SAP invests in Brazil cloud facility

German firm announces multimillion-dollar investment to offer some applications on its own cloud to local customers - but ERP is not on the cards.

Software giant SAP has announced yesterday (2) its plans to invest R$19m ($8,5m) in a Brazil-based cloud facility that will initially offer its SuccessFactors human capital management systems.

The new site will go live in the first quarter of 2015 and will be based in São Paulo. The company did not disclose who will be the local colocation partner for the facility.

According to trade portal Baguete, the company also plans to use the new site to host some of its software-as-a-service offering in areas including e-procurement and customer relationship management.

Fierce competition in the SME market

Predictions around the adoption of cloud systems in Brazil are bullish - cloud revenues in the country reach $1.1bn by 2017 according to consultancy Frost & Sullivan - and SAP's latest announcement is a response to this forecast demand.

According to separate research by Capgemini , software-as-a-service will represent most of that demand, particularly within small and medium enterprises looking to keep IT costs low.

While SAP wants to diversify its offering in the business applications front in Brazil, it faces tough competition within its sweet spot - enterprise resource planning (ERP) applications - when it comes to Brazilian SMEs.

In the SME space, companies have been choosing to buy local ERP systems by Brazilian firm Totvs as opposed to global alternatives such as SAP and Oracle, according to a recent study. 

SAP Brazil head Cristina Palmaka has been quoted as saying that the company's own local cloud offer of enterprise resource planning systems is something for the future. Tricky subject, given the investments Brazil-based firms have made in the last few years in order to offer SAP's cloud-based ERP portfolio.