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SAP on Public Cloud - hold your horses

"Last year, I was able to list around 50 unique benefits for utilizing Public Cloud as SAP platform", says Pete Nieminen and reveals a few of them in this blog post.

Pete Nieminen / November 23, 2020

It was more than three years ago when I started to look public cloud as a viable option as a SAP platform and ecosystem. Already at that time, there were large implementations and some proprietary automation on most of the hyperscalers (Microsoft, AWS, Google Cloud, IBM and AlibabaCloud) and even some public references available.

At the Nordic level, we were standing behind. Maybe the reason was our very early adaptations of the Public Cloud, which were mostly lift and shift-projects to the early, very different from now cloud services. Back then, most benefits were left unclaimed and unreachable, decision makes were disappointed. Lack of knowledge or unwillingness to listen to the experts was the most common reason for failure.

Even Gartner found out, re-visiting their research for Public Cloud infrastructure, that cost-efficiency if achievable usually in two years, but even in properly made transformation can still come up as negative ROI.

For me, this just emphasizes that cost savings cannot be the only or even the primary reason for entirely new infrastructure.

During the past ten years, Public Cloud has evolved exponentially. Terms like infinite scale, could native, always-up-to-date, Cloud DevOps and Cloud FinOps and many more hypes raised, but the actual business benefits were also within reach. I call this as the second coming of the Public Cloud. This time, supporting the business is the key.

Last year, I was able to list around 50 unique benefits for utilizing Public Cloud as SAP platform. To mention a few:

  • Extremely reliable, certified infrastructure with global reach
  • High-fidelity, on-demand platforms and services with automation
  • Infrastructure as a code enabling fast deployment and support operations with minimum or no downtime
  • Cost efficiencies due on-demand infrastructure, multiple licensing possibilities and implementation and optimisation models
  • Last but not least, scalability, including for business.

There are many more and I will discuss them more closely at upcoming postings of this blog.

Scalable IT-infrastructure is nice, but achieving a truly scalable business is excellence.

Advantages of utilizing the Public Cloud as SAP platform are indisputable

The technical, financial and business advantages are substantial. Unpredictable costs and huge capital expenses can now be transformed into operating expenses. First time ever, you can actually downscale and not only upscale your ERP-costs during the long contract period. Even SAP itself predicts that more than 3/4 of its customers will choose Public Cloud as the next platform.

So why the headline says: "hold your horses"? Is there something wrong with the concept? No, and not because this is a big decision. There are over 5.000 organizations that have already made it. Most of them fully successful and getting full benefits. I am worried about them who are NOT getting the full benefits.

Now when most of the enterprises have realized, that utilizing the Public Cloud as a SAP platform is an excellent idea for both business and IT, the organizations started rushing in. The future or present requirement for S/4 HANA is also accelerating the need for platform change. It is true that so many have done the migration to Public Cloud already, that probably no deep discovery and project planning phase is needed (note that I am talking about the BASIS migration now, not SAP applications) since the migration process is quite straightforward for those with enough experience on it.

There are many things that affect the success of the migration and the final business transformation.

First of all, this is a business project and not IT-project. Why? Because of the old principles of governance (including sourcing), architectures and best practices do not apply anymore. Secondly, the direct cost savings is only a fracture of the full business benefits available.

Thirdly, Public Cloud, SAP and Cybersecurity is a combination where all parts require a new kind of understanding of the new ecosystem. There is also a great variety of Public Clouds and SAP cloud-based applications which need to be evaluated.

There are the skills, tools and experience, so what am I worrying? The rush. Previously I mentioned that the old "ways" do not apply anymore. Many of the organizations planning for the migration do not realize that they want the RFI's, RFP's and whatever answered in a week or two. Why? Because that's the way it has always been done.

If you want everything to be done 1:1 it still does not work that way. Even with experience, automation and straightforward processes, you cannot do SAP on Public Cloud as 1:1 migration. If you could, you would lose all possible benefits and pay too much from the beginning with never getting to any kind of break-even in costs - and you can't do even that, since most of the principles are not the same. You need to plan the strategy, start the journey with migration and establish a roadmap for controlled and measured business transformation.

In my following blogs, I will tell opinions and suggestions on how to manage the journey properly. While waiting for the next posting, please give the experts a reasonable amount of time to suggest the best possible way of keeping your most valuable and business supporting part of IT in the best possible condition - present and in the future.

 

Pete Nieminen
Head of SAP on Public Cloud

My role is to work as a trusted advisor to organizations on their journey, governance and achieving true business value from the public cloud. I operate both on customer projects and supporting internal development of business and services on the Nordic level. Currently, most of my time goes for the business and service development for SAP on Public Cloud together with our Public Cloud and BASIS organisations - inshore, nearshore and offshore.

Author

Pete Nieminen

Head of SAP on Public Cloud

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