On-Prem Versus Cloud

Customers might have envisioned cloud computing quite differently than SAP’s reality. Without an exit strategy, the SAP cloud becomes a lifelong commitment. Furthermore, SAP’s cloud only is no longer up to date, and neither is S/4 Hana.

The conversion to S/4 can take years to complete. Including staff training, changes to business processes, and testing, the impending conversion can take five years or more. 2030 is not only end of support for ERP/ECC 6.0, but also a realistic estimate of when most S/4 projects will be completed. In 2030, Hana will be 20 years old, and S/4 will celebrate its 15th birthday. Some Abap code in S/4 is older still. If there will be a Hana 3.0 or an S/4 predecessor has yet to be confirmed by SAP, but sooner rather than later, the company will have to answer those questions if it doesn’t want to risk losing even more customers to other cloud providers.

Cloud, the great mystery at SAP

Cloud Only originated under former SAP CEO Bill McDermott as he bought up one cloud company after another. There was a lack of both strategy and integration, but McDermott’s narrative was exemplary and thus satisfied at least financial analysts.

Farsightedly, SAP’s supervisory board member Hasso Plattner recognized the danger of uncoordinated cloud growth. He knew that many SAP customers need and want a continuation of successful SAP values, chief among them integration.

McDermott’s successor Christian Klein listened to SAP customers and began to clean up the construction sites of the past. More and more often, the SAP community heard Cloud First instead of Cloud Only. A small but decisive shift in strategy. Cloud remained the goal, but not at the expense of customers.

The first SAP press conference in 2022 brought disillusionment, however: Christian Klein and CFO Luka Mucic again spoke of Cloud Only. This shift in strategy is painful because on the one hand, SAP has no technological cloud computing expertise like AWS, Google, or Microsoft, and on the other hand, SAP’s customers hardly trust RISE with SAP and are not willing to bet their reliable systems on a Cloud-Only concept.

Only hybrid models will survive, because it is never as black and white as some people want to make it seem. The world is colorful!