SAP has truly emerged as a "cloud company," making tremendous progress in diversifying and boosting its cloud offerings to help its customers effectively manage people, money, clients, and suppliers. More than ever before, customers are demanding access to SAP solutions with cloud deployment and subscription consumption models. Beyond the company’s core cloud solutions, SAP has also worked closely with partners certified in hosting and managed services to enable customers to consume SAP’s proven on-premise solutions with cloud deployment on a subscription basis. We call this arrangement "managed cloud as a service." Let’s explore how this model works, what benefits it offers to both customers and partners, and its future direction.
Unique Model Delivers Immediate Gains for Customers
With managed cloud as a service, partners deliver SAP solutions to their customers as a turnkey offering on a subscription basis. These offerings typically include hosting and management of SAP solutions on a private cloud infrastructure, full support and management of the applications, and implementation and migration services, with no need for the customer to license solutions separately from SAP. This approach provides customers all the benefits of a cloud consumption model — pay-as-you-go economics; rapid time-to-value; low TCO; and scalable, flexible deployment — coupled with fully managed, enterprise-class SAP solutions that were previously only available on premise. A recent study by VMS AG, a company focused on fact-based benchmarking and analysis of the TCO of SAP solutions, concludes that managed cloud as a service enables 30% savings over a five-year TCO life cycle. Roughly half of the savings are realized in the first year as companies avoid up-front capital investment in hardware and software. Other savings are captured throughout the following years as operations costs, continuous improvement projects, and upgrades are greatly streamlined and simplified due to cloud computing efficiencies and resource consolidation.
Capitalize on the Booming Cloud Market: The Advantages for Partners
As enterprises of all sizes explore and commit to cloud deployments, we are seeing a clear, fundamental market trend: Dynamic, hybrid solution landscapes combining on-premise, hosted private cloud, and public cloud solutions are continuing to gain popularity, and will persist for the foreseeable future. To manage the transition of their solution landscapes and the ongoing evolution of deployment models, companies are turning to trusted partners and creating a compelling market opportunity in the process. According to IDC, the hosted private cloud services market is expected to grow at a compound annual rate of 50.4% (from 2011 to 2016).
Partners that provide managed cloud as a service find that they can grow their business by delivering new offerings, building new pipelines, and closing more deals. Access to SAP’s solutions gives these partners a robust foundation for delivering their own domain expertise and unique service offerings, all in a single subscription-based pricing model. In many cases, these companies find that delivering a turnkey cloud offering is a great door-opener for further opportunities to add value for their customers. The pay-as-you-go model allows a greater portion of their customers’ investments to go toward innovative new capabilities, rather than toward basic infrastructure that simply "keeps the lights on."
As a result, the opportunity for partners is booming — and not just for technology services vendors. Telecommunications companies, financial services institutions, and companies in other industries have begun to elevate their customer value propositions by offering SAP solutions delivered via the cloud (see Figure 1).
Emerging Future Direction
Today, managed cloud as a service is a substantial business that is rapidly accelerating and gaining momentum. SAP is expanding its roster of more than 175 providers and aligning its collaboration to the customer segments, industries, solutions, and geographies that represent the greatest mutual business opportunity.
For example, in some cases, the provider’s most viable opportunity is a coverage area shared by the SAP field sales organization. In this scenario, partners secure license capacity by purchasing bulk licenses up front and commit to selling in collaboration with SAP; in return, they enjoy status as one of a few designated providers in the relevant domains or markets, selling and delivering in full alignment with the SAP field. In other situations, the provider’s focus is inso-called "white spaces" — areas of the market SAP’s field does not cover. In this case, the provider purchases bulk licenses and, in return, becomes the "go-to" partner for target solutions in a pre-defined territory or scope of the market.
In either situation, customers can count on a provider that is certified by SAP to deliver hosting solutions and application management services. These partners undergo a rigorous assessment of their delivery and support capabilities to ensure ongoing high standards for the management of SAP solutions.
SAP’s commitment to the cloud is clear, and offering cloud choices to our customers by leveraging the power of the ecosystem is a key part of that commitment. When customers evaluate their enterprise solutions roadmap, they can consider how managed cloud as a service may play a key role in delivering the value of SAP solutions faster and with less up-front investment by bringing the benefits of a cloud deployment model and subscription economics to traditional on-premise solutions. For more information about managed cloud as a service, visit www.sap.com and use the search term "MCaaS."