Over the last few months we have seen SAP expand their portfolio of software solutions through a series of strategic alliances with partners who may otherwise have developed into competitors due to an overlap in services offered. The alliance with Hewlett Packard Enterprise is more obviously complimentary in that HPE offers hardware servers and networking equipment services while SAP is a software centred company. Greenlake is HPE’s cloud software “as-a-service” offering and as such was the focus of the newest development of the alliance with SAP.
The relationship has been established for decades now but has just received a boost with a simultaneous press release announcing that new version of SAP HANA Enterprise Cloud will be released as a “customer edition” which can be run at customers’ own data centres, using HPE Greenlake cloud services exclusively to “install and manage the required infrastructure”.
SAP revealed its reasons for the alliance in the press release: that customers running HANA Enterprise Cloud in SAP data centres and hyperscalers had made clear that they required the option to use their own data centres. This may be in part due to an urge to physically oversee operations from day to day but when questioned IT businesses have very important and specific reasons for preferring localised data storage and processing.
For all businesses maintaining the integrity of data is not only critical to their business model, they also have a legal responsibility to protect data relating to their customers.
In May 2020 the International Data Corporation published research into cloud adoption which demonstrated that 70% of applications used by large organisations remain outside of the public cloud.“The reasons included the need for data sovereignty, specific industry compliance, a low risk tolerance, specific company policies, and limited or no access to SAP data centers or hyperscaler infrastructure options.”
To satisfy the section of the market that requires physical control of data assets SAP introduced this new version of HANA Enterprise Cloud as a non-disruptive and easily implemented way for customers to maintain their pre-existing system while also side-stepping perceived disadvantages of Cloud systems. The development of the Customer Edition seeks to provide the best of both worlds and has the added incentive of an operation expense business model: meaning that they only pay for the services to the extent that they use them, thereby allowing for easy and dynamic scalability.
Together the alliance intends to provide an adaptable and comprehensive answer to the daily challenge of data security and industry compliance. The combined expertise to address both sides of the coin should ensure the smooth running of a cloud service. While HPE Greenlake integrate the physical assets, “SAP Cloud Application Services will support the day-to-day running of the applications and help customers with adoption of SAP S/4 HANA…”
The integration of services also benefits from pre-existing testing and optimisation.
“HPE’s infrastructure technology, which underpins HPE GreenLake cloud services, has been proven in verifiable SAP benchmarks to scale to substantial demands from SAP customers.”
HPE reinforced SAP’s statements in their own press release.
“With HPE GreenLake, SAP will be enabled to offer the customer edition of SAP HANA Enterprise Cloud with a consistent, automated cloud experience and their flexible subscription-based as-a-service model.”
It should be emphasised that access to the SAP Enterprise Cloud Customer Edition is exclusively through the use of HPE Greenlake. This ensures that SAP and HPE hold on to their existing customers and through this reciprocal arrangement achieve a degree of cross-fertilisation of their customer bases. It also contributes to the benefits that each party has to offer to potential future customers. The extent of integration of their services is no doubt intended to reassure their customers there will be no friction between different aspects of the business IT landscape and no weak links in the IT chain from end to end.
As with the recent alliance between Siemens and SAP the combined offering of two trusted brands is expected to set the pair above their competitors in the market. As a long-term business strategy SAP are currently favouring business diplomacy over any aggressive acquisitions.
Whether the decision by SAP to offer SAP Enterprise Cloud for use in private data centres through the use of Greenlake is due directly to customer demands, or more general market pressure is not clear. The compromise they have achieved allows them to appear amenable to demands on the part of their customers for more control over data while still holding the reins to some extent through the exclusivity of the deal with Greenlake. The apparent result is a demonstration that SAP is listening to the needs of its customers but also surveying the field in order to play the long game.