What does the decision to run SAP Carbon Impact on Amazon’s Elastic Compute Cloud (EC2) mean for the future of its on-demand strategy?
It depends on whom you ask.
Despite assertions to the contrary made by SAP officials, some industry watchers wonder if the company’s decision to run its sustainability application, Carbon Impact, on Amazon’s cloud might someday lead to Business ByDesign running on that same on-demand platform.
“It could be a precursor to Business ByDesign being on Amazon,” said Ray Wang, an analyst and partner in the San Mateo, Calif.-based Altimeter Group.
Questions over SAP’s cloud strategy, and how it might affect applications like Business ByDesign, arose when SAP chose to run Carbon Impact on Amazon despite spending huge sums of money and long hours -- and enduring untold grief along the way -- building its own internal cloud for Business ByDesign.
SAP launched Business ByDesign, its on-demand ERP software for small- and medium-sized businesses, more than two years ago with a goal of signing up 1,000 customers, only to delay the project in 2008 to fix bugs and make it a profitable product line. It released version 2.5 in July.
“Because it’s there”
Running Carbon Impact on Amazon’s platform makes sense because it can do it more cheaply and more efficiently than SAP thanks to Amazon's massive scale, Wang said.
“Amazon is running at a much higher efficiency, and it makes sense for people to at least host the infrastructure portion on Amazon,” he said. “It’s really getting to the lowest cost of delivery. There’s no sense in any organization going out and getting a ton of data centers if they don’t have the scale yet,” Wang said. “Amazon and Google have the two lowest-cost delivery models out there.”
The decision to use EC2 makes sense for another reason, according to Josh Greenbaum, principal of Enterprise Applications Consulting in Berkeley, Calif. “It’s there now.”
“Microsoft’s Azure is not yet ready for this kind of product,” Greenbaum said about the public cloud that company is currently developing. “There are a lot of software companies that are using Amazon as essentially their test bed for their cloud applications,” he said.
“It is a place you can go right now, put something in a cloud and run it and see how it works and what customers think about it,” Greenbaum said.
“This is really the ideal sandbox for SAP to start getting Carbon Impact out on the market,” he said, adding that it makes sense for SAP to use a range of clouds for future on-demand applications rather than putting them all onto one platform.
Could Business ByDesign ever end up on Amazon?
It would technically be possible to run Business ByDesign on EC2, according to Rainer Zinow, senior vice president of Business ByDesign, but that’s about where the discussion ends, he contends.
“We have said that our Business ByDesign customers have specific requirements regarding security, data privacy, regulations and other aspects. So for them, it is very important that we run Business ByDesign on a highly secured private cloud,” Zinow said, adding that Carbon Impact doesn’t have the same security requirements.
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“So, technically, theoretically, it’s possible. Is it a feasible alternative at this point? Not at this point in time,” he said. “We have a full-blown cloud which does precisely what we need, where we have full control over the entire stack from the operating system to the virtualization, to the database.”
SAP declined to further elaborate on their future on-demand strategy regarding future applications. Executives also declined to comment on why they did not choose to run Carbon Impact on their Business ByDesign cloud, only that company would largely be “cloud agnostic” and not focus on any one platform, according to Rahul Sood, senior vice president of product management for Carbon Impact.
What the users think
None of these questions worry Patti Charlton, who is the CFO of ResearchPoint, a clinical research organization based in Austin, Texas. Charlton’s company is one of the 100 or so Business ByDesign users, and therefore one that would be affected by any decisions regarding the application.
Back in December of last year, Charlton said she had been impressed with Business ByDesign and felt that SAP was listening to users’ needs regarding improvements to the application.
When asked whether she wondered what SAP’s decision regarding Amazon meant for her and ResearchPoint, Charlton said it wasn’t something that was on her radar.
“I was unaware of the move you mention,” Charlton wrote in an email, adding that she likely wouldn’t be looking into it, either.
That’s not a huge surprise, according to Wang, who said that customers only care that the terms of their service agreement with SAP are met.
“It’s not like they’re going to think about it twice,” he said.
“What’s more of an issue is, will SAP continue to find these lower cost alternatives so that they can keep on lowering the cost of delivery for these customers?” he added. “That’s all customers care about at the end of the day. They just want the lowest cost of delivery and know that SAP can scale. That’s very important.”
Nor did the assertion that SAP is running Carbon Impact on a public cloud it has never used before apparently bother Atlanta-based Arch Chemicals, whose chief sustainability officer said he had no particular thoughts either way on the arrangement -- or the platform.