SAP SE and Microsoft Corp Tuesday said the two companies are working together to better integrate their cloud services for corporate customers. Microsoft CEO Satya Nadella appeared on stage at SAP’s annual conference in Orlando, Fla.
Microsoft plans to deliver broad support for the SAP HANA database and business applications on its Azure cloud. There are also new integrations between Microsoft Office 365 and SAP cloud applications. Microsoft has more than 70 million active business users on Office 365 and now they’ll be able to access an expense report from Concur, an SAP service, directly from Microsoft Outlook.
The stakes are high for this shared effort as vendor partnerships and ecosystems are becoming increasingly important as companies move to the cloud. The announcement reflects a fundamental rethinking of information technology happening across many companies. The cloud, once a corporate afterthought, is now the core of IT, forcing a realignment of vendors and their technology. In the midst of all this change, the customer is, at least in theory, ever more central.
“Partnerships are absolutely necessary, more so necessary than in the past if we’re going to meet our customer’s reality,” said Mr. Nadella on stage with SAP CEO Bill McDermott. “We better have empathy for your reality,” he said.
In the old model of information technology, companies purchased software and hardware from different companies, which they put into their own data centers. Once they purchased the technology, they were left on their own to make it all work together. In today’s model, the vendors operate the hardware and software in data centers and corporate customers access them through a Web browser.
Over the last decade, companies have used select software services such as Salesforce and Office 365. Now, a wholesale movement to the cloud has begun and companies are taking it one step further. Instead of operating their own data centers and filling them with their own hardware and software, they’re renting the hardware – so called infrastructure as a service — from cloud providers.
“This is about SAP doing business the way our customers want to do business,” John Torrey, chief strategy officer of SAP business networks & applications group, tells CIO Journal. “Between SAP and Microsoft we have massive customer overlap and we’re compelled to do business in this way,” he added.
Some companies, such as Netflix, have gotten out of the business of running their own data centers and now use cloud providers for IT services instead.
The worldwide public cloud services market is projected to grow 16.5% in 2016 to $204 billion, up from $175 billion in 2015, according to Gartner The highest growth will come from cloud infrastructure services such as Azure and Amazon Web Services. The infrastructure-as-a-service segment is projected to grow 38.4% in 2016.
When customers built their own data centers, they could run whatever software they wanted. In the new environment, companies rely on their cloud providers to help them make that run, said Jason Zander, corporate executive vice president of Microsoft Azure.
As the nature of the relationship changes, customers can expect their service providers to be more cooperative with other providers. “Companies now have an opportunity to pick what they want and know that their vendors are going to really try to help them out as opposed to competing on every angle,” said Mr. Zander.
The utility of the integrations between vendors like SAP and Microsoft will depend in part on the degree to which they cover all platforms, including mobile. “Mashups make sense, but the execution is key,” said Ralph Loura, chief technology officer of skincare firm Rodan + Fields and former chief information officer of Clorox and Hewlett-Packard enterprise group.
By 2020, General Electric plans to move 70% of its computing workloads to the cloud. Greater integration among software vendors and cloud providers makes it easier for developers to access needed data and speed the acceleration to cloud, said GE Power Chief Information Officer Clay Johnson.
“When you have 1,000 or more applications and you’re trying to push more to the cloud, having those integrations and hooks already set there for you is a huge plus,” he said.
GE Power has set up “cloud factories” where employees prepare applications for a move to cloud. There, developers would write lines of code to help connect applications to cloud providers. More built-in integrations from vendors “help us eliminate a few steps.”
“Before developers had to write their own software and basically hook back into SAP somehow,” Mr. Johnson said. “Now all the APIs and all the hooks are going to be right there for developers to write their applications natively back to the platforms.”
More partnerships between software vendors like SAP and Microsoft show an awareness that companies like GE are making a bigger cloud push, Mr. Johnson said.