Despite growth, questions remain over whether SAP can get customers off-prem fast enough to appease investors SAP's operating profit has fallen 45 per cent year-on-year in the fourth calendar quarter of 2021 to €1.47bn as cloud investments drag on profitability. Despite boasting 17 per cent growth in cloud revenue to £9.4bn, the full-year results also show the pain involved as one of the world's largest software vendors attempts to …
"The plan is to increase revenue and benefit from the same customer base..."
This is the goal of the entire "cloud computing" fad including the hyperscalers themselves. Initial costs are lower than running on-prem hardware but long-term costs end up being much higher, but by that point it's way too expensive and difficult to simply get off "the cloud" or even change cloud providers so they're stuck.
It's no wonder it's the *investors* who want this model to be the future of computing...
Build it and they still won't be willing to pony up monthly service fees when they already have perfectly good on-premises hardware that has served them until now.
Add in the recent failures at big cloud and internet service providers, and I'd be awful leery of putting my eggs in their baskets instead of my own.
If the SAP cloud offering is on any US owned cloud then GDPR could make it very risky for any EU company to use the SAP cloud offering.
The US CLOUD act allows the US government to access data on any US owned cloud provider even if the servers are not in the US. As repeated court decisions in the EU have shown, contract clauses that state that the cloud provider will keep the data secure are not regarded as sufficient for GDPR purposes if the US has overriding access because of their CLOUD act.
Unless SAP builds its own cloud not using any of the existing US based cloud suppliers then using SAP's cloud offerings is likely to be held in violation of the GDPR.
Many SAP customers are refusing to "upgrade" to the cloud offerings for this exact reason. They simply do not trust the US hyperscalers with regards to privacy and security.
Amazingly, despite being a German company with many many big European customers, they don't offer a European alternative to the big three US hyperscalers. They offer Alibaba for Chinese customers but no European hosting for EU customers. This is just as confusing for many inside the company as it is for anyone else.
They do have their own cloud infrastructure but it's the butt of many jokes internally due to its... poor reliability record. But they are developing a UK data centre. Seems a bit of a strange mixed message when the rest of their efforts are all about getting into bed with the big US hyperscalers but perhaps this is what will be used for customers who don't trust their IT infrastructure to be hosted by Amazon, Google, or Microsoft. Not sure.
SAP have had a couple of attempts at building their own cloud using in-house and 3rd-party hosting suppliers, even they're using the major hyperscalers for their own-label offerings now.
European customers looking at cloud look at AWS, Azure and maybe Google. Who else is there with similar offerings, and deep enough pockets to get on SAPs certification lists?
It is certainly going to be very interesting over the next few years as to where this goes as an awful lot of money and ego has been bet.
So why would anyone ever put themselves through it unless and until they absolutely have to?
At which point the pain of moving to cloudy SAP (which is currently illegal for any EU or UK business) is likely the same as moving to another provider, so reevaluate the market and pick something less terrible.
Pretty much the best attitude, don't be first to upgrade, but make sure you leave plenty of time and go at a point of your own choosing. Which is something else they take off you with the RISE offering - you upgrade every 3 months, when they say, and you'd better make sure you've testing everything on time.
But moving from on-premise real tin or VM to a cloudy VM really isn't that huge an undertaking (to be honest it starts to get boring after you've done a few) when compared to redoing every interface and process from scratch and then migrating and testing every record, to some other product which has its own set of features, stupidities and bugs and where you also have to retrain everyone on the brave new world.
SAP actually have a pretty good process for upgrades. The biggest problem is when people think they know better and cut corners and don't test thoroughly before they do it for real. And then find their backup process has a few issues as well....
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