SAP and Microsoft Partner
Cloud Computing PHOTO: eberhard grossgasteiger

The already red-hot cloud services space just got hotter this week when SAP and Microsoft announced that there are developing their partnerships to expand the use of each other's cloud-based products and services delivered via the internet. As a show of faith in the deepening relationship, they also announced they will be deploying each other’s cloud solutions internally.

SAP With Microsoft

The upshot of the agreement is that companies will co-engineer and go to market together with solutions and provide joint support services to ensure cloud experiences for customers. The new agreement will come into effect immediately and will see SAP HANA Enterprise Cloud — SAP’s private managed cloud service — on Microsoft Azure. From the Microsoft perspective, this means that this will allow customers to run SAP S/4HANA on Azure, while Microsoft will deploy SAP S/4HANA to help run its own internal finance processes. SAP will move its key internal business critical systems to Azure.

For businesses, the expanded relationship will make it easier for enterprises using SAP to run those applications and give Microsoft an extended reach into the large organizations it has been targeting since the start. Among the joint customers are the Coca-Cola Company, Columbia Sportswear Company, Coats and Costco Wholesale Corp, who are already on Azure.

Anything that happens to SAP or Microsoft in the cloud is going to have repercussions across the cloud landscape and this announcement is no different. The bottom line here, though, is the ongoing battle for hyper-scale cloud dominance and Microsoft’s moves to make Azure the home for cloud — based enterprise apps.

1. Apps Are Key

Greg Pierce is chief cloud officer at Tampa, Fla. Concerto Cloud Services. According to him, the expanded partnership shows that both sides realize that apps are the key to enterprises and they are rolling out offerings and innovations to meet this market. He also shared that it indicates that infrastructure-as-a-service is reaching a maturity level that will force a new round of competition. “If Google has been relegated to a distant third in this market don’t underestimate them. They have invested their innovation into the next iteration of container-based, serverless cloud. They will be a formidable challenger with their scale and pocketbook. It's going to be fun to watch,” says Pierce.

2. The Role Of Azure

For Microsoft this is all about Azure and its competitors. Andy Gordon is VP of Sales and Partnerships at Betheseda, Md.-based solutions provider BroadPoint. He says that Microsoft sees its growth areas as Office 365 and Azure and competition can benefit from both. In this world all partnerships are possible and this expanded agreement is a huge endorsement of the Azure solution reliability. It now puts it on equal footing with Amazon Web Services. “[The deal] will increase the awareness of businesses moving to the cloud. Successful announcement like this from both Amazon and Microsoft will accelerate/legitimize businesses moving to cloud solutions. So even though this announcement may be somewhat of a blow to Amazon, it will help with awareness for both in the long term,” he said.

Naresh Koka is Vice President of Strategic Alliances at Chicago, Ill.-based digital technology consultancy SPR. He points out that the while the two companies — Microsoft and SAP — are competitors, the depth of their relationship now makes them more partners. “Their latest partnership announcement comes as no surprise, and it’s a strategic move to use each other’s cloud platform and software — S/4HANA Enterprise on Microsoft Azure. It not only provides confidence and adoption of S/4HANA Enterprise on Azure by enterprise customers, but also drives innovation by both companies to improve end-user experience,” he said.

3. Looking After Partners

There is also something for Microsoft’s partners here. Gordon McKenna is CTO of Microsoft Cloud Services at Reading, UK-based Inframon, an Ensono company.  He says the announcement is a massive boost for partners like Ensono as it further endorses the capabilities and credibility of Microsoft Partners in helping customers make the leap to both this latest SAP platform as well as Microsoft's Azure public cloud offering.

The agreement has implications for the wider cloud market too and follows other recent agreements like that between Salesforce and Google. Manish Gupta of Redis Labs, home of open source database Redis, which uses Google Cloud services points out that deals of this magnitude hold the promise to shift the balance of power creating a new cloud map. “This is good for the market, as no single cloud provider should be allowed to become a monopoly. It's great to see GCP and Azure lining up to AWS and Alibaba.  Multi-cloud will become the norm as enterprises choose to hedge their bets and manage negotiating terms and risks — business agility is key here,” he said. He also added that come from behind cloud players need best-in-class software partners like Salesforce to gain a competitive edge against their incumbents.