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SAP Embrace gets new love from SAP-Microsoft partnership

SAP and Microsoft partner to make Microsoft Azure the preferred public cloud infrastructure for customers who want to move to S/4HANA workloads to the cloud.

SAP and Microsoft are making their cloud relationship almost exclusive with a new program.

SAP Embrace was announced in May as a program to help SAP customers move workloads to public cloud hyperscalers Microsoft Azure, AWS and Google Cloud Platform (GCP). Earlier this month, SAP and Microsoft announced a new development in the program with a three-year agreement to use Microsoft Azure as the preferred hyperscaler infrastructure provider for SAP systems. The deal is intended to address SAP's issues in moving customers both to the cloud and migration to S/4HANA by providing a simpler, more cost-effective and risk-mitigated path.

SAP Embrace is intended to provide SAP customers a path to the cloud on Microsoft Azure infrastructure, according to the companies. SAP and Microsoft, along with systems integrators, including Deloitte, Accenture and IBM, will offer SAP customers bundles of cloud services, including unified reference architectures, road maps and market-specific information to help mitigate costs and risks of moving to the cloud. Microsoft field sales teams will sell the SAP Embrace bundles directly to customers and Microsoft will also embed and resell components of SAP Cloud Platform in Azure.

SAP worked with Microsoft, AWS and Google to develop the initial phase of SAP Embrace, but subsequent development over the summer led to the partnership agreement with Microsoft to use Azure as its preferred public cloud provider, said David Robinson, SAP senior vice president and managing director of the cloud business group.

SAP customers are in large measure satisfied that any of the three public cloud providers can handle SAP HANA database workloads and run HANA-based applications, Robinson said, but they are looking for a clear and simple path to the cloud, which was the main goal of SAP Embrace.  

"[Customers] would like to understand that, as they migrate to S/4HANA in conjunction with the lift to the cloud, they can follow a path that leads to the intelligent enterprise and will give the most cost-effective and risk managed journey," he said.

SAP customers lean toward Azure

David Robinson, senior vice president and managing director of cloud business group, SAPDavid Robinson

The SAP-Microsoft partnership came about mainly because the majority of customers that SAP worked with to validate the SAP Embrace model were already leaning toward Azure, Robinson said.

This was primarily because Microsoft had demonstrated that Azure provided a consistent enterprise degree of engagement and support beyond just the compute network and data store, such as support services and lifecycle management, according to Robinson.

"Microsoft understands the enterprise to speak the enterprise language, and has processes wrapped around their compute network and storage around Azure that are more aligned with what SAP customers need to be able to consume and drive their S/4HANA environment," he said.

SAP and Microsoft relationship may get cozier

It's unusual that SAP would go with something that's relatively exclusive, said Joshua Greenbaum, principal at Enterprise Applications Consulting, but it may be a sign of more to come from SAP and Microsoft.

Joshua Greenbaum, principal, Enterprise Applications ConsultingJoshua Greenbaum

"We know that Microsoft's SuccessFactors implementation runs on Azure and they're moving their ERP to Azure, so we know Microsoft wants as many workloads as it can get on Azure and they're willing to incent SAP to do it," Greenbaum said. "But I think there's more to this. There will be another component of this deal coming, because I'm pretty sure that the numbers don't add up for just this much exclusivity."

Although the Microsoft Azure deal is not exclusive, the other two hyperscalers were not pleased at the recent addendum to SAP Embrace, Greenbaum said.

He pointed out that Robert Enslin, Google president of cloud sales and former SAP executive, and Thomas Kurian, Google Cloud CEO, are likely tapping their considerable experience to develop enterprise applications.

"It's pretty clear that they're going for an apps play that can compete with SAP," Greenbaum said.

For AWS, on the other hand, Amazon's relentless expansion into virtually every business may give potential customers pause before they entrust their systems to AWS.

"On the Amazon side there's a lot of customers -- retail, logistics, you name it -- where Amazon the mothership is encroaching into a lot of core business areas, so a lot of folks are getting nervous about putting their enterprise software on the Amazon cloud," he said. "In a way, Amazon sort of backed itself into this position."

Other public cloud options still available

SAP customers still have the option to deploy S/4HANA and SAP HANA-based applications in any public cloud provider they want, Robinson said.

AWS recently announced new memory upgrades to the EC2 cloud infrastructure designed to manage S/4HANA sized workloads. 

"If a customer still wants to run it on AWS or Google, they can still do it; the support is the same and we continue to certify these workloads on AWS on GCP," Robinson said. "The difference now is not the support or the ability to run, certify and upgrade -- we will always certify that these infrastructures perform on database workloads as we design. But with Microsoft, we're adding an additional degree of abstraction on top of that around the harmonization of the cloud platform services."

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How will the SAP Embrace initiative spur movement to the Microsoft Azure cloud?
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The recent survey conducted by ASUG states, AWS and Microsoft share fairly equal market share of SAP customers. Around 34% of respondents are identified as Azure’s current customers, while 32% are AWS customers, and 15% are Google Cloud customers. It is found that HEC has only 11% current users.
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