Can SAP-IBM Deal Keep Oracle, Amazon At Bay?

by CXOtoday News Desk    Oct 15, 2014

deal

Tech giants SAP and IBM have announced a partnership to offer cloud computing services to the enterprise. While the companies believe that a new partnership will help strengthen their positions in the cloud computing space experts see it as a great way of outpacing rivals like Amazon and Oracle that have chosen to build their own network of data centers, but are also bullish on enterprise cloud applications.

SAP and IBM, who have been long time partners see businesses increasingly moving their data to the cloud. As per the partnership, IBM will provide cloud infrastructure services to SAP, which will run its business applications— the HANA Enterprise Cloud—on top of them.

“SAP has really morphed as a company to a cloud application and platform company. Our goal is to be the cloud company powered by HANA,” Kevin Ichhpurani, SAP’s head of business development said in a statement.

SAP developed its database HANA an “in-memory” database, to outpace its rival Oracle. Oracle too has its own in-memory database, and it is selling it on its own hardware. Meanwhile, IBM was also expanding its cloud capabilities, often with a loggerhead with tech giant Amazon, just like other vendors such as Oracle, HP, and Microsoft. Today every single vendor is looking to grab a pie in the cloud space, competing with Amazon. Incidentally, early on it also partnered with Amazon to sell a limited, cloud version of HANA.

But it sees greater gain in the IBM partnership which will be selling the full version of SAP’s database in the cloud, known as SAP HANA Enterprise. As an expert notes, while enterprises might test HANA using Amazon’s cloud, they couldn’t really use HANA for big apps. And the point of HANA is to use it for big apps.

IBM has been selling SAP apps for enterprise customers for many years now. So it makes sense that SAP would turn to IBM to help it host its cloud.

The deal would also be useful from a regulatory perspective, as, the location of a data centres becomes important from a compliance and regulatory perspective. Other factors include having your business-critical data closer home for better performance and accessibility. Experts have already noted that latency is a key issue when cloud services are hosted outside India.

Therefore, concerns about SAP not having Indian data centres would be addressed and enterprise apps that Indian companies have not moved to the cloud because of compliance concerns may now have a viable option.

IBM has partnered with Apple to sell phones and tablets (and related applications and services) to business customers earlier this year. This would be the second big deal in a year for the Big Blue. For SAP too it’s a further drive to offer its applications worldwide, which in turn can boost its revenue. Experts see this as a win-win deal in the cloud computing space.