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Get to know members of the SAP cloud services family tree

SAP cloud services come in two varieties -- PaaS and IaaS. They have similar names, but radically different functions. Learn how the two approaches differ.

Although SAP has many cloud-based applications -- including Ariba, Simple Finance and SAP Business ByDesign --...

its cloud strategy includes two cloud services with similar names, but radically different functions: SAP HANA Cloud Platform and SAP HANA Enterprise Cloud.

SAP HANA Cloud Platform (HCP) is a platform as a service (PaaS) offering that lets customers and business partners build and deliver applications that run on top of HCP.

SAP HANA Enterprise Cloud (HEC) is an infrastructure as a service (IaaS) offering that recreates all the servers and software an enterprise uses to run its SAP-based business from an off-site data center.

SAP HCP for add-on applications

Although SAP HCP is a less established PaaS than several major competitors -- such as Amazon Web Services, Salesforce, Microsoft Azure, Cloud Foundry, Heroku and Google App Engine -- SAP cloud services is working to change that.

According to John Appleby, global head of SAP HANA for Bluefin Solutions, SAP has maneuvered its "A-Team" leadership into positions to build out the SAP HANA Cloud Platform go-to-market strategy. "It may not be all that visible from the outside yet, but SAP is all in on HCP," Appleby said.

So, what about usage today?

"From a customer perspective, HCP is in early adopter status -- there are a lot of customers doing a little something, and a few who have built interesting apps," Appleby said, noting that SAP is working to make HCP easier to buy to ramp up adoption.

"In addition, S/4HANA extensions will be on HCP with HCI for integration, and as customers start to move to S/4HANA, we will see the usage drive up fast," he added.

It may not be all that visible from the outside yet, but SAP is all in on HCP.
John Applebyglobal head of SAP HANA for Bluefin Solutions

Extension, it turns out, is a key word for HCP. SAP is beginning to make it clear that, if you're going to add custom applications or services to SAP software, you should do it with HCP.

"Today, if you're running Business Suite and you want to customize an application, you go into the NetWeaver layer and you write ABAP code," said Dan Lahl, SAP vice president of product marketing. "This has been a long-running model, but you know what's not included in S/4HANA? There is no NetWeaver, so the HANA Cloud Platform is the new extension piece, the integration piece, the develop-new-applications-against-your-data piece."

As it turns out, there is even more ambition built into SAP's PaaS: Independent software vendors and system integrators with deep industry-specific expertise can use HCP as a do-it-all platform for add-on applications and extensions, too.

"HCP is like the app store for SAP," Lahl said. "It's an exciting new way of thinking of how our enterprise applications can get extended."

Moving your 'data center' to SAP HEC

"The HANA Enterprise Cloud is really a managed service in a private cloud," explained Lahl. "The way we see this working out is that it's for traditional customers with a license who want someone they trust to manage it for them." In fact, Lahl said, most HEC customers use their existing SAP licenses and then, simply pay for the managed services component based on their level of infrastructure service needs.

What about the IaaS industry at large?

"For true core ERP, customers are still reluctant to go to the cloud. There are various drivers for this, including regulatory and security concerns, networks and performance concerns, and the lack -- in many cases -- of a tangible reduction in total cost of ownership," Appleby said.

On the other hand, said Gartner analyst Mike Dorosh, "In the ERP space for net new deployments -- those changing platforms or moving beyond something basic -- we're seeing a large number of small-to-midsize customers look to the cloud."

Ultimately, he said, the majority of net new deployments are going toward some variation of IaaS. And the key driver is that IaaS can help companies eliminate ownership of often underutilized hardware, which requires skilled staff to constantly maintain.

So, how do existing ERP customers transition into IaaS deployments?

"A lot of times, the IaaS starts with test-and-development environments," Dorosh explained, noting that after developers have a good experience, more cloud-based services often follow for the organization.

SAP is also seeing this kind of trend. For example, Lahl said, a customer might say, "Just give me the database as a service because I want to build my own application on top of it." After that, customers naturally start to want to add new types of cloud-focused services.

"While we can describe a very simple PaaS offering, once customers get in and look at how they are going to deploy it, they might really ask for an IaaS type of service or a DBaaS," Lahl said.

Custom SAP cloud services

If you only look at the surface, the SAP HANA Cloud Platform and HANA Enterprise Cloud seem straightforward, if not rigid. That surface view, though, belies what's happening deep inside customer engagements and contracts: SAP cloud service pricing is getting more flexible.

"You can't generalize because there are so many different possibilities out there -- so many different licensing models," said Dick Hirsch, senior consultant at Atos SE. SAP has become much more original and aware of custom pricing models afforded by cloud environments, he added. For example, a contract might note user-based or usage-based pricing, while public SAP marketing suggests a different model altogether.

Meanwhile, SAP's PaaS and IaaS themselves are far from static.

For example, HCP is poised to move beyond SAP's own hosted service -- most notably, through SAP's involvement with Cloud Foundry.

"If you look at the close association with Cloud Foundry … this is really interesting because it allows HCP as a PaaS to be deployable in private clouds or on-premises," Hirsch said.

SAP has been vague on the timing, but Lahl confirmed that SAP plans to "containerize" HCP to let customers easily move an HCP stack among various IaaS offerings -- a move that will give customers a whole new realm of HCP deployment options.

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