SAP’s program Embrace is supposed to show customers an easier way into the cloud. The ERP company swears that Microsoft, Amazon, Google and Alibaba play equally important roles in this collaboration. However, behind the scenes, SAP is cozying up to Microsoft.
Why Microsoft and SAP?
The two companies can look back on a long-standing, successful partnership. Microsoft has been by SAP’s side since the success of R/3 with Windows and SQL.
There are several joint partners, consultancies and other connections between SAP and Microsoft, making customers feel like they have an extensive safety net at their beck and call. Building on the successful R/3 past, the two companies are collaborating on much more than just Hana and Azure.
For example, Microsoft, SAP and Adobe announced the Open Data Initiative over a year ago. The goal is to synchronize CRM data models. Former CEO Bill McDermott himself initiated this partnership as a way to better position his C/4 Hana vision against Salesforce.
Additionally, Microsoft’s newfound openness and transparency makes it easier for SAP customers to trust cloud platform Azure. Even though AWS will probably remain the most cost-efficient and Google the most innovative cloud platform, Azure will remain the preferred platform in the SAP community.
SAP can only remain the number one back-office system if the release change from ERP/ECC 6.0 to S/4 and Hana is successful. Its self-imposed deadline is 2025, but by now even SAP has realized that this will not be manageable: With user groups DSAG and ASUG, the ERP company is currently talking about extended maintenance for SoH (Suite on Hana).
SAP needs to take care of a lot of things right now. Making Hana stable, preparing for Hana 3, and somehow, against all odds, trying to make the deadline 2025 mean that it doesn’t have the resources to invest in areas like AI or CRM.
Enter Microsoft. The company welcomes SAP on its Azure platform, investing 70 million euros into their new partnership. While SAP is struggling with its operative solutions, Microsoft can swoop in and take over the market shares of solutions like Leonardo and C/4 Hana.
Every AI and IoT extension of SAP’s core system is better off on Azure, anyway. Not only are Microsoft’s offers more cost-efficient, but also more extensive. Furthermore, Microsoft’s solutions are either developed in-house or with open source communities while SAP still largely relies on other companies like Nvidia.
Microsoft’s CRM portfolio is far superior than SAP’s C/4. Dynamics CRM might even replace C/4, based on the aforementioned Open Data Initiative between Microsoft, SAP and Adobe.
SAP in the back, Microsoft in the front: Based on cloud platform Azure, this could become the ultimate enterprise software alliance. This will likely be a win-win-win situation. Not only will SAP customers benefit, but also the two companies themselves: Microsoft will successfully position itself in the enterprise software market and SAP will finally be able to focus on its core competence ERP again.