SAP: Head In The Cloud(s)

However painful its consequences may have been, COVID-19 has been a gamechanger for many companies. Working from home, online meetings, data out of the cloud – all of a sudden, these things that seemed impossible a year ago have been made possible within a few weeks. Even after COVID-19 will (hopefully) have become only a distant memory, compliance and data protection concerns will not exert the same pressure on the cloud decision-making process that they once used to.

Cloud computing can only reach its full potential if it is aligned with a company’s digital transformation strategy. And that’s where the rub is: For many organizations, digitalization doesn’t necessarily mean Cloud Only or Cloud First.

Integration problems hinder migration

What do I mean by that? Let’s take trade, for example. Many trading companies have devised thorough, actionable strategies to become agile, customer-oriented, intelligent enterprises operating modern IT infrastructures. However, execution and implementation of most of these strategies is delayed or halted completely because many interfaces and functionalities that are available in traditional ERP systems are not available in S/4 Hana anymore. For example, the module International Trade in S/4 Hana usually requires add-ons and custom code to work as well as its predecessor in ERP/ECC. And this custom code is exactly the reason many companies are hesitating to migrate to the cloud: The fear of even more integration problems is holding them back.

This is a strategy as much as a communication issue. How are IT decision makers supposed to make a convincing case for a comprehensive cloud strategy to management if they need to concede that complex custom code extensions will still need to be operated on premises?

SAP should stay out of the cloud for now

It’s only reasonable for SAP to consider a ‘Cloud First’ strategy in the long term. It needs the cloud’s flexibility and agility to develop and implement innovations and to differentiate itself from competitors. However, CEO Christian Klein should also consider the business reality of his customers.

It sounds like a paradox: SAP’s key to cloud computing success isn’t in the cloud for now. Customers do not only expect improvements concerning the integration of SAP cloud applications with S/4 Hana but also regarding S/4 functionalities. Only if seemingly small problems have been dealt with can companies concentrate on their digitalization strategies. IT decision makers will also have an easier time communicating their ideas to management.

Christian Klein and his management team have to reconcile two worlds: Head in the cloud(s), feet grounded in on-premises reality. Only if customers know that functional updates as well as their individual solutions and custom code will continue to stay available to them in the cloud will they feel good about getting rid of on-premises systems for good.