SAP Cloud Deployment Models and Their Evolution

You may have seen pictures of three main cloud deployment models, for all the cloud applications that SAP provides. I want to share the thinking behind the design and evolution of those models.

SAP Cloud Deployment Models and Their Evolution

SAP customers, who run SAP ERP on-premise applications, are adopting cloud solutions to take advantage of faster innovation, consumer grade user experience and lower total cost of ownership.

Lines of businesses such as human resources, procurement, finance, sales, service and marketing are adopting the cloud to respond to changing employee and customer expectations without having to rely on internal information technology teams and undertake large, high-cost, high-risk on-premise software implementations. They are also turning to the cloud because of the superior user experience that engages a newer generation of employees who expect enterprise software to function like consumer apps they use every day. For example, an industry that is struggling to attract and retain new college graduates can implement onboarding solutions, delivered from the cloud and on mobile devices, that attract and engage a new generation of employees during the critical new-hire onboarding period.

Line of business users normally start with one or more applications in the cloud and have a desire to get there quickly without too much help from their information technology teams. In many cases a company’s information technology team may not have the time or people to devote to a project that does not directly contribute to the revenue of that company. The hybrid deployment models are designed to meet the needs of such line of business users.

Information technology teams are adopting the cloud because it helps them deliver solutions to their internal customers faster at a lower cost, while freeing up time and money to invest in projects that help the core business of their companies. For example, a banking customer that runs SAP for Banking can move human resource management, procurement and travel management to the cloud while retaining their on-premise software to run their bank.

When companies move all their business applications in one or more lines of businesses to the cloud, usually their information technology teams take the lead in decision making and implementation. They look for a single provider who can provide multiple applications for all their business needs. The full cloud deployment models and the associated services are designed to meet the needs of such information technology teams.

Executives such as CEOs, CFO and CIOs are moving subsidiaries or newly acquired companies to the cloud and connecting cloud systems with their on-premise ERP to reduce the cost of information technology, gain better insight into the business, reduce the time it takes to integrate systems and culture of newly acquired companies.

When executives such as CEO’s CFOs and CIOs move subsidiaries or newly acquired companies to the cloud for cost and other business reasons, they do it because they may have a need to keep such subsidiaries separate for legal or other business reasons. In this model a subset of employees, usually from a subsidiary, end up using cloud applications while another subset of employees, usually from the parent organization, end up using on-premise software for the same business process. This might sound inefficient. But there are many technical and legal reasons for which executives of a company may want to key some subsidiaries separate. However, they would still need to look the whole organization including subsidiaries while making business decisions. The Two-Tier deployment models are designed to meet the needs of such executives.

The role of integration in these deployment models
When lines of businesses move their software applications to the cloud, they sometimes incorrectly assume that these applications are self-contained and need not talk to other business applications that may be on-premise and other supporting applications that may be in the cloud. Such an assumption is costly and may lead to the failure of cloud implementations. SAP studied thousands of cloud implementations and learned that on an average line-of-business cloud applications are connected to over 15 systems using at least 60 integrations. For large businesses this number could be in the hundreds.

SAP’s cloud integration strategy was developed in response to these specific consumers of cloud software, their challenges, their desires and the ground realities they face. While, SAP’s cloud applications are designed to provide complete self-contained functionality, they are also well integrated with a customer’s on-premise SAP systems to support end to end business process. SAP provides the necessary technology and content to connect its cloud applications to 3rd party cloud applications. SAP also provides a set of tools and technologies that enable customers and partners to build their own custom integrations. For customers who may not have the know-how, SAP provides fixed price professional services packages to implement the integrations.