Big SAP customers eager to move to the cloud

But security and integration concerns over cloud services linger, according to the study

Some of SAP's largest customers plan to nearly double what they now spend on cloud deployments in the next year -- good news for a company that is trying to position itself as a key player in that market -- according to research commissioned by IT services provider HCL.

SAP's largest customers are keenly interested in moving to cloud deployments, and in a big way, research commissioned by IT services provider HCL suggests.

Some $39 billion worth of SAP "landscape," a commonly used term for the development, test and production systems SAP customers have, may move to the cloud within two years, according to the study conducted for HCL by Vanson Bourne.

The study also found that 45 percent of companies spent more on SAP cloud investments during the past year and will almost double that spending during the next 12 months.

While companies are looking to cut costs, 59 percent cited "agility and speed" as another reason to move to the cloud, while 46 percent named "access to new technologies," according to the survey.

But some longstanding enterprise concerns about cloud computing remain in effect, judging from the survey results. Thirty percent said integration with on-premises systems had been an inhibitor and another 36 percent raised concerns about security and privacy in the cloud. Thirty-eight percent said they simply haven't had the budget to buy cloud services.

Few large SAP customers are considering a wholesale move to the cloud. Eighty-eight percent of survey respondents said they would use a hybrid approach, keeping some systems on-premises.

When SAP customers do adopt the cloud, it won't just be for SAP's packaged SaaS (software as a service) apps. Some 56 percent said they intend to use SAP's Hana Enterprise Cloud at some point. SAP is offering hosted versions of its flagship Business Suite on the service, which runs on Hana, an in-memory computing platform that lies at the center of its overall product strategy.

SAP's decision last year to let customers essentially trade in on-premises software licenses for new ones in the cloud was a popular one among respondents, with 74 percent saying the move has encouraged them to adopt cloud services.

"These stats are not surprising and only highlight the groundswell of opportunity represented by cloud solutions going forward," an SAP spokeswoman said via email Thursday.

Vanson Bourne surveyed 100 executives from enterprises with at least than US$1 billion in annual revenue. Sixty-seven percent of the companies had at least $5 billion in revenue. Fifty respondents were in the U.S., 40 were in the U.K., and the remaining 10 are based in Australasia.

Timken, a large bearing and steel manufacturer, has made a big investment in SAP's cloud offerings, having moved a range of human resources processes to SAP's SuccessFactors application suite.

Previously, Timken had run HR on-premises for 30 years, said Rob Arbogast, director of OA program deployment, in a recent interview.

With SuccessFactors, Timken "immediately gets best-in-class" features for HR, Arbogast said. And life is just easier with the cloud, he added. For example, Timken doesn't have to worry about keeping the system updated with the manifest legislative changes that happen each year in countries around the world, Arbogast said. "It reduces my complexity."

That's not to say there aren't compromises with SaaS. "If you have your own system you can write whatever you want to write," he said. "The big difference is that I no longer can do that and I have to work within the configurations."

Meanwhile, even if it lacks full-blown geographic and industry representation, the HCL survey results are good news for SAP, which has seen sales of on-premises licenses fall in recent quarters. The vendor has made a series of moves to rebrand itself as a cloud vendor, both through a series of acquisitions and public declarations of taking a "cloud-first" approach to product development.

At last week's Sapphire conference, SAP revealed a key new part of its cloud plans, unveiling Simple Finance, the first in a series of ERP (enterprise resource planning) modules that will run on the Hana Enterprise Cloud. Simple Finance features a radically simplified code base compared to its on-premise Business Suite counterpart.

Over time, more elements of the Suite will get the same treatment as part of what SAP is calling the Simple Suite.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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