Cloud Resources: How does my organisation decide if we should run SAP in the cloud?

SAP has their own cloud solutions for their products, and they support running SAP products on other cloud vendors’ platforms such as VMWare vCloud, Amazon EC2 and soon Microsoft Azure.  SAP also supports virtualisation platforms that allow customers to run SAP software in their own datacentre efficiently.

Many customers are now facing the decision on how SAP ties into their wider strategy; whether it will be run and supported fully in-house, whether the infrastructure should be hosted in an external cloud, or if a fully supported solution should be hosted externally.

We’ve recently worked through this decision making process with one of our key customers, and I wanted to share some of the information that helped them make their decision.

Software as a Service (SaaS)

SAP’s own cloud solutions can provide a fully working and supported solution.  This is naturally less flexible than running your own servers but it removes the requirement for an organisation to provide technical support for the SAP application.

Using SAP’s cloud also gives the advantage of a different licensing model.  You can use the SAP software on a subscription basis without purchasing, reducing the initial expense.  With this benefit comes major risk; once your solution is built and your data is there, you are tied into the subscription for your key business processes. 

Infrastructure as a Service (IaaS)

Running SAP products on a third party cloud platform gives the cost savings and reliability of the cloud for your hardware platform, but leaves you to manage and support the SAP products. 

Buying Infrastructure as a Service (IaaS) and managing your own applications is the most flexible cloud option, and allows you to use a traditional SAP licensing model.  It also means that an existing SAP landscape can be moved to the cloud very easily, with a simple technical migration project

There is still risk with this model.  You rely on a connection to your cloud vendor, and you need to know you have the skills and resources to support your SAP applications, and ensure the infrastructure is configured in line with SAP’s Best Practice.

 In-House Infrastructure

A lot of the benefits of the cloud are available with in-house infrastructure.  If you have a large datacentre, you can achieve economies of scale with virtualisation and storage that allow you to run a software defined datacentre.  Combined with proper planning of your requirements, you can provide on-demand infrastructure for your applications at low cost.

A hybrid cloud model is also possible to augment your own datacentre.  You can run development applications and less critical applications in the cloud, whilst running your key applications in-house.

Any in-house approach reduces the risks and costs of storing your data externally.  Connection problems to a cloud vendor will not happen, and securing the data can be easier.  You do still need to have the skills and resources to support the SAP products, and ensure your infrastructure is configured in a manner supported by SAP. 

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There are advantages and disadvantages of each approach.  This is reflected in the market data, as SAP is seeing sales of licenses for in-house software fall.  Conversely, their fast growing cloud divisions have seen margin targets pushed back as businesses struggle to overcome the problems with running SAP in the cloud.

Clouds of People

We’ve found that one of the major hurdles to running SAP in-house or with an IaaS cloud is the technical support of the SAP applications.  This is challenging to deliver as you need a large team to cover all required skillsets at all times, but often the workload and budget is only available for a very limited number of resources.

We are seeing customers adopt a cloud model for their support resources.  An external team can provide the size and breadth of skillsets you need, but you only pay for what you use.  If you need a single resource to handle the workload, but require several people to cover holidays and the range of skills, using a cloud workforce can solve this issue.

Partnering IaaS or an in-house datacentre with an external workforce to support the applications gives a good combination; a single platform for all your applications, the flexibility to store and manage your data as you require, but with the knowledge that your applications are well supported by a specialist team.

Stretching the analogy further, the hybrid cloud model works for resources as well.  You can build an internal team to deliver the majority of the support with your best interests in mind, and in line with how your business runs, but augment any missing skills or flexibility with third party support.

The Final Decision

We worked through all of the above discussion with our customer.  Faced with their existing in-house hardware reaching the end of life, we helped them review all of these options and choose the best fit.

SaaS was not considered as the large SAP investment they already held was tied up in traditional SAP software, which was already meeting their needs.

The IaaS option delivered a significant cost saving on price, and they were prepared to partner this with Absoft’s NetWeaver Managed Service to deliver the SAP technical support on the cloud platform.

The customer had an established in-house datacentre and no immediate plans to move other applications to a single IaaS provider, so a lot of the benefits of moving SAP to the cloud were lost.  This meant it was more appropriate for them to procure traditional hardware for their existing datacentre, which is partnered with Absoft’s NetWeaver Managed Service for their SAP technical support.

This customer had unique requirements that demonstrate that no single option works for everybody, and it’s important to review all options in detail and consider the wider implications, and how each fits with your wider strategy. 

written by Robert MacDonald, SAP Consultant