SAP Takes It All to the Cloud

SAP, the German software giant, is making one of the largest pushes into cloud computing yet seen from a large incumbent company. It may even be destroying its own business, in order to build for a new one.

SAP is famous for developing enterprise resource planning, or ERP, software. ERP is used to control complex manufacturing, run corporate functions like financials, or manage a company’s systems of supply. A few years ago SAP introduced HANA, a product that combines fast computing and data retrieval to better analyze how well a company is working. The product has been a big hit, and SAP has been proclaiming it the company’s future.

On Tuesday SAP said it would offer HANA as a cloud-based product, providing companies with access for the cost of a license. Prices were not disclosed. SAP has established a network of seven data centers around the globe to support the endeavor, a company official said, and will begin by deploying 30,000 computers for the network.

“We will do cloud-based ERP on a massive scale,” said Vishal Sikka, a member of SAP’s executive board and one of the people who oversaw the project. Of SAP’s regular product, he said, “At some point in the future, complex implementations should go away. All of our products are moving to HANA.”

SAP, along with companies that have agreed to test the product, already has 750 terabytes of data in the system, enough data to fill 750 million good-sized books. The company expects to have twice that amount in the system by the end of the year.

That probably is not all that much data, compared with the amount SAP touches the old-fashioned way, with conventional computer servers inside companies, but it is a decent start. As SAP builds the trust of big customers with its cloud, Mr. Sikka said, SAP will become a giant.

“We have single customers running projects that are bigger than the entire Salesforce.com cloud,” he said.

SAP has already been running both cloud and software as a service, or SAAS, projects, thanks to its acquisition of two companies, Ariba and SuccessFactors. With HANA in the cloud, however, SAP is moving much more into offering insight online, either directly to its customers, or as a service to end-users.

Mr. Sikka said SAP served some 220 utilities globally, who reach about 2.5 billion customers. The utilities could let the customers use HANA to model how much they were spending, and finding ways to cut their bills. “We realized we could do that for them with 2,000 servers,” he said.

Other uses of the data analysis tool might include real-time understanding of online customers, financial risk analysis or rapid insight into geologic information for energy companies, he said.

If SAP follows through on a fast build out to cloud computing, it could create some tension with Amazon Web Services, currently an SAP partner. AWS has recently made it clear that it wants to host a lot more corporate computing in its giant cloud.

And, as usual over the last couple of decades, the move will be viewed in terms of competition with Oracle, which is operating its own cloud services, but also offers a lot of servers and software for customers to buy and use inside their companies.

“Oracle - what can I say?” Mr. Sikka said. “The future is in open clouds, not proprietary hardware.”

Oracle didn’t see it that way.

“Technically speaking, neither is more or less proprietary than the other,” said an Oracle official, who was not authorized to speak for attribution. “HANA is expensive and proprietary, it must be paired with a hardware system from the factory. We use standard commodity components, and engineer the hardware and the software., so we can deliver better performance.”