SAP to expand Asia datacenter footprint in cloud drive

Having launched three new data centers in Japan and Australia earlier this year, SAP is now targeting to add at least three more in the region and grow its global datacenter footprint to 20 locations by the end of 2014.

Such plans are fueled by the company's goal to deliver all its applications via the cloud and become "the cloud company", powered by its cloud platform HANA. The German software vendor is also preaching a "run simple" business strategy that includes simplifying its own products, noting that 90 percent of companies fail because of complex IT infrastructures.

Customers are seeing the value of a cloud approach, said Adaire Fox-Martin, SAP's president for SAP Asia-Pacific Japan, who was appointed to the role in February 2014. 

In a phone interview Friday with ZDNet, Fox-Martin underscored the importance of cloud in simplifying IT infrastructures. She used the analogy of buying and driving away with a new car from a showroom compared to building and assembling a new vehicle in a garage. A public cloud model offers customers the ability to "drive away immediately" with the applications they need to support their business, she said, and noted that offering its ERP tool on the cloud speeds up time to value for SAP customers.

Cloud provides the opportunity to simplify infrastructures and operations, reduce the time to value, and free up dollars for innovation, she added. "If you think about it, innovation really comes from software. When you look at a typical stack for any on-premise environment, you have a very small percent of total IT cost, less than double-digit, attributed to software and the vast majority is spent on infrastructure, services, support, hardware, network, and so on.

"I believe companies see most of the value in software, so the conversations we're having with customers is how you can reduce the cost in infrastructure and services in cloud, thus, freeing up the opportunity to innovate," said Fox-Martin. 

According to SAP, it is seeing the rewards. The company's cloud revenue run-rate is nearing 1.1 billion euros (US$1.49 billion) and it currently boasts the world's largest cloud subscriber base of 36 million users. Its cloud subscription in Asia-Pacific has a growth rate in the "mid double-digit", said Fox-Martin. 

To support this increasing demand, SAP expects to grow its global data center footprint from 14 to 20 locations by end-2014, including China, Australia, India, and Russia. It currently operates three data centers in Asia-Pacific region, with two in the Japanese cities of Osaka and Tokyo, and one in Sydney, Australia. 

Asia is a very diverse market and data sovereignty is a key issue for customers, especially in the public sector, Fox-Martin said. "So we're looking to build more data centers and exploring plans to partner data center providers in the region, offering such services on a subscription basis," she said, adding that this would address any concerns about data security and sovereignty. 

She declined to provide a timeframe or identify markets where new data centers will be built, but revealed that SAP is looking to launch at least three more in this region. Data center locations would be evaluated based on the business case for one in the market, such as customer demand and infrastructure viability, she explained.

She acknowledged that infrastructure have presented significant challenges in Asia where India, for instance, faces increasing shortfall of power, and these may hamper cloud adoption and deployment. However, she said, these will be resolved as several Asian markets are rapidly building up capacity from an infrastructure standpoint and also tapping mobile technology to leapfrog matured Wester economies. 

At its annual Sapphire conference earlier this month, SAP announced various upgrades for HANA that include mobile, analytics, data services, and cloud integration services. It released a service pack 8 for the flagship cloud platform, which offers support with partner systems such as Red Hat Enterprise Linux and Intel Ivy Bridge-based systems.

Earlier this week, it announced a new partnership with IT services vendor CSC to facilitate migration projects that involve moving applications to the HANA platform. The initial focus will be on specific industry sectors including banking, engineering, and public sector applications. SAP offers industry-specific offerings for 25 verticals including healthcare, chemicals, retail, and financial services.

The vendor last month said it planned to slash its headcount by between 1,500 and 2,000 as it reorganizes to focus on cloud computing. SAP currently employs about 67,000 people worldwide.