Mostly bark, little bite in SAP's cloud offerings

A move to full-blown cloud services could decimate its business, so SAP focuses on window dressing

SAP had a turbulent start in the cloud computing space. In 2010, it launched Business ByDesign as a SaaS offering to resounding yawns from the cloud computing industry.

Vowing to improve, SAP did what all big companies do when they want to move quicker into a market. Innovate? Nope -- it bought other companies. The shopping spree included SuccessFactors, a human resource management SaaS provider.  

Then the addition of HANA.  HANA is a sexy in-memory database and analytics engine that also serves as SAP's big data strategy.

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In its move to the Web, SAP's actions have been a bit confusing. Months ago, SAP placed its All-in-One ERP app on Amazon Web Services as a public cloud SaaS offering -- kind of. Now, it is making HANA available from its own cloud, as well as from partner public clouds.

What bothers me about SAP and cloud computing is that this company should be leading the way for its customers in the move to public and private cloud computing. Instead, it seems to be digging in its heels and passing off simple cloud application migrations as a full-blown cloud computing strategy. SAP's millions of users won't be fooled.

The dilemma is the same at Oracle and other large software providers. If SAP successfully moves its value to a public cloud-based resource, it will actually contract its own value.

If SAP users consume SAP applications and technology as public clouds, they won't want to pay traditional SAP prices, and SAP will fundamentally have to change its sales model. Such a shift would be hugely disruptive and, for investors, would remove a tremendous amount of value from SAP. In other words, the more successful SAP is in moving to the cloud, the worse its business does.

The argument is that cloud computing is the way to go and SAP won't have a choice in the matter. I believe that is true. I also believe that SAP should create a more solid and better-defined cloud computing strategy and road map. I don't see it having long-term success by buying companies and hoping everybody figures it out.

This article, "Mostly bark, little bite in SAP's cloud offerings," originally appeared at Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at For the latest business technology news, follow on Twitter.


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