Non-Stickiness is Clearly a Cloud Characteristic: Head- Cloud Business, SAP India

June 21, 2012
Non-Stickiness is Clearly a Cloud Characteristic: Head- Cloud Business, SAP India
Niraj Athalye talks on how its recent acquisitions enable SAP to invade the cloud space even more aggressively and go beyond the regular SaaS, Paas and IaaS offerings.
SAP is building a scalable cloud business unit offering a complete ERP suite in cloud along with a portfolio of loosely-coupled apps to its customers. We speak to the Head of SAP's Cloud Business, Neeraj Athalye on what differentiates SAP from its competition and the untapped areas of opportunity the company is looking at.

The cloud has been a much debated topic. What remains to be said?

Any new disruptive technology that comes into the market goes through its own adoption lifecycle. From a cloud standpoint, the market is yet to reach its 100 percent potential. A majority of the organization’s are still testing and trying to figure out how they can leverage this new trend.

In terms of cloud offerings, SAP has a very strong foot in the door with our recent acquisitions, especially that of Success Factors that gives us 15 Mn users in the cloud. SAP’s On Demand business, which was launched a couple of years ago, has also seen 1000 plus customers.

Since we have such strong presence in the corporate market and customers who have invested heavily in SAP, we will not try to create a solution out of the blue which will necessitate a rip and replace. The hybrid approach, therefore, is critical to our strategy.

Social media integration also plays an important role. The time it would take a marketing department to survey 5000 customers versus the information available at the click of a button through social media is a game changer. The user interface too is critical. Users expect to receive, with the advent of HTML5 and such tools, a uniform experience across all the new age devices they use.

Moreover, instead of one-year or two-year long release cycles, shorter time frames have come into play with the cloud. The speed of innovation too has drastically increased. The latest versions are almost immediately accessible to every customer through the cloud. These are some of the aspects that need to be kept in mind when we talk of cloud today.

Even then, not everything will move to the cloud. A recent Forrester research report claims that ‘Cloud is not the future’?

There are 3 pillars to corporate IT – On Premise, On Demand and On Device. SAP believes in a hybrid approach and by this we mean that we are available across all three platforms.

There are different areas that necessitate the need for these three to exist. A sales professional will need a sales force automation tool on his mobile. A regional manager will need the reports on the cloud, accessible to him wherever he is. The head office will need the customer data on premise. By default, the business needs cut across all three fronts where one cannot do without the other. We strongly feel that a hybrid approach is here to stay.

Could you elaborate on the Success Factors acquisition and how it has helped SAP in its cloud campaign?

Being a leader in the HR space, the knowledge and experience of Success factors makes the latest innovations readily available to our customers. It complements our On Premise HCM which has traditionally been a strong solution.

Also, as India grows and with it the Indian organizations, the need to manage organizational talent will be top priority for businesses and that is what the solutions from SF will help us offer to our customers.

You’ve mentioned that cloud is not just about SaaS, PaaS or IaaS. What else can be achieved through it?

With social media redefining the entire concept of collaboration, we have launched solutions like Streamwork that help people not only just within the organization but also those outside the organization to collaborate with each other in a seamless manner. My personal opinion is that it will be the next generation e-mail. It serves as a whiteboard which allows you to write messages embedded with links and in a manner similar to Facebook.

SAP Information Interchange is another application that allows SAP ERP to exchange user organizations’ data directly, and without any manual intervention, with the supplier’s ERP – whether it be SAP or non-SAP environment. Electronic Data Interchange (EDI) through a cloud platform is popular in US and Europe and is picking up steam in India. The automotive sector in India is the first to leverage it. EDI is typically done one-to-one in India. Now it is one to many with a hub and spoke model.

These innovations become relevant in a scenario where managers joining the organization from today’s B-schools have a lot of expectations from IT solutions.

What are some areas of untapped cloud opportunities that SAP is looking at in India?

We see dealer management as a massive area of growth. The first wave of dealer management was one of home-grown applications. Companies developed their own software and gave that to their dealers. The next wave involved picking up a software vendor who would build that application for the user organizations but even that has come to end of life.

We are now in the third wave, which is move towards doing this completely in the cloud. There are hardly any white goods manufacturers or auto organizations that are talking of on-premise dealer management. Almost everyone is asking for a cloud solution from a provider who has proven track record of developing quality software.

Collaboration is important and organizations want to take this to the next level to include interactions with their suppliers and key customers and ensure an optimized supply chain.

So will it be fair to say that cloud is gaining popularity in areas where information security is not the greatest concern?

Certainly not. A sales force automation on the cloud is becoming popular but that means there are revenue details involved and that for any organization is critical data. Even when you are doing multi-crore reverse auctions for procurement using a solution in the cloud there is a security aspect but it is tested.

As long as the parameters of security are met by the cloud service provider there isn’t anything for the users to be worried about. But this could be a disadvantage that the smaller players face. They may not necessarily have the robust infrastructure and tightly secure datacenters that the bigger players can afford.

What is it that differentiates SAP’s cloud offerings from that of its competitors?

An SAP cloud platform ensures that the data is secure and also that the data flows seamlessly through the cloud and on-premise infrastructure. SAP will always have solutions that will compliment our on-premise offerings and on a platform which is fully integrated to the existing systems.

It allows us to provide a seamless user experience. A user isn’t concerned where the data is coming from as long as it reaches him where and when he needs it.

This integration is what other players will not be able to offer. They have to go to ‘x’ for their sales force automation, rely on ‘y’ for sourcing and ‘z’ for HR. But with SAP’s cloud, the organizations will be much better equipped to handle these scenarios.

But such a scenario also throws up the question of lock in. How do you incorporate exit strategies into the offerings?

We have situations where customers want to try out our On Demand solutions and then move to our On Premise systems. So we need to be able to help him migrate the data and we deliver. These terms and conditions are built into the contract. You can exit at a minimal time-frame.

The advantage is that it allows you to experiment. Those who are unsure about their readiness can easily try it out with a limited number of users and then decide to roll it out to the entire organization.

How do you then approach large enterprise and SMEs as clearly, even with cloud, one size does not fit all?

Both these markets have their own distinct characteristics. For the SMEs cloud is purely a TCO (Total Cost of Ownership) game. They will adopt ready to use solutions with minimum customizations from a tested provider and enjoy the savings.

The large enterprises are evolved customers. They will, more often than not, have an on-premise platform which could be SAP or non-SAP. They have evolved processes and there are some very distinct areas where cloud has a significant value proposition for them.

The speed at which the business requirements are changing, it will be difficult for the enterprises to re-design their existing on-premise infrastructure as rapidly. In such situations they can quickly utilize a ready-to-use, 21st century solution which is easily integrated with the backend.

With cloud, the crowd is innovating on behalf of the organization. It’s the time and effort saved in terms of downloading an app which suits your needs versus developing an app for it.