you considered about my organisation’s size or someone in my industry?”
She also added that one of ASUG’s missions is user education, and moving forward the public cloud infrastructure will be high on the agenda. “We surely understand that these hyperscalers are going to play a role when customers migrate to S/4 HANA”.
AWS with the introduction of new EC2 instances, packed with large amounts of RAM, is all set to manage workloads just like SAP. The competition is getting tough, and customers have to decide which ERP they want to work on.