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September 19, 2018

SAP’s Deal With Alibaba Cloud: “Double Digit Trillion” Opportunity

Alibaba and SAP will offer SAP S/4HANA Cloud and SAP Cloud Platform on Alibaba Cloud’s infrastructure as a service in China. Announced at Alibaba’s Computing Conference

By jonathan chadwick

Chinese internet giant Alibaba and German software company SAP have announced at Alibaba’s Computing Conference 2018 that they are offering SAP’s products on Alibaba Cloud’s Infrastructure-as-a-Service (IaaS) in China.

Alibaba's Computing ConferenceFrom Wednesday the companies will jointly go to market with the SAP S/4HANA digital cloud suite.

Alibaba Cloud customers will also be able to deploy the platform-as-a-service (PaaS) SAP Cloud Platform to build new applications and integrate third-party technologies.

The announcement, made at Alibaba’s Computing Conference 2018 in Hangzhou, China on Wednesday, builds on an original partnership formed in 2016 to bring integrated cloud services to enterprises in China.

China: SAP’s second home

Without being drawn on specifics, SAP CEO Bill McDermott told CNBC that the deal with Alibaba could be a billion-dollar partnership, saying that “we don’t do deals if they’re going to be small”. He added that it will bring the SAP brand into the mid-sized companies and the small companies, “so they too can be a big company”.

“Fundamentally the cloud is the best way to scale in technology. China is our second home. This is a massively important market to us. Ali Cloud gives us the infrastructure as a service to put the best, most modern ERP system in the world on top to serve customers, so they can serve their customers and create immense value,” he said.

“If you look at the size of this market, this is the second-largest economy in the world. You’re dealing with double digit trillion in economic possibilities. So we think this could be one of the top five partnerships globally in the very short term.”

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SAP S/4HANA Cloud uses AI-powered automation, predictive analysis, and hands-free conversational UX, allowing companies to migrate core business processes at lower costs, SAP said. SAP Cloud Platform, meanwhile, lets customers develop new applications and customise existing ones.

Alibaba SAP: Working on AI, IoT, and New Retail

SAP will continue to employ Alibaba Cloud technology, while Alibaba will adopt S/4HANA to drive its new business model. The two companies will also explore collaboration in the areas of AI, the Internet of Things, and New Retail.

Alibaba Cloud was established in 2009 and is China’s leading provider of public cloud services, according to Gartner. The research firm said earlier this year that Alibaba is also among the world’s top three IaaS providers, behind Amazon and Microsoft.

Gartner added that Alibaba has the capability to invest in global expansion and the potential to become an alternative to global hyperscale cloud providers in some regions.

At the company’s Computing Conference 2018 in Hangzhou on Wednesday, meanwhile Alibaba Cloud announced plans to launch its own AI chip next year, according to ZDNet.

Called AliNPU, the chip looks to boost support for cloud and smart city technologies, among others. The company has established a semiconductor division for production of the chip. Alibaba is currently chaired by Jack Ma, who recently revealed his retirement.

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