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SAP's McDermott: Say Goodbye To 'Too Complex'

SAP CEO Bill McDermott promises to help customers simplify their technology landscapes using SAP Hana Enterprise Cloud. But is this the kind of cloud that most companies seek?

required to migrate to the new workflows and interfaces? How significant will promised performance gains or net-new functionality be to the business? Will these benefits offset new costs for cloud hosting and the switch to Hana?

Not to complicate matters, but SAP has a separate cloud called the Hana Cloud Platform. This is SAP's platform-as-a-service (think SAP's version of where you can rent infrastructure, including Hana database services, and also subscribe to true, multitenant SaaS applications from SAP and its partners. The plan is to move all of SAP's SaaS offerings, including Ariba, FieldGlass, Hybris, and SuccessFactors, to this platform, but that will happen over time starting with the components that will most benefit from Hana performance. Indeed, SAP is masking a lot of behind-the-scenes complexity with its clouds.

Sizing up the cloud competition ahead, financial securities analyst Jason Maynard had a rather brutal assessment of SAP's prospects after Tuesday's announcements. "Simply refactoring code onto the Hana database doesn't mean [SAP's] systems are true software-as-a-service," he wrote in a research note Tuesday. "We think SAP is paying the price for the company's inability to get behind the shift to the cloud in the last decade in a tech industry that's clearly turning to the cloud ... While SAP has a great franchise and very sticky installed base, it is clear to us they are late to the cloud and missed the architectural shift."

As for that "sticky" installed base, the path to the cloud isn't black and white. And despite all the cloud hype, ERP deployments, particularly large ERP deployments, won't move to (or be replaced in) the cloud easily. McDermott said SAP's strategy is to give customers choices and flexibility. There's staying on premises, moving to the SAP Hana Enterprise Cloud private option, or moving to the Hana Cloud Platform public option. A hybrid combination of all three will probably be the reality for existing customers.

As for would-be new customers, the momentum of new deals seems to have swung in favor of cloud options like NetSuite and Workday. Their stories are simple: it's ERP built for and delivered in the cloud.

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