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November 19, 2012

SAP should be clearer on cloud migration, says User Group

Customers believe company is not making migration seem attractive and many don't know how to start process

By Steve Evans

German enterprise software giant SAP has come under more fire from its UK User Group – this time over migration to the cloud and the benefits it can bring.

The UK & Ireland SAP User Group has released research to coincide with its annual user conference, currently taking place in Manchester.

The research revealed that over half (58%) of SAP users felt the company was not doing a good job of making migration from on-premise to cloud-based platforms an attractive option.

Perhaps more worrying was the fact that 80% of respondents said they had no idea how to upgrade to SAP’s OnDemand offerings, or even integrate them with existing SAP implementations.

Nearly all (95%) of respondents also said they felt they should be given discounts on new licences or offered trade-ins when switching from on-premise licences to cloud-based ones.

These results echo findings revealed at last year’s user conference, when 58% of respondents said they do not understand the company’s cloud offerings and 59% said they didn’t understand the upgrade or implementation process. Just over one-quarter (27%) said they did not know what benefits SAP’s cloud platform could bring to their business.

This suggests that SAP is not doing a good job of selling its cloud offerings to existing customers, and is not learning the lessons of previous customer feedback.

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Cloud criticism is nothing new for SAP; the company has been accused of being slow to react to the shift away from traditional on-premise deployments to cloud computing.

The company has been working hard over the last few years to change that opinion; it has made a number of acquisitions to boost its cloud strategy, spending nearly $8bn on collaboration firm Ariba and human capital management vendor SuccessFactors.

Peter Lorenz, who was in charge of the OnDemand division until he stepped down earlier this year, told CBR at last year’s TechEd/Sapphire Now conference that the company had been slow to embrace cloud computing but added it was confident it was making the right moves.

"I think it was important for SAP to understand what the differences are between the business we’ve been running very successfully for 30 years and what the new requirements for the new business are," he added. "There are new requirements and you have to comply with them. We know now where this thing is going and what it means, so the whole strategy has to be more than ‘Here’s a service’."

Alan Bowling, chairman of the UK & Ireland SAP User Group, said most customers know now the benefits of cloud computing but called on SAP to make the journey more appealing.

"Many users see cloud as a different way of delivering IT services. Therefore they are asking the question, if they have already invested in an IT service do they want to pay for it again simply to have it delivered from the cloud? We are now at the point where the benefits of cloud are well understood; however, what we as users need is simple and cost-effective deployment strategies," he said.

Bowling also questioned whether SAP is doing a good enough job of explaining how those cloud acquisitions will fit into its strategy and how they will benefit customers.

Before the conference began User Group CEO Craig Dale predicted a big theme at the conference would be how to drive value from an SAP implementation, and the survey has suggested that is something many customers are concerned about, particularly when it comes to using SAP to get the most out of data.

Specifically users are concerned about SAP BusinessObjects, the company’s business intelligence platform, acquired for $6.8bn in 2007.

"Many users have already invested in SAP BI and BW, so they want to know if they will be treated like completely new SAP customers if they move to SAP BusinessObjects. Or will users be given discounts to account for the fact they have already invested in similar technology from SAP? " Bowling said.

"Clarity over these issues will help users tackle the data challenges they are facing more quickly and may lead them on the path of HANA adoption to speed up processing. But without clarity and understanding from SAP we could find many organisations unable to move forward," he added.

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