It is both a dilemma and a paradox: Cloud computing is being offered to SAP's existing customers as the ultimate freedom and flexibility. After years of agonizing in their own data center, the cloud is supposed to allow them to breathe freely. The lack of flexibility in the company's own infrastructure is supposed to be compensated for in the cloud by limitless resources - but hardly anyone offers a way out of the cloud. What happens when parts of a company are sold or shut down? How can data, processes and business objects be removed from the cloud and still be used?
A cloud exit strategy must be more than a download to a data lake, because this repository has no algorithms. The data without business processes is worthless. The licenses are in the cloud and there is no download function for them at SAP. An exit strategy must therefore be an export function for business objects, right?
The cloud truth therefore lies elsewhere, because all the technical and organizational arguments of the hyperscalers and SAP are correct. The cloud dilemma is the far too high business conditions and the inflexible and expensive license costs or subscription fees. It is paradoxical that all cloud providers, including SAP, speak of high savings values and justify these with the operational hardware operating costs, but hardly anyone speaks of the exorbitant subscription fees and the lack of exit options.
SAP is even trying to surpass the rigid and expensive on-prem licensing model in the cloud. At an SAP licensing presentation, the rhetorical question was asked: How does SAP CFO Luka Mucic plan to realize the revenue growth he predicts in the coming years? The promised growth will not be possible through new customers. SAP CEO Christian Klein and Luka Mucic ruled out major takeovers and acquisitions and the revenue increases that could be achieved with them. What remains are SAP's existing customers.
The on-prem license model with its annual maintenance fee is very profitable for SAP, but hardly expandable. A renewed increase in the percentage of the maintenance fee to be paid as a function of the license list price is hardly conceivable because SAP is continuously reducing the range of services in the on-prem ERP/ECC 6.0 area. For some time now, there have been protests regarding the poor price-performance ratio. For SAP, the on-prem scenario seems to be a discontinued model.
But more than half of the DSAG members surveyed want to remain on-prem. The reservations about the SAP cloud seem to be enormous. SAP operates its own cloud similar to the existing on-prem black boxes. The current scenario seems like R/3 in cloud cuckoo land. SAP buries the alleged cloud flexibility under its own license terms - at the end of the contract term, the SAP cloud customer only has the option to renew, at whatever price! There is no exit strategy and thus no option for price negotiations. So if the existing customer chooses a subscription model (Con-tract or Product Conversion), he seems to be at SAP's mercy forever.
After years of experimentation - Jugend forscht - there is sufficient usable cloud infrastructure for SAP operations at SAP itself and the hyperscalers. Thus, for the time being, there is nothing to be said against the move toward the cloud, were it not for the unacceptable licensing models without an exit strategy. Even with the on-prem models, SAP was not able to offer "breathing" systems. The most spectacular case was a possible SAP system for the German Armed Forces: In case of deployment, many licenses are needed, in case of peace, considerably fewer. Decommissioning licenses is always difficult with SAP because there is a risk of relicensing when they are activated again.
The all-in cloud contracts are thus a mathematical trapdoor function - a one-way function. There is only one direction: into the cloud. No existing customer can get out! The theoretical mathematician would hope for a prime number decomposition that works in cryptography, but certainly not in ERP. Who knows a cloud exit strategy and a suitable on-prem/cloud licensing model?
