Cloud should go beyond cost savings, says SAP
By Edwin Yapp November 6, 2013
- The cloud is more than TCO savings on TCO; it’s about empowering greater business agility
- Should not be a CIO discussion but about business and value to customers, says SAP
THE conversation within the industry about cloud computing should no longer be about lowering costs of IT infrastructure but about enabling businesses to attain better agility, and consequently help them raise their overall business value, says German software giant SAP AG.
According to Francois Lancon, president and managing director of SAP South-East Asia, enterprises should embrace the cloud not so much to lower their total cost of ownership (TCO) but because it can give businesses clear advantages over the competition.
“It’s nice to have lower TCO but that’s the cherry on the cake,” he said at a media briefing recently. “[However] while TCO used to be the fundamental value of the cloud for enterprises, this is no longer true anymore.”
Lancon (pic) said the value of the cloud today is about three things: The first is about faster deployment, thereby quicker time-to-market; the second is about more frequent innovation and software updates; and lastly, it's about agile deployment, configuration and the ability to integrate.
Faster deployment means enterprises using the cloud typically are able to deploy new applications and features in weeks instead of in months, he said.
He said being more frequent in innovation updates means vendors no longer need to tell their customers every three to four years that it’s time to upgrade their software according to their maintenance contracts.
Customers, on the other hand, need not worry about expensive software upgrades and long durations to do so, he added.
“In the cloud, software is upgraded automatically, so customers are out of this dilemma, and they don’t have to go through that tedious process.”
Lastly, Lancon said enterprises can deploy new functions with the cloud relatively easily.
“Typically these cloud applications have ‘connectors,’ which enable enterprises to hook their on-premise data centres onto a cloud service provider’s infrastructure, and they can do this a lot faster than they could with traditional software.”
Cloud impacts business basics
Notwithstanding the clear advantages the cloud can offer enterprises from a technology perspective, Lancon said the true power of the cloud is in its ability to help them enable new business processes and gain better insights to their business activities.
A typical enterprise would have already enterprise resource planning (ERP) in place to manage customer relationship management (CRM), financials, and human resources.
“But do you have ability to mine social media data? And not only that, to be able to map it back to your CRM systems, and be able to then use the data to define marketing and sales strategies? If so, how long will it take for you to deploy such implementations?
"With the cloud, it could be a matter of weeks, but on your own, it may be a matter of months,” he said.
Lancon also gave other examples of how the cloud would enable business agility and these include the areas of workforce management and purchasing, and procurement.
“For example, if you as a financial company want to train your people in regulation and compliance, what tools do you have to do this? Can they be deployed quickly, managed easily and can content be changed flexibly?
“Or if your company was not tracking your invoices properly because of poor processes, would that not impact your cash flow directly? Automation through software on the cloud would solve these challenges,” he said.
Lancon said these are the issues facing the C-level suite today, adding that is what a CFO or CEO today would have to think about.
“[Therefore], the cloud is not a CIO discussion per se but about business discussions,” he argued. “It’s about re-inventing the way you do your business and successful companies are doing this with the tools the cloud provides.”
Lancon claimed that SAP understands the elements and is be able to help companies with some of these challenges currently facing enterprises.
Powered by its SAP HANA in-memory technology, the Walldorf, Germany-based software player's cloud platform has a suite of applications which Lancon said could serve enterprises well.
“We see the future comprising the hybrid cloud – a combination of private, on-premise cloud infrastructure connecting to our SAP HANA cloud, which gives flexibility for our customers to retain control but yet benefit from our cloud offerings,” he added.