SAP took a shot at cloud computing. And missed. Repeatedly. [shutterstock: 1044023293, STUDIO DREAM]
[shutterstock: 1044023293, STUDIO DREAM]
Blog Last and Least

Why SAP’s Cloud Business Will Fail

SAP has been busy trying to position itself as a successful cloud provider. Here’s why it will fail.

2004 has not been a good year for SAP. It was then that it acquired all shares of its consultancy subsidiary SAP Systems Integration. Seems harmless enough, right? However, this acquisition led to a significant loss of know-how in outsourcing, hosting, SaaS, and cloud computing. But why? Well, SAP may have integrated SAP SI, but T-Systems got its know-how.

To this day, SAP has not been able to recover from this loss of know-how – and it shows. Customers who opt for HEC, the Hana hosting of SAP, have to cancel their projects because – you guessed it – the cloud business know-how is just not there.

Lapse in judgement

SAP made a mistake when it acquired SAP SI but gave up its know-how, yes. But customers who gave up their IT know-how in favor of cloud computing also made a severe mistake. And not only that, they doubled down on it, turning down cheaper offers from AWS, MS Azure, and Google, and deciding on the pricier HEC (Hana Enterprise Cloud) instead.

Granted, when they opted for SAP’s HEC, they hoped that higher prices also meant higher level of know-how and experience. What a lapse in judgement!

Now, both sides are missing IT know-how. Users don’t have it anymore because they planned on cloud computing, and SAP doesn’t have it because they began building it up too late. HEC projects had to be stopped and canceled.

A growing trend in the SAP community right now is that SAP customers turn to niche cloud providers who still have SAP know-how. Some customers also opt for Azure, because Microsoft has been involved with SAP systems for many years now. Furthermore, it also knows about ERP’s complexity first-hand – resulting in know-how and experience.

As the situation of SAP customers seems to get (slightly) better, one question remains: what can SAP do to save its cloud business? It can either reduce its cloud prices significantly or invest massively in consultancy services. All in all disastrous conditions for a satisfying cloud return.

E-3 Magazine February 2019 (German)

About the author

Peter M. Färbinger, Editor-in-Chief

Peter M. Färbinger is Editor-in-Chief and Publisher at E-3 Magazine, AG, Munich, Germany. He can be reached at [email protected]


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    • Hi Ahmed,

      thank you so much for your question! As is often the case with the Editor-in-Chief blog, this article is mostly based on discussions and private talks with customers themselves. At least in the German SAP community, customers are cancelling their HEC projects ever more frequently. I hope this answers your question!


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