SAP's platform strategy doubles down on cloud, IoT, AI, and user experience

A series of strategic communications this month demonstrates that SAP is not just serious about cloud, but is betting the business that it can create the most contemporary, compelling, and capable enterprise cloud platform.
Written by Dion Hinchcliffe, Contributor

As organizations attempt to read their digital transformation tea leaves this year, many are simultaneously looking for the best ways to execute once they're ready. That's because digital transformation, a top priority in most organizations this year, now centrally involves the cloud, where the vast majority of IT is swiftly moving.

But for large organizations, moving to public cloud is a rather delicate and highly fraught step that requires challenging-to-realize shifts in culture, control, operations, and most of all, platform.

As a result, large enterprise vendors like Microsoft, IBM, and SAP -- the three current old-guard standouts, along with ascendant cloud-native firms like Salesforce -- have been investing in the next-generation of IT technologies that are likely to carry their customers into the future, betting they'll be where customers have to invest next. More significantly, given where IT workloads are headed now, vendors are primarily designing and delivering these new technology within their primary cloud platform offerings, and not as traditional on-premises software

The message here is clear: The cloud is the doorway through which the future of enterprise technology lies.

In terms of the new technologies themselves, the top headliners this year consist of enterprise-class adoption of the Internet of Things (IoT), artificial intelligence, next-generation analytics, and much better integrated business applications, as cloud is increasingly understood as a natural platform for creating more cohesive and connected IT systems.

SAP's Cloud Platform for 2017: HANA, computing, analytics, big data, machine learning, IoT, and user experience

However, it is SAP -- which arguably has the some of the deepest business DNA in its products by virtue of running the back offices of the many of the largest organizations in the world for several decades -- that increasingly seems to be pulling ahead of the pack in terms of a cohesive vision, strategy, and portfolio of products. Looking digitally stodgy and a bit long in the tooth only a few years ago -- somewhat like Oracle does these days -- SAP has steadily emerged from the traditional enterprise ranks by articulating, and then attempting to deliver on a much more up-to-date IT vision.

It's a vision that is unapologetically cloud-first, app-centric, mobile-friendly, increasingly open, and even democratized, while not giving any ground away from what is perhaps SAP's ultimate differentiator and core institutional strength: The organization's vast accumulation of on-the-ground industry knowledge of what makes the processes and operations of global enterprises run like clockwork.

SAP's cloud: 2017 is for execution

I recently had the opportunity earlier this month to witness the coming together of SAP's current product vision from their CEO Bill McDermott -- and a host of other company leaders -- at SAP's Capital Markets Day at the New York Stock Exchange on February 9th.

The news presented here, as well as at Mobile World Congress yesterday, is as much positioning as it is concrete product announcements that flesh out the platform: Since HANA, the company's popular in-memory database technology, is a foundational element of this platform, the moniker up until now for their cloud portfolio was the SAP HANA Cloud Platform.

However, as SAP's cloud ambitions have matured and clarified lately, the "HANA" part was officially dropped this month. It's now the SAP Cloud Platform, a name that should make much more sense to everyone who takes a look at the far-reaching assembly of capabilities that SAP now has under that name.

Thus, SAP's cloud platform today is about far more than just making HANA available in the cloud. Noted Matthias Steiner, an SAP cloud platform evangelist, yesterday in a major public post about this change:

"[I]t is plain to see that the role of SAP Cloud Platform is certainly more nuanced and of much broader strategic significance than just offering SAP HANA in the cloud and that its strategic role in integration and extension scenarios has been something that was not quite reflected in its name; hence the name change."

The extension scenarios Matthias mentions are vital in my view to the richness, breadth, and long-term benefits of SAP's cloud platform. They include not only all the business apps SAP offers in the cloud (Concur, Ariba, Hybris, SuccessFactors, Jam, etc.) but the aforementioned strategic emerging technologies of today, including IoT, artificial intelligence/machine learning, and the ever-growing and specializing world of big data analytics, all as Platform-as-a-Service (PaaS.)

The SAP cloud platform takes fuller shape in 2017

In terms of actual product news, February has been an action-packed month for the SAP Cloud Platform. At Capital Markets Day we learned about CLEA, a key part of the company's growing machine learning capabilities. From only broad statements about platform-based machine learning made at SAP TechEd last October to a specific product announcement in February, machine learning has finally arrived in SAP's cloud platform in an official way.

In a nod to the considerable hype swirling around AI and machine learning these days, SAP has taken pains to observe that CLEA is not blue sky artificial intelligence that may be usable in the future, Instead, it's intended to very pragmatically tackle urgent business problems like automating payments, sorting through thousands of resumes to find the right job candidates, and pre-emptive customer care. As Juergen Mueller, SAP's Chief Innovation Officer, notes "SAP's vision for machine learning is to focus on solving real business problems that will have huge business impact."

It turns out the CLEA was just in the initial bow wave of a raft of updates and additions to SAP's cloud platform this month. In Barcelona yesterday, SAP also announced the following to further bolster their cloud capabilities:

The SAP Cloud Platform IoT service. Now available in beta, and speaking over forty device protocols, this device management service is intended to assist companies in quickly realizing IoT strategies and services. A major goal of this service is to integrate IoT services with the platform's streaming analytics service to handle the vast volumes of data IoT can generate and are normally challenging to cope with.

SAP API Business Hub. This is what makes the SAP Cloud Platform an open platform and ecosystem that customers and 3rd parties can build upon. It provides a central catalog of development interfaces (APIs) for SAP's cloud services. In my estimation, not enough is made of this highly strategic capability in making the SAP Cloud Platform a genuine foundation for enterprises and vendors to develop with and/or digitally transform upon. This makes SAP's cloud much more open, compelling, and useful to organization than it would be otherwise.

SAP Cloud Platform SDK for iOS. As I point out below, user experience cannot be neglected, perhaps especially in cloud platforms, so it's great to see SAP paying close attention to digital experiences on mobile devices. The SDK will provide organizations with the tools they required to create enterprise-grade apps for iPhone and iPad based on SAP Cloud Platform. The SDK is based on Swift, Apple's latest language for making it easier to develop mobile apps on iOS.

SAP Cloud Platform Workflow. Out next month, this SAP Cloud Platform service is designed to to support the automation of enterprise business processes by business analysts to rapidly create new composite workflows for business processes.

SAP Cloud Platform Virtual Machine Service. Already available in much of the rest of the world, it will be available in North America this quarter. I call this the "escape pod" to SAP's cloud platform, as it aids customers to migrate their existing workloads based on current on-premise software, languages, or runtimes so that they can run directly on the SAP Cloud Platform. At TechEd, SAP opened up HANA to Bring Your Own Language (BYOL), and this news helps complete the story in making the move to public cloud easier, swifter, and cheaper.

SAP Cloud Platform Big Data Services. Need Hadoop in the cloud? The SAP Cloud Platform now offers it and makes possible big data applications without big on-premises investments in Hadoop farms, one of the last significant growth areas of local IT hardware investment.

User Experience: The oft-neglected aspect of enterprise cloud

Perhaps most interesting of all is that SAP, unlike Amazon and its 50+ categories of public cloud offerings, has also given great thought to how the cloud platform will be delivered as an experience to its customers and users. With today's relentless customer/user experience focus, I view this as essential to a contemporary enterprise cloud offering, to realize end-to-end value.

As I note in my take on the platform, SAP has a strategy for user experience that extends from the boardroom and intranets right down to individual applications, with multiple approaches that can bring compelling user experiences, from touch to voice, to life with rapidly expanding SAP's cloud services.

The list of provided user experience capabilities for the SAP Cloud Platform is robust and often cutting-edge: SAP Copilot offers Siri-like voice interfaces to cloud applications, while SAP Fiori is a set of contemporary user interface design patterns and tools matched to the platform. Then there is the combined set of SAP Cloud Platform Build and SAP Cloud Platform Portal that allows cloud applications to be quickly built and then situated in a coherent set of corporate digital experiences. SAP's Digital Boardroom product is a compelling user experience as well, and even including virtual reality experience if you can't be in an actual boardroom.

SAP positions to be the enterprise cloud leader in capability

While SAP will likely never capture the raw compute workload market share that more generic public clouds like Amazon or Azure have, the company is also playing a different and entirely more strategic game.

Instead, the SAP Cloud Platform play is positioned way up-market from commoditized public clouds. Instead of being everyman's set of services, the platform is squarely aimed at global organizations with highly complex and diverse -- even esoteric -- needs that intend to modernize their IT by moving to public cloud for much or most of their technology development and operations.

As I talk to CIOs and IT leaders over the last year, I see more and more interest in finding future strategic partners, with matching platforms, that are capable, ambitious, and future proof. As I analyzed recently, SAP's cloud platform belongs on a very short list of players in public cloud that can meet the needs of virtually any size or type of organization, especially as a target platform for digital transformation.

With the recent -- and in my book both laudable and necessary -- stance towards openness (example: support for BYOL, the API Business Hub, and letting anyone develop with HANA for free with the Express Edition), SAP's cloud looks more attractive and inviting than ever as a strategic destination for those making the public cloud transition.

What's more, all of these moves -- openness, better positioning, and rafts of new services -- are necessary to fuel SAP's growth ambitions, which were recently summarized in a comprehensive strategic presentation at Capital Markets Day. This deck makes SAP's overall company objective clear as they experience steady yearly license declines in their legacy on-premises software: Grow cloud to be a third of revenue by 2020. This objective appears reachable as cloud bookings are growing by 31% yearly, unlike their traditional business.

In short, the cloud is also the doorway to SAP's future. While they have a lot of execution left to do in 2017, the broad outlines are clearly setting the industry pace in enterprise IT at the high end.

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