SAP and Azure

Cloud computing is simple and complex at the same time. The cloud initiatives of Microsoft, SAP and the partners show a trend and also solutions, but do not always provide the right answers.

The challenge with cloud computing: The entire operating model changes! Whether private, public or hybrid cloud - the user in the high-bay warehouse, the CFO and the entire IT team are affected. Cloud computing questions everything and at the same time opens up fantastic answers.

How does Sabine Bendiek explain the phenomenon of cloud computing in a private setting at the cab stand?

"If you turn on your phone or tablet while waiting in line at the cab stand to watch a movie via Netflix, Sky and Co. or get the info from home via WhatsApp 'Dinner will be ready at 8', then you are using the cloud"

is how the Microsoft boss describes her daily dealings with the cloud.

And so documents, photos, computing power or even an entire software can be accessed "from the cloud". And we need another cab, Ms. Bendiek, don't we?

"Anyone who orders a cab via app is already using cloud services and no longer has to get local phone numbers from the phone book, call the cab driver to ask how long he'll be, and have change ready for payment. Others take care of that for him. That's how cloud works in cabs!"

Even classic SAP on-premises customers are having to deal more and more with cloud issues. More and more applications are being offered by SAP only as cloud solutions.

SAP supports existing customers with many hybrid scenarios. For example, customers can leave their systems on-premises and connect them to the PaaS solution SAP Cloud Platform or the SaaS solution SuccessFactors via the SAP Cloud Connector.

"It's not just a question of technology, it's just a cultural change"

SAP co-CEO Christian Klein told E-3's Editor-in-Chief in the summer interview (see E-3 Magazine September 2019, page 24).

"Openness to new things, the will to map new business processes, is becoming increasingly important. We have to bring people along with us. My job is to communicate and explain the change.

Why do we have to change certain processes, certain workflows, in order to still be successful in the future? I think that also moves many customers when implementing SAP S/4 Hana."

Microsoft positioned itself very successfully with cloud computing a few years ago - when some experts already believed that it had lost touch with AWS and Google.

"The success certainly has a lot to do with Satya Nadella as a person, but also fundamentally with a new openness at Microsoft and a willingness to change and permanently learn new things"

Sabine Bendiek describes the change, as Christian Klein sees it similarly for SAP.

"When Satya took on his new role as CEO a little over five years ago, he put it in all of our heads: Our industry doesn't respect tradition, only innovation!"

And that was no empty phrase. Against the backdrop of digital transformation, it meant that old recipes for success have an expiration date - even if they are currently still profitable.

"We recognized in good time that the future lies in intelligent and technologically open cloud platforms. All with a clear goal: to give customers, partners and developers the greatest possible variety of services with simultaneous integration capability.

Incidentally, this includes a hybrid choice, where on-prem, private and public cloud scenarios can be combined"

adds the Microsoft Germany boss.

The digital transformation is complex because it affects the organizational structure and processes at SAP's existing customers.

"There is a tension between process optimization and resource optimization"

defines Professor August-Wilhelm Scheer in an E-3 interview.

"If you want to speed up processes, you have to use more resources, and if you want to reduce resource use, you create more queues and processes slow down."

From his many years of very successful research and professional experience, Professor Scheer knows that in the IBM mainframe era with time-sharing operating systems, maximizing utilization at the expense of application throughput times dominated because of the very expensive hardware.

In the case of the cheaper client-server systems, the focus was then on optimizing business processes and the hardware, on the other hand, was only utilized to a limited extent.

"This optimization potential leverages cloud computing and virtually brings back the 'mainframe' for better resource utilization and server parks can be globally utilized 24/7/365"

Scheer explains.

"This makes it all the more important to ensure that this does not happen at the expense of process efficiency. In addition, with cloud computing there is greater pressure to standardize processes, and capacity expansions are not reflected as investments in the balance sheet, but as rental expenses in the G & V with corresponding relief for liquidity.

It also eliminates maintenance and operating costs for the user, and organizationally, the ease of scalability of resources is also important for a dynamically evolving business."

Sabine Bendiek adds analogously:

"Cloud computing offers access to powerful, state-of-the-art IT capacity or applications at any time and without upfront costs, billed only according to actual consumption.

Instead of rigid capital commitment and depreciation, costs are allocated to the operating budget, reducing financial risks. We are just witnessing the beginning of a gigantic wave."

Microsoft Azure is the environment that consistently supports the increasingly demanded hybrid scenarios, integrates existing investments and can be seamlessly integrated with other systems such as Office 365.

In addition, Microsoft and SAP have a very close partnership, run their SAP systems on Azure and therefore know exactly what challenges, but also advantages, this brings. In the future, customers will also benefit from the S/4 cloud solution.

SAP Cloud Platform, SuccessFactors and numerous other "as a service" solutions are already operated by SAP in the Microsoft Azure Cloud.

This motivates customers to also run their classic on-premises solutions in Azure. SAP makes this possible with a multi-cloud strategy. Customers can run their SAP solutions on AWS, Google and, of course, Microsoft Azure.

Interestingly, despite its multi-cloud strategy, SAP IT has a very clear, exclusive Azure strategy and is currently migrating more SAP systems to Azure. Many customers are following this example.

More innovation through cloud

"Cloud platforms offer users an enormous wealth of innovation opportunities in one marketplace through new services for digitization that they can simply use with their credit card"

Professor Scheer knows because of his successful entrepreneurship.

"However, the user must be organizationally and technically open-minded and develop his new automation concepts in terms of content. Then the automation of business processes through technological innovation in the cloud will succeed more easily and better."

According to Scheer, it is important to use cloud services that offer open standards in order to connect them with other standard services or services developed in-house.

"This is where, for example, the Microsoft Azure Cloud with its many open interfaces such as OpenAPI or OData and open source services can help"

he explains and adds:

"Standardized processes are effective, but do not always support a differentiated business model. Standardization in the areas that do not directly add value makes sense in this context and does not stand in the way of differentiation in the core business."

It appears that the existing SAP customer does not have to worry about anything. In many cases, this is the ideal solution. But it also has to fit, because SaaS also comes with the least flexibility and customizability.

Here, the middle way via a private or public cloud is often a better solution. In Microsoft Azure, the customer gets his own environment, his own virtual network, in which he can install his SAP system.

He doesn't have to worry about the data centers or servers, but he can also access networks and compute resources almost at will.

"Classic on-premises or hybrid operation offers customers the highest degree of control"

Sabine Bendiek knows from many discussions with customers.

Hardware, network, storage and servers remain in the company's own hands and can be offered as a service - in the form of a private cloud.

"Of course, this also makes you responsible for everything and you have to manage and operate the entire infrastructure"

she warns against going it alone. And she poses the question: But is that really necessary to successfully support one's business?

However, many services can also be obtained from a public cloud for cost reasons, since high upfront investments in specialized hardware are unnecessary and can be adapted to current needs.

"We believe there are good reasons and advantages for both models. That's why our recommendation is a hybrid model. This allows software-as-a-service solutions such as SuccessFactors and Concur to be used.

At the same time, costs are optimized, innovations can be used and requirements flexibly adapted. Existing systems can also be integrated".

explains the head of Microsoft Germany.

"But the fact is: we currently see a clear trend towards hybrid environments and support this with our portfolio!"

Cloud: More than infrastructure

Customers have historically perceived cloud as an infrastructure issue for "lift and shift" or "lift and migrate" SAP applications.

"But Azure is more than just an infrastructure platform for SAP applications"

Bendiek emphasizes.

"Azure is a platform for innovation. With the services available, customers can run, develop and extend both their technical and business applications with AI and IoT services, for example."

With Office 365, Teams and the connectors to Dynamics 365, Microsoft, together with SAP, offers the innovation platform that is intended to enable customers to complete the journey into digital transformation with a secure future and investment.

"This is also at the core of the guiding principle of our SAP and Microsoft partnership: Driving Innovation together. The 'together' then also includes our partners and customers."

Sabine Bendiek explains in an E-3 interview.

SAP is not complicated, but it is complex: What are the most important cloud arguments for an existing SAP customer? From the business, organizational, technical or licensing area?

Microsoft CEO Bendiek:

"Especially from the first three areas: From a business perspective, of course, the change from CAPEX to OPEX is interesting. But more interesting is also the possibility of flexibly provisioning and adjusting one's systems, or even switching them on and off as needed."

Experience in the SAP community shows that costs can be saved here immediately. From an organizational perspective, it is important that the existing SAP customer can add, resize, or remove systems in the event of organizational changes, such as the acquisition or sale of parts of a company.

The technical view is extremely interesting due to the available integration and automation options as well as the standardization. As a rule, nothing changes in terms of licensing law, Sabine Bendiek hopes.

"If cloud infrastructure is worth it for the customer from a compliance and cost perspective, they should transfer and dedicate freed-up resources to new or higher value tasks"

says Professor August-Wilhelm Scheer, and he differentiates:

"Processes and machine controls that require near real-time interactions with high volumes of data should be handled more locally."

Then process efficiency once again takes priority over resource efficiency, see above. The reservations about data protection and data security often expressed by SMEs in the SAP community are sometimes exaggerated.

"Hyperscalers in particular offer many provisions that a medium-sized company can hardly implement in its own data center"

Professor Scheer knows from his company's collaboration with Microsoft.

Now the question arises: With regard to the transformation to the cloud, does the existing SAP customer "only" have to optimize his business processes or redesign and plan them?

Professor Scheer:

"Fundamentally, transformation is a good time to rethink one's business processes. Changing the infrastructure already achieves benefits on its own, but the greatest benefits come from simultaneous disruptive innovations."

During the transformation, a distinction must be made between which applications are moved to the cloud. In the case of support processes that do not differentiate in the competition, Professor Scheer believes that standard solutions, without modifications based on best practices, should be mapped in the cloud or in cloud applications as far as possible.

"For core processes, on the other hand, more careful consideration needs to be given to which specifics should be retained and which new functionalities can be added by using cloud services"

warns Scheer. In general, however, the same principles apply to cloud as to an on-premises installation:

"The customer should constantly optimize its core processes and then disruptively change them if new business opportunities are to be quickly implemented"

emphasizes Professor August-Wilhelm Scheer.

Hybrid: Organization and technology

A plant manufacturer that significantly strengthens its sales and service orientation and also supplies the software for production data analysis as an extension of its business model can, as an example, combine on-premises production planning and control with cloud applications in customer management and service as well as with machine data analysis in a hybrid constellation.

"If the existing processes are already organizationally optimal, then it's just a matter of technical transformation and exploiting the business benefits of the cloud"

explains August-Wilhelm Scheer.

The capacities of employees freed up in the process can then be used for new applications within the processes.

For example, decisions can be more supported through the use of AI, and the detailed operations of workstation processes can be improved through RPA.

RPA makes an important contribution to relieving routine tasks such as manual booking processes or reading information from e-mails and thus forces the more targeted use of employees for higher-value activities.

Is there a difference between on-premises and cloud with regard to the use of tools such as RPA, neural networks, etc.? Whether a tool runs on-premises (installed in the company's own data center) or is used in the cloud is no longer a differentiating factor, says Professor Scheer and explains:

"Since open-source AI platforms like TensorFlow have been around, the differentiators have been the user's knowledge and ability to properly use these technologies, methods, and models.

This includes knowledge of innovative business processes and at which point one can achieve meaningful results with tools such as RPA or AI. In the case of AI, proximity to the required data plays a special role in whether it is better used locally or in the cloud.

Cloud AI is much faster to build and offers functionality and scalability that you don't find on-premises. If the data volume explodes exponentially, with on-premises you might have to wait one to two years until a new computer room is built.

With the cloud, you can flexibly switch the resources you need off or on. So there are several arguments that need to be carefully weighed against each other."

One trend that can be observed in the SAP community is that the business departments themselves control their requirements, receive immediate feedback on the result, and see direct added value. One example is the reporting of SAP key figures using Microsoft PowerBI, a no-code reporting solution for business users.

These services are always accessible and highly up-to-date, no matter from which location. And with Azure in particular, Microsoft offers the possibility of implementing hybrid solutions. The decisive factor here is often investment and inventory protection with simultaneous access to innovation.

"In fact, the cloud offers the opportunity to involve the business more deeply in decision-making and also to assign more responsibility. IT and business departments are moving closer together"

Sabine Bendiek knows from many conversations with customers.

Partnerships

How important are partnerships with SAP service partners such as Scheer for Microsoft, especially in SAP business? And with other IT providers and also SAP partners such as NetApp and Suse? Microsoft Germany CEO Bendiek:

"Partnerships with the companies mentioned and all our many other partners are essential for Microsoft. Especially in the SAP and Azure context, almost all implementations are realized via partners.

Microsoft has built a dedicated team in the partner organization to do this, to support partners and provide them with necessary training."

Partnerships with global consulting firms such as Accenture, KPMG, Ernst & Young, Capgemini, PwC, Deloitte, etc. are also very important from a Microsoft and SAP perspective.

"This is where customers benefit from the fact that almost all major systems integrators are both SAP and Microsoft partners, even if the respective teams have not always been optimally connected in the past"

Bendiek describes the market situation. But that has changed.

"The representatives of these consulting firms are consulted by their customers on cloud strategies. In order to be able to provide very sound advice here, an intensive technological and strategic exchange is necessary.

For this reason, together with SAP, we support our partners in acquiring the special SAP and Azure competence. And that applies equally to regional service providers."

Hyperscaler and SAP

The Scheer company works with Microsoft, among others, on cloud computing: Are there fundamental differences between the hyperscalers for SAP's existing customers? And how popular is the SAP Cloud Platform itself? Professor August-Wilhelm Scheer:

"The product portfolios of the major hyperscalers Microsoft with Azure, Amazon with AWS, and the Google cloud platform, GCP, differ primarily in their software services offerings.

Microsoft has extensive experience and distribution in the Office products as well as in the IT infrastructure with Exchange and the Active Directory Services.

With PowerBI, the user gets a simple and powerful BI solution that is open and can be connected to SAP, and the new Microsoft Teams combines a collaboration solution in one product.

AWS has its roots in the web services and e-commerce business. Here there are concepts and offers around this topic and especially for software developers.

GCP is in between and has a web-based office solution and innovative AI solutions. In IT infrastructure, all vendors have very good solutions and few differentiators."

In addition to product specifics, however, it is also important for the SAP community to take a look at the compliance and industry focus mentioned above. In Professor Scheer's opinion, Microsoft is ahead of the game here and has the most extensive range of certifications and audits.

"We see this in the acceptance in the SAP community and this is also confirmed by DSAG's investment surveys from this year"

Scheer explains.

With the introduction of Office 365, the Microsoft Azure Cloud has already been tested by management, the specialist department, IT, the works council and, in particular, data protection and IT security. The path to further cloud services thus appears to be paved and open.

"How in demand SAP Cloud Platform, SCP, is, you can't say for sure today"

says Professor Scheer.

"SAP is doing a lot of work to raise awareness of the platform and is loading it up with a lot of innovation and products. Our customers are taking their first steps, and some have built entire microservice architectures. The SAP cloud platform is on the strategic agenda for most customers."

"At this year's DSAG Annual Congress, 56 percent of SAP customers voted for Azure as their preferred cloud platform"

Sabine Bendiek reports, not without pride.

"This drives us to provide our customers with the best cloud platform for their SAP workloads and help them with their digital transformation."

The following applies: For users, there are two accompanying focal points for an SAP migration to the cloud. Hybrid solutions and the integration of data, services and products such as Office 365 or data analysis tools.

"To name just two topics that are also found in our own DSAG working groups and can be ideally realized with Azure.

In addition, Microsoft has always had a very competent partner ecosystem that is not only familiar with our platform, but also knows the requirements of the customers.

Last but not least, it is certainly the unique partnership with SAP: both companies have their SAP systems on Azure and learn from each other"

stresses the Microsoft Germany boss in the E-3 discussion (see also double interview in E-3 September, page 18, with Hinrich Mielke, SAP Director at Devoteam-Alegri and Deputy DSAG Working Group Spokesperson, and Marcus Sommer, Business Lead Microsoft Cloud Infrastructure).

Partnerships between IT providers, DSAG and SAP partners have a very good tradition in the community: Can "SAP and Azure" be implemented without Microsoft and SAP partners?

"Even if implementation is possible on your own, we recommend implementation by partners"

says Sabine Bendiek. Microsoft attaches great importance to partner competence here.

"In addition, we provide resources and technical support on projects and customer activities from within the Microsoft partner organization.

Together with SAP and our partners, we support SAP customers, for example, through the Move-S/4-Hana-on-Azure program. Through proven process models and SAP-and-Azure-certified experts, we offer the best possible support."

Bendiek describes the situation.

A special connection in the SAP-and-Azure context:

"Suse and Microsoft have shared a partnership in sales and technology for more than a decade"

Sabine Bendiek explains.

"Suse solutions for Microsoft Azure provide a proven, reliable and secure platform for cloud computing. Customers know they can rely on the seamless integration of Suse solutions on Azure."

This close cooperation in sales is demonstrated by Suse and Microsoft in joint workshops with Suse, Microsoft and SAP, among others.

"Where we show how existing SAP customers can work with Suse solutions on Azure"

Bendiek describes the status.

In addition to the sales cooperation, Suse and Microsoft are permanently working on the provision of optimized solutions on Azure for a joint market approach.

In addition to the cooperation in research and development, Suse and Microsoft are also linked here by the many years of good cooperation in the SAP Linux Lab.

Another asset in the SAP-and-Azure scenario is the aforementioned Office 365.

"In addition to technical points - for example, single sign-on or the long-supported integration of SAP data into existing Office products - there are also many non-technical advantages"

says Sabine Bendiek.

For example, Microsoft has held intensive discussions with Office 365 customers with a view to data protection and security. This usually includes extensive discussions with works councils.

"This is another starting advantage for a migration from SAP to Microsoft Azure"

Sabine Bendiek is pleased.

Holistic action

The status of connecting Office 365 to S/4 is sufficient:

"We are satisfied, but we are also still at the beginning".

knows the Microsoft Germany boss.

The Embrace program launched by SAP at the Fkom 2019 event in Barcelona (field kick-off meeting earlier this year) will reveal some very interesting additional integration scenarios.

"But the important thing is that the foundation for this integration is already in place today: all customers expect a single sign-on between Office 365 and S/4 when they integrate, and that's assured."

Bendiek emphasizes.

Due to open standards, further integration is relatively easy. Numerous partners are already active in this area and offer successful integrations in Excel, Outlook, PowerPoint or even Microsoft Teams.

And not just in one direction. The SAP Fiori user interface used in S/4 also allows easy integration of Office data. For example, you can easily integrate documents from OneNote into an SAP Fiori application, access e-mails, or even integrate chats from Microsoft Teams.

"There are no limits to the ideas here"

Sabine Bendiek knows.

On the future of cloud computing and in conclusion:

"In our experience, the hybrid cloud is currently still often the standard. With SAP systems, we observe that customers first migrate the non-production systems to Azure and then migrate the production systems."

explains Sabine Bendiek, head of Microsoft Germany.

"Hybrid scenarios are not trivial and require more effort, but they can be useful and also necessary. Microsoft and its partners have many years of experience in both worlds and can therefore provide the best support."

In the E-3 Summer Talk, current SAP co-CEO Christian Klein opined:

"Both and. For many of our existing customers, we continue to see a very high demand for S/4 Hana on-premises.

That is why we will continue to invest here. In addition, we are well advised to provide customers with hybrid support. In the future, too, there will be customers who want to run their applications in their own data center."

And elsewhere, Christian Klein specified:

"The change was important for us in two ways: on the one hand, we are bringing products to the cloud; on the other hand, we are driving operational change.

After all, what does it mean for internal processes when the service no longer takes place on-premises at the customer's premises, but in the cloud? New processes had to be set up here, which was also an expression of the digital transformation at SAP itself."

In conclusion, Professor Scheer says about the future of cloud computing in the E-3 interview:

"What is important is not a formal cloud architecture, i.e. where the workload resides, but how the user meets the challenges of speed, agility and differentiation in their processes.

A cloud architecture is helpful here, but not the primary driver. Platforms that enable low code and thus citizen development, i.e., support application development by the business department, are more likely to provide the decisive impetus. The cloud is the vehicle for this and accelerates innovation and adoption."