The Allegory of the cave, or Plato’s Cave, describes a group of people who have lived chained to the wall of a cave all their lives, facing a blank wall. The people watch shadows projected on the wall from objects passing in front of a fire behind them and give names to these shadows. The shadows are the prisoners’ reality but are not accurate representations of the real world. The allegory explains how the philosopher is like a prisoner who is freed from the cave and comes to understand that the shadows on the wall are not reality at all. A philosopher aims to understand and perceive the higher levels of reality. However, the other inmates of the cave do not even desire to leave their prison, for they know no better life.
The freed philosopher would think that the world outside the cave was superior to the world they experienced in the cave and attempt to share this with the prisoners remaining in the cave attempting to bring them onto the journey they had just endured. The returning prisoner, whose eyes have become accustomed to the sunlight, would be blind when they re-enter the cave, just as they were when they were first exposed to the sun. The prisoners, according to Plato, would infer from the returning person’s blindness that the journey out of the cave had harmed them and that they should not undertake a similar journey.
For anyone wondering why I’m droning on about an Ancient Greek allegory, the dark cave can be substituted with one’s own on-prem datacenter, and the blinding light of the outside world, the enlightenment, with cloud computing. Plato surmised that there can only be one outcome, but when it comes to the SAP community, the results are not so clear. On-prem datacenters offer some advantages that cloud computing doesn’t, but cloud computing opens up new possibilities that on-prem customers could only dream of.
Cloud or on prem? It’s complicated
The benefits of cloud computing are heavily influenced by the global economic crisis, system failures, and the startup economy. No assets, no problem – just rent and lease the systems you need. There are many situations where cloud computing is the only reasonable answer. If you want to revolutionize the market tomorrow, you can’t be caught up in building your datacenter today.
If a long-term plan is possible and necessary assets and know-how are available, then on-premises models can actually be more beneficial. This is not only true for SAP systems, but also for the IT scene in general. However, SAP customers are having a hard time planning long term. For example, there is still no clear answer on what will happen to IBM DB2, Oracle, and MS SQL licenses after 2025. Employee know-how and infrastructure investments are rendered useless by the forced upgrade to Hana.
Even though SAP CEO Christian Klein said that S/4 Hana’s adoption curve is one of the fastest SAP has ever seen for any of its ERP systems, the number of live S/4 systems remains low. Even in the cloud, the full potential of S/4 cannot yet be unleashed, meaning that the solution doesn’t add as much value as it could.
Christian Klein has also said on several occasions that the trend towards cloud computing will accelerate. While that may be true, it doesn’t mean that customers will opt for SAP’s solutions. At the beginning of 2021, the German-speaking SAP user group DSAG published its annual Investment Report, which revealed that despite SAP’s ‘Cloud First’ strategy, investments in the relevant SAP solutions remain low. For example, only 2 percent of respondents are planning to invest in Qualtrics.
There’s pros and cons for both sides of this argument. While cloud computing has definitely played a huge part in keeping companies afloat during the COVID-19 pandemic, short-term benefits shouldn’t outweigh long-term advantages. If one combines datacenter know-how, a capable team, and a CFO who knows their stuff, trading on-prem licenses for cloud solutions from SAP, Microsoft, and others might not be the best way forward.