Microsoft and SAP have been working together in the cloud arena for the past several years. Naturally, any time two tech powerhouses of this magnitude come together for collaboration, industry ears perk up (including mine). For years, the two companies have been working together to get SAP’s business software and services up and running on Microsoft Azure, and it was announced in 2014 that a handful of SAP’s business applications would be Azure-certified. Today Microsoft and SAP took their years-long partnership a step further, with the announcement of new integrated enterprise offerings, and a good faith deployment of each other’s cloud solutions internally. While SAP has been on-stage at events from Amazon.com AWS, Google GCP, and IBM Cloud, I do think there is a message that Microsoft and SAP announce this during AWS’s reInvent conference, and that is that SAP prefers Microsoft Azure.
New offerings and integrations
The new offering, SAP HANA Enterprise Cloud on Microsoft Azure, will enable customers to run SAP S/4HANA on Microsoft’s secure, managed cloud. The companies say this will allow customers to “get the best of both worlds,” leveraging Microsoft Azure’s intelligent, trusted cloud (and portfolio of cloud services) with SAP’s tried and true application management and product expertise. SAP and Microsoft boast several mutual big-name customers, such as Coca Cola, Costco, and Columbia Sportswear, all of whom are bullish that the expansion of the partnership will help drive their respective cloud strategies.
The other big announcement of the day was that both SAP and Microsoft will start running S/4HANA on Azure for their internal operations. SAP announced it would be moving over a dozen of its business critical systems to Azure, such as the SAP S/4Hana system supporting Concur—a leading provider of integrated travel and expense management solutions, owned by SAP. Microsoft announced that it is currently in the process of modernizing and transforming its internal systems, replacing its legacy SAP finance applications with SAP S/4HANA Central Finance on Azure. Microsoft also announced its intention to connect SAP S/4HANA to Azure AI and analytics services, which the company says will make financial reporting more efficient and decision-making more powerful.
The partnership with SAP is part of a several-year-long effort by Microsoft to entice more big-name software companies to host their goods on Azure and challenge Amazon.com’s current grip on the on-demand, web-based compute market. Amazon.com still has a market share edge on Microsoft and its other competitors, offering almost 100 different services under its AWS umbrella. However, it’s important to note this dominance is due in part to the fact that AWS has been around the longest—the competition is making strides in its effort to catch up.
All in all, this looks to be a big expansion of an already good, strategic partnership. Increasing compatibility between the two tech giants is only going to make Azure more alluring to potential customers looking for an alternative to AWS. In addition, the fact that the two companies will be running each other’s solutions internally is a measure of good faith and a tell-tale sign of a well-functioning partnership. I’ll continue to watch with interest.