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NEW YORK -- As a further push into the small to medium-sized enterprise (SME) ERP market, SAP announced the ability to run SAP Business One Cloud in HANA-based data centers operated by the vendor. The announcement came at the SAP SME Summit held here this week. The SAP-run cloud offers a third cloud deployment option for Business One users and addresses the costs of entry into ERP software, according to SAP executives.
SAP Business One Cloud already runs in infrastructure hosted by a third party, such as Amazon Web Services, or in an SAP partner's hosted cloud. The new SAP data center option for SAP Business One Cloud is available in North America, with plans to expand to Europe and Asia in 2016.
SAP's hosted cloud builds upon what SAP began three years ago with the introduction of an upfront, perpetual subscription license for the on-premises Business One, according to Luis Murguia, senior vice president and general manager for SAP Business One. Two years ago, SAP introduced a cloud control center for Business One to allow partners to host the software in a multi-tenant environment, followed by access to Business One through a browser-based interface. This week's announcement adds a hosting service for partners to offer a full cloud experience to customers, while still maintaining a partner-centric business model, he said.
Because cost and getting the most out of investments are important factors for SMEs, SAP announced the availability of complementary services, including backup and restore, disaster recovery and platform maintenance, along with the new cloud deployment option. The company is relying on its channel partners to provide application migration, implementation, management and support services.
Security not always main reason for hosting with SAP
According to both Murguia and Robert Anderson, research vice president at Gartner Inc., in Stamford, Conn., security isn't necessarily one of the top concerns for SMEs with regard to cloud software. Rather, it's the cost associated with ERP systems that causes them to reconsider, including the cost of updating on-premises systems.
"SAP has a very large, captive installed base that loves Business One, but they're on premises and looking for new levels of simplicity," Anderson said. By offering its own data center to host Business One, SAP is providing that simplicity, as well as a way for SAP partners to up-sell existing customers, rather than lose them to competitors. Having access to HANA in the cloud is critical, both for growing SMEs and for SAP to offer, he added.
While some industries -- such as those that deal with Safe Harbor regulations or banking and finance companies -- still hesitate to move systems to the cloud, most have evolved in their thinking to recognize that the security provided by a data center run by SAP is stronger than anything they could do on their own, Anderson said.
According to Murguia, SAP currently has 1,800 customers using SAP Business One Cloud, although not necessarily using the new SAP cloud hosting service. Two partners have already signed on to offer the SAP data center as an option, he said.
SAP is also touting Business One's flexibility as a competitive advantage. Murguia cited the software's ability to be run in a multi-tenant cloud infrastructure, as well as the user's own environment, as part of the reason for its 20% yearly sales growth. Additionally, the pay-as-you-go pricing can be attractive compared to a perpetual license, he said.
"In the United States, eight out of 10 new customers are contracting with a perpetual license, but running [Business One] in the cloud," Murguia said. "We needed to make cloud ERP more affordable, but with the robustness of SAP standards."
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