Cloud computing versus cloud functionality

At the SAP annual press conference on January 27, 2022, SAP CEO Christian Klein and CFO Luka Mucic impressed with good figures from the cloud business. "Our strength in the cloud business is obvious", Christian Klein said very confidently. "More and more companies are choosing SAP [...] The accelerated growth promises even greater opportunities in the future." Correct. But the question remains how many existing SAP customers will really voluntarily opt for the cloud if access to on-prem solutions becomes almost impossible.

At the annual press conference, Klein and Mucic again gave a guarantee for on-prem S/4 until 2040. But the reality looks different. An on-prem product like S/4 Private Edition for Customer Data Center (CDC) is hardly offered. But this is exactly where the crucial difference between on-prem cloud functionality and cloud computing arises at SAP and the hyperscalers.

"The preliminary SAP figures from the fourth quarter of 2021 are already proof of this: The software manufacturer is making progress in the cloud business"Christine Grimm, DSAG Board Member for Transformation, and Thomas Henzler, DSAG Board Member for Licenses, Service and Support, said. And the DSAG board members specify: "However, the path to the cloud is accompanied by a number of challenges for user companies. Classic ERP structures, as users knew them from the past in the on-premises context, are often too complex in the cloud and are difficult to bring into line with a cloud philosophy."

In the press conference Christian Klein tried to keep the ball flat: "We have made a long-term commitment to S/4 Hana, and that includes the on-premises versions." The fact remains that SAP would rather see its existing customers in the perpetual dependency of a cloud computing than autonomous in their own data center or with a hyperscaler with cloud functionality from an S/4 private edition for CDC.