SAP Outlines Cloud Application Strategy

Mike Vizard

As part of an effort to accelerate adoption of its ERP software running in the cloud, SAP today outlined a series of initiatives it plans to deliver over the next three years.

Speaking at a SAP Capital Markets Day event today, SAP CEO Bill McDermott says about half the company’s S/4 application business running on top of the SAP HANA in-memory database is being driven by new customers. In fact, McDermott says, 85 percent of the company’s installed base of users has upgraded to S/4.

To drive more adoption of its cloud service, SAP is now committing to delivering quarterly updates to its ERP cloud service. Those future updates will include setup wizards infused with machine learning and artificial intelligence; customizable, prepopulated settings; and external application programming interfaces (APIs) to integrate with other applications, legacy systems and other cloud services.

In addition, SAP detailed plans for including blockchain digital ledger capabilities along with additional support for Internet of Things (IoT) extensions.

Finally, SAP highlighted forthcoming Computer Learning for Enterprise Applications (CLEA), a series of intelligent application services making use of machine and deep learning algorithms to continually optimize a process such as cash management. In the future, SAP is also pledging to employ algorithms to match invoices to automate the accounts payable process.

In terms of overall market reach, McDermott says, SAP can now extend the reach of SAP S/4 applications down to organizations with as few as 1,500 employees via a SAP S/4HANA Cloud service. It is deployable in as few as five weeks, and McDermott says the goal is to increase adoption of SAP application software via a cloud service that eliminates the need for companies to invest as much in IT infrastructure and staff to manage on-premises applications.

“We have a massive opportunity with midmarket customers in the cloud,” says McDermott. “We’re going to hit the accelerator on that.”

In total, McDermott noted that as of the fourth quarter, S/4 is valued as a 3 billion Euro business, with another 5.5 billion in Euro revenue backlogged. At the same time, McDermott said, unlike other rivals, SAP is seeing growth in both its cloud and on-premises software businesses. Nevertheless, McDermott says that by 2018, the company’s overall cloud business, which includes S/4, HANA, a new rechristened SAP Cloud platform-as-a-service (PaaS) environment and a range of software-as-a-service (SaaS) applications, will be larger than its on-premises software business.

Which of those services an organization will embrace is going to vary widely by individual customer. But most of them will more than likely be managing some form of a hybrid cloud computing environment for years to come.


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