SAP Taps The Cloud To Grow In Asia Pacific

By Clement Teo, Fred Giron, Gene Cao, and Tirthankar Sen

SAP is betting that its future lies in the cloud. While the company still books just 5% of its global revenue from cloud services, SAP is putting the cloud at the center of its growth strategy, unveiling new business models and initiatives aimed at increasing the cloud consumption of its applications. To facilitate this, SAP is making it easier for clients and partners to embrace the cloud. For example, its cloud extension policy allows customers to reallocate existing license seats to a cloud subscription. Clients can unlock the stored value of unused licences and put it to work, giving end users access to meaningful applications in the cloud.

What It Means

SAP has a number of cloud services on offer, and the changes the company is making to pursue its high-growth strategy in Asia will not only transform SAP’s business model, it will also change how its partners do business. Client organizations in Asia will also have to adapt and:

  • Identify SAP partners that can help them embrace these cloud models. Enterprise adoption of cloud services in Asia is still at an early stage (except in Australia and Japan), so offering a broader choice between licensed and as-a-service will vault SAP into a new league of tech vendors ready to take advantage of this rising tide. SAP’s move toward cloud delivery won’t just affect internal SAP sales processes, though: Customers will need to identify VARs, SIs, and hosting providers and seek their support. Client organizations will also have to consider enriching internal IT teams with the skills that will allow them to leverage new solutions such as the SAP HANA enterprise platform.
  • Make sure that SAP is localizing its cloud Rapid Deployment solutions (RDS) for their markets. SAP recently added public cloud services like SuccessFactors and HANA Enterprise Cloud to the RDS portfolio. These packaged service offerings are led by the SAP Services team, which needs better penetration into the region’s partner channels. Organizations need clarity on the roles that SAP Services and its partners play from a go-to-market strategy standpoint and how they will localize the front-end interactions, solutions, and support services that clients in Asia Pacific need.
  • Consider hosting service providers. With managed cloud-as-a-service (MCaaS) and HANA Enterprise Cloud, SAP is moving more aggressively into the managed services space, both directly and via its partners. MCaaS allows partners — at least those with deep enough pockets to acquire the licenses — to deliver SAP solutions on demand. SAP hosting providers will increasingly become a viable option for the delivery of SAP services; organizations need to add this as a potential sourcing option for their enterprise application needs.

SAP is finally catching up to give organizations what the vendor itself has been clamoring for for the past few years: choice. The next step for client organizations is to determine who best to work with when deploying these services.