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Five Ways the SAP Cloud Strategy Opens the Door to Business

Feature Article | November 17, 2014 by Andreas Schmitz

Extending business networks, helping small companies gain a foothold in the market, and reducing the data footprint are just some of the ways the SAP cloud strategy is opening opportunities in business.

Current trends are sending a very clear signal: Three quarters of companies’ IT investments will go toward hybrid and cloud applications in 2016, and 30 billion mobile devices will be connected to an “Internet of everything” by 2020. Using the cloud, SAP has already brought together 15 million people through its social business networks—with no sign of slowing down.

According to a recent analysis by IDC market researchers, the partner companies in the SAP ecosystem alone will generate €26.4 billion revenue in four years, six times as much as in 2014. In line with these developments, SAP Executive Board Member Bernd Leukert is emphasizing a “cloud first” approach. Leukert says that since the cloud makes new applications available immediately, companies can implement them ad hoc. This even includes mission-critical systems, according to Helen Arnold, member of the SAP Managing Board.

Here are some of the amazing things the SAP Cloud is already doing to open the door to more opportunities for business.

1. Enabling faster innovation

In the past, reduced costs were the main reason why companies used cloud applications. “Customers are now aware that the cloud also allows for faster execution on innovation,” explains Sven Denecken, global vice president responsible for cloud solutions at SAP. Tire manufacturer Contitech has long been using a mobile cloud solution to access its customer management system from anywhere, and teams at compressor specialists Kaeser collaborate through the SAP Jam social software platform. This is all due to speed having become a differentiator and providing a competitive edge. SAP updates cloud products every quarter. This represents a four-fold increase compared to the enhancement packages (EHP) for on-premise ERP solutions.

2. Defying industry pressure

In the industry, pressure to innovate is growing. “Nowadays, two or three resourceful individuals can get a business model going, something that entire companies would have been busy with in the past,” says Denecken.

The taxi industry is having a hard time dealing with Uber, the private driving service that enables anyone to use their car as a taxi. Airbnb turns private apartments into cheap hotels upon request. Industries are being forced to be as constantly creative as small startups, otherwise their business models can become has-beens from one month to the next. The cloud supports companies in providing individualized offerings.

One example from retail: For sales in the cloud, Nestlé subsidiary Nespresso relies on the cloud shop solution from hybris to get closer to its customers. hybris makes use of multichannel marketing. To quote Ariel Luedi, CEO of hybris: “The linear way of shopping is dead.” This is why he is now emphasizing the “customer journey.” The prerequisite for this is a system that serves all channels simultaneously. “Say you buy two products for the price of one as part of a promotion,” Denecken explains, “and then you go into the shop to return one of them. This has to be made possible.”

3. Reducing the data footprint

SAP Simple Finance, a technology trio comprising SAP ERP, SAP HANA, and the finances add-on, eliminates aggregates and indices which previously made quarterly reports or annual reports so laborious. Leukert’s promise: Costs will decrease and system flexibility and expandability will increase.

The first external customer to use SAP Simple Finance is La Trobe University in Melbourne, Australia. A small group of customers is currently testing its application. The add-on signals the start of the “s-innovations,” which will initially be available only in the cloud, but will also be coming to on-premise systems.

SAP’s calculations suggest that for a company that currently requires seven terabytes of data storage capacity, one terabyte will suffice in the future. Even though these solutions will integrate the processing of analytic and transactional data with existing tasks, they will require less hardware, fewer backups, and lower bandwidth.

4. Connecting companies

With the acquisition of Concur, SAP continues to expand its B2B network activities. Ariba already has over 1.5 million companies connected through a single retail platform. Here, customers are provided with information about their suppliers, can compare themselves with the competition, and do actual business.

Deutsche Bank, for example, uses Ariba to run an online clearinghouse. The network’s members can settle their financial business and consolidate their orders in one place. SAP sees great potential in Concur to extend SAP services within its B2B network. The Washington-based company’s services, booking business travel for companies and managing their travel costs, could also be offered on the Ariba network. Concur has over 20,000 customers, which include the likes of Google, Kellogg’s, and Deutsche Bank. It runs a unique platform that networks travel agents, hotels, and carpooling centers, and integrates all their offers and services into its travel planning.

5. Making it easier for startups and developers to build applications

Sooner or later, all solutions (like SAP Business ByDesign) will be transferred onto the SAP HANA platform, greatly benefiting startups and developers. The programming language Java and the SAP language ABAP can be employed for SAP HANA. This is one major reason why there are already 1,500 startups that are working towards solutions based on the platform. Even Amazon Web services can be built on top of the SAP HANA platform.

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