Europe's largest enterprise software company SAP said that they are migrating its customers away from software run on their own premises and into its cloud offerings by 2021.
Speaking to TechRadar Middle East in an exclusive chat, Zakaria Haltout, managing director of SAP UAE, said that some of its customers are already on the cloud, some are moving to the cloud now and some in next year but “we will have very few on-premises customers in the UAE after 2021.”
He said that digital transformation in the cloud sector is reaching its tipping point in the UAE.
According to a survey conducted by SAP and YouGov recently, 88% of customers in the UAE said that they plan to increase cloud spending next year and 59% of all respondents will increase cloud spend by at least 30%. Overall, 83% of IT decision-makers said their organisations will run partially or fully on the cloud in 2020.
According to research firm International Data Corporation, the public cloud market in the UAE is expected to grow by 35% to $406m in 2020 compared to $299m this year.
“The cloud adoption in the UAE is much bigger than certain mature European countries,” he said.
Moreover, he said that SAP was the first multi-national enterprise software company to have a public cloud data centre in the UAE.
SAP has its own public cloud data centre in the UAE and private cloud data centres with local partners such as Microsoft Azure, Injazat and Dewa’s Moro. SAP also has a data centre in Saudi Arabia.
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ERP is still core business application
Haltout said that cloud journey has been amazing and it is the strategy of SAP.
“We started our cloud offering in 2010 and 2011 by offering private cloud (on-premises) and then we moved to the public cloud. Some critical industries such as oil and gas or financial services prefer to have hybrid model, due to data residency, and they would like to taste the flavour of cloud computing and do some customisation,” he said.
Due to the local data centres, Haltout, an ex-Oracle consultant, said that SAP’s cloud customers, in some quarters, are growing in triple digits and compared to year over year, it is growing in double digits.
Some of SAP’s big customers include Adnoc, Dewa, Fewa, Enoc and Etihad Airways, to name a few.
Haltout said that when he joined SAP in 2008, ERP used to contribute more than 80% to the growth but now it is around 30% as SAP now has other solutions to offer.
He admitted that ERP is still the core business application.
“We have S/4 Hana, fourth generation of ERP, in both private and public cloud. I have been implementing ERP for more than 10 years, including those of rivals. S/4 Hana runs on in-memory database platform and no other vendor has a similar offering,” he said.
ERP on a public cloud can be challenging
Even though multiple reports are talking about S/4 Hana public cloud not meeting customers’ demands and satisfaction, Haltout said that public cloud offering is something new, about three years ago.
“We are still adding pieces by pieces of vertical solutions. Customers are expecting the same offering they get from on-prem in the cloud also, just like plug-and-play. People are comparing it with the S/4 Hana on-premise as it covers twenty-five vertical solutions. It is the result of the development of SAP in more than 40 years.
“The core for S/4 Hana is the same but both private and public products are different. If customers request a lot of customisation on the public cloud, we recommend them to have it on-premises. If customers go for discrete manufacturing, manufacturing, professional services, retails and so on, then we recommend the public cloud,” he said.
ERP on a public cloud can be challenging, he said and added that it is the case for all other vendors as customers don’t take it seriously from the beginning and due to lack of involvement from senior management as they only rely on IT staff.
“When we meet a customer, we say that this is a business project and not an IT project. Customer should have a clear understanding of what he is looking for and without taking advantages of SAP’s best practices, then it is challenging. Public cloud limits customisation,” he said.
Moreover, he said the objective of the public cloud is to have “zero customisation”.
In the UAE, SAP rolled out S/4 Hana public cloud last year and some customers are already live.
“We are number one in the UAE in the ERP space. Adnoc, Dewa and Enoc use to run on Oracle and they changed to SAP,” he said.
Exterminating product silos
When asked whether SAP is facing a big technical challenge to get all recent acquisitions working together by integrating them, he said that more than 90% of its acquisitions are now running on Hana and everything will be on Hana platform in 2020.
The big acquisitions which SAP made recently are Qualtrics for $8b, Concur for $8.3b, SuccessFactors for $3.4b and Callidus Software for $2.4b.
“We aim to exterminate product silos and to bring greater focus and rigour into SAP’s product strategy,” he said.
Furthermore, he said that SAP solutions can now run on Microsoft Azure and Amazon in the UAE but the priority to customer choice.
When asked why Azure, he said that SAP’s expertise is to build software and “we want to continue to build software rather than services and hardware. Microsoft and AWS chose to specialise in this area and this how we can leverage each other. In the UAE, Microsoft has a good business in the public sector and having our apps on Azure is an advantage for us.”