What are the key drivers for moving SAP to the cloud?

While the cloud is increasingly becoming the way of the future, many organizations continue to prefer on-premises data centers, which some consider a safer choice. When it comes to SAP, many are not sure about the overall business case and how to justify the move to the cloud, which can be a major undertaking.

We have created a series of blog posts to make you understand what are the key drivers for your SAP to cloud transformation and how you can prepare best for the next steps to come:

1. What are the key drivers for moving SAP to the cloud
2. How to create an effective strategy when moving SAP to the cloud?
3. 12 things to include in your SAP cloud migration plan

What drives your SAP migration to the cloud?

SAP isn’t typically the first platform that an organization moves to the cloud. However, it can be one of the most significant workloads. Understanding the main drivers for an SAP cloud migration and what future innovation benefits it can bring will justify the move and can impact the organization’s broader cloud adoption strategy:

• Agility: In this ever-changing world where speed has become the new fuel for business success, organizations are forced to react much faster to the latest trends, technologies, security risks and innovations. Staying on-premises means significant lead time to procure and install new infrastructure compared to public cloud, and increases the amount of time, money, and people you will have to invest in to maintain your SAP estate to avoid compromising on speed and flexibility. With a cloud-based approach, your organization can focus on the opportunity rather than the IT infrastructure needed to take advantage of it.
• Efficiency: At its core, efficiency is about removing unnecessary steps to streamline processes that increase productivity or deliver on your customer requirements faster. On-premises infrastructures do not benefit from the level of automation and economies of scale available in the public cloud, adding more manual tasks to your workday and building up the complexity you must deal with to keep your business running. On-premises infrastructures are also more prone to human errors, a common cause for outages. As a result, this decrease in efficiency slows down business growth and the ability to fulfill customer needs quickly.
• Flexibility: Running your SAP estate on-premises does not offer the cost optimization opportunities that public cloud offers nor the flexibility to scale your costs up and down as you please. The pay-as-you-go-model’s available in cloud mean you only pay for infrastructure you use as and when you need it. This frees up budget to fuel your modernization and innovation engine, leading to a more agile, flexible, and efficient business model.
• Resilience: While an on-premises SAP infrastructure might offer a secure landscape for your data, these systems are never completely watertight. Without a proper disaster recovery solution in place – which can be quite expensive to maintain – you are exposed to potential physical damage and/or security attacks that put your data and the availability of the critical SAP system at risk. Another risk stems from your software which might need manual updates and extensions to remain current. Such holes in your infrastructure strategy can bring costly disruptions to your business and add more tasks to your workload.
• Cost Effectiveness: Running your SAP environment on-premises not only leaves you with the full ownership and responsibility for your infrastructure, but also requires a fair amount of pre-planning and pre-investment to determine how many data centers you should have to cover an expected demand. While the assumed demand won’t hit you and your organization from day one, you will have to pay for this capacity to scale up from the outset. As a result, you are not cost-effective, and you are highly likely to pay for more than you consume.
• Innovation: Disruptive technologies conquering the market are driving business innovation and modernization. If you want to stay ahead – or at least abreast - of your competition, you will have to adopt some of these innovations. Organizations that already have a cloud strategy in place may want to align SAP with the rest of their applications and data, beyond their current computing and storage in the cloud. Public cloud vendors are heavily invested in innovation and providing added value services such as Big Data and analytics, AI (Artificial Intelligence), and process automation.

Cloud in action: making your SAP estate work to your advantage

To better understand what can trigger a migration to the cloud, let’s break down a few different business scenarios you might have experienced:

Obsolescence of your current infrastructure

Your SAP infrastructure is an important cost item in your IT budget. The company expects the IT team to increase the flexibility of the way the business operates and be able to accelerate the response times to business requests. But these demands can’t be met within the limitations of your current on-premises infrastructure, which is aging. The hardware your SAP runs on is often the weak link, with limited or costly support provided from the vendors to remain using it. To stay competitive, your organization must be able to respond to market changes quickly while adhering to stringent security, compliance, and governance protocols. It’s critical that you know when your current infrastructure can no longer carry the load and create a solution, which could involve overhauling or decommissioning a facility that is no longer fit for purpose. This will take time.

In contrast, if your SAP estate runs in cloud, your organization no longer has to worry about upgrading and maintaining data centers and servers and can leave that to the cloud providers. What’s more, you can seamlessly scale up and down infrastructure to best support the business requirements at any given time, meaning you can respond to business requests and industry opportunities far faster.

Relieving your IT wallet

Many IT departments experience increasing pressure to operate on tighter budgets, optimizing their architecture to reduce costs. There is also pressure to shift costs from CAPEX (Capital Expenditure) to OPEX (Operational Expenditure), to free up budget for other critical business investments.

Finding ways to reduce spending is an important part of maintaining efficiency and staying on-budget. A first starting point could be to look for unused resources in your SAP estate as servers and related on-premises infrastructure aren't cheap. Between power, cooling, networking gear, and the software licenses needed to run everything, the upfront capital expenses attached to a complete in-house IT infrastructure are quite large.

Taking advantage of cloud computing solutions to handle your infrastructure needs can reduce this burden massively. Instead of having to deal with a large upfront capital expenditure, you can get all the benefits of a complete, functioning infrastructure for an easily managed, consistent operating cost by using a cloud service provider’s investment in the latest generation servers and systems.

Need to innovate

The technology market is changing rapidly, and organizations are faced with increased demand to adapt their ERP platform to meet constant changes in business requirements.

Innovation is survival as new business models appear and challenge the old way of doing business, with customer expectations shifting, and organizations needing to provide the best customer experience possible. Innovative technologies including big data, AI and process automation enable better anticipation to serve customer demands and provide real time updates as well as a streamlined experience for customers engaging with your business. The need to innovate is not optional. It’s a vital requirement to stay in business.

The cloud unlocks new opportunities to expand your ERP capabilities and deliver transformative products and services, including the processing of massive amount of data, enhancing insights, business processes, and tools to build innovation. Ultimately, the greatest advantage is that the organization can be innovative without having to build everything from scratch.

Why approach SAP cloud migration with a different mindset?

When it comes to cloud infrastructure, it is essential to shift mindset to reap the benefits offered by the cloud. New ways of thinking and new processes and functions are key to optimizing cloud costs.

These are key mindset change lessons:

• Leave it to the cloud experts: the key to taking full advantage of cloud infrastructure, including cost optimization, starts with the design. can’t be a replication of the “old” design, anchored in years of experience of on-premises architecture.
• The role of IT is changing from owner-builder to custodian: IT departments will provide the overall governance across all new technologies, many of them acquired rather than built and ensure that contracted SLAs are being respected, that the systems are interoperable and can work together, and that the service providers have long-term visions that are compatible with the direction that the company is heading in.
• Acting as a custodian allows IT to leverage the knowledge of end-users with respect not only to new applications and devices but also of new uses of existing technology.