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Going into the new decade, the battle for SAP cloud ERP workloads among hyperscalers like AWS, Microsoft and Google continues to mount.
AWS this week fired the latest salvo, with the introduction of new EC2 instances packed with large amounts of RAM, which is critical for SAP's S/4HANA ERP software.
Last year, AWS EC2 instances with 6, 9 and 12 TiB of memory became available. The new ones go much further, with 18 TiB and 24 TiB options. The 8-socket instances with 2.7 Ghz Intel Xeon chips run on bare metal and are optimized for AWS's Elastic Block Store service, AWS said in a blog post. They are available in Dedicated Host form and carry a three-year contract term.
S/4HANA, like other SAP applications, runs on top of the HANA in-memory database and was rolled out in 2015. The vast majority of SAP customers remain on earlier versions, such as Business Suite 7, but if SAP maintains its position that eventually only HANA will be a supported database for its apps, all users will have to upgrade or switch ERP platforms.
Moving ERP systems to the cloud in general presents a challenge, as the applications tend to be quite monolithic; they are not cloud-native and thus hard to scale out in tradition IaaS fashion.
Larger, more powerful, RAM-infused instances have been the main answer from AWS, Google, Microsoft and other IaaS providers so far, with the prospect of ERP apps broadly refactored for containers and microservices still some time away.
Still, for clear economic reasons, AWS and its rivals all want to attract as many SAP cloud ERP workloads as possible. They are not only the largest application workloads, but are also connected with many other IT assets, creating stickiness.
"Next to Oracle database workloads, [ERP] is the prime thing to hunt," said Holger Mueller, an analyst with Constellation Research in Cupertino, Calif.
But AWS and others have yet to meet some important needs of SAP's ERP customers, said analyst Joshua Greenbaum, principal of Enterprise Applications Consulting in Berkeley, Calif.
"They're very much into speeds and feeds," he said. "They're going to keep pushing these announcements, but it ironically renders them less strategic, not more strategic."
Microsoft and Google will surely follow AWS's new instance releases with similar updates of their own, Greenbaum added.
"There's this Newtonian physics going on," he said. "What AWS does today, Azure and Google will do tomorrow."
It's nonetheless important for vendors to offer ERP customers these instance types, as it gives them more choice as they ponder a move to the cloud, he added.
"[But] what I think customers need at a strategic level is services that look at some of the more complicated issues they're facing," Greenbaum said. "Having more memory is fine but it doesn't provide strategic value to the customer."
In May, SAP moved in the latter direction with the launch of Project Embrace, a partner program between itself, AWS, Microsoft and Google that will offer reference architectures, services and other guidance for adopting S4/HANA on those hyperscale platforms.
ERP enters the cloud era
It's very early days for ERP in the cloud, apart from the few cloud-native ERP applications such as Plex Systems Inc. and NetSuite. In contrast, HR and CRM software have the biggest presence in cloud, through SaaS vendors such as Salesforce and Workday, as well as products from Oracle and SAP.
The on-premises ERP world has long been marked by implementation projects that struggle or even fail altogether. Similar stories haven't cropped up much with respect to cloud deployments, but they surely will, according to Greenbaum.
"The same old practitioners are bringing the same old worst practices to the cloud," he said. Still, some SAP customers, such as the U.S. Navy, have reported great success moving and consolidating complex workloads to AWS.
However, important advances have been made on a technical level. Greenbaum cited Microsoft's effort to move its ERP applications onto Azure.
Joshua GreenbaumPrincipal, Enterprise Applications Associates
"When they put Dynamics on Azure, it was a great stress test," he said. "[ERP is] really complex. It's the thing the hyperscalers know they have to do well."
Oracle has taken a novel approach with its own IaaS, through a partnership with Microsoft. Under the pact, customers run their application logic and presentation layers on Azure, while tying back to an Oracle database running inside Oracle Cloud Infrastructure on an Exadata machine.
SAP's ties with Google Cloud seemed to be strengthened with the departure of longtime SAP sales executive Rob Enslin for a similar role at Google Cloud back in April. Enslin has been tasked with building out a large enterprise sales organization at Google Cloud, one which he will presumably help seed through his longstanding history with SAP.
Other options are available as well. For some time, SAP has also offered HANA Enterprise Cloud (HEC), which provides a private cloud foundation for ERP. Deloitte recently signed on as an HEC partner and will use hyperscaler infrastructure on the back end, coupled with its managed services.
Still, some SAP customers are more interested in having direct relationships with hyperscalers, particularly to play one against the other for an economic edge, said Jon Reed, an independent analyst and co-founder of Diginomica.com. But others "just don't have that sophistication and commitment to do that," he added.
SAP customers ponder their cloud ERP journey
The Americas' SAP Users' Group (ASUG) has held face-to-face events all year with customers who are trying to figure out their upgrade path to S/4HANA, said ASUG SVP Chris Crone.
AWS and Microsoft have fairly equal market share today among SAP customers, according to recent ASUG survey data. About 34% of respondents identified as current customers of Azure, compared to 32% for AWS and 15% for Google Cloud. Only 11% currently use HEC.
As for S/4HANA adoption, an ASUG survey found that 16% have gone live on the software and another 16% are in the process of doing so. The remainder either have no plans to upgrade (12%) or have plans for the future (56%).
Adding to the mix -- and potential confusion for customers -- is S/4HANA Cloud, a SaaS-based, somewhat scaled down version of the app suite that's based on the same codeline as the main version.
SAP customers are having trouble understanding the differences hyperscalers pose compared to on-premises environments and traditional hosting, with respect to things like economic models and security, Crone said.
Also, ERP in the cloud isn't simply about moving the workloads over, Crone added. "You still have all these application management things that have to happen," she said. SAP teams must figure out the way roles and responsibilities change with a move on to AWS and its ilk.
Finally, SAP customers don't necessarily want to be first to make the leap. "You hear the stories about the big brand names that made the shift, but what about someone in my industry, or my organization's size?" Crone said.
One of ASUG's missions is user education, and public cloud infrastructure will be high on the agenda going forward, she added. "We realize these hyperscalers are going to play a role when customers migrate to S/4 HANA."