SAP co-founder Hasso Plattner defends S/4HANA cloud strategy

The co-founder of the German software giant SAP, Dr Hasso Plattner, took to the stage at the Sapphire conference last week to talk about the company’s latest Leonardo product and why he sees its next generation ERP S/4HANA’s future as residing in the cloud.

Mark Hurd, the CEO of arch rival Oracle criticised SAP’s cloud strategy back in December. As reported by Diginomica he said: “Their cloud strategy, which is most often referred to by the term S4/HANA, is fundamentally a hosting strategy. It’s really taking their core ERP on-prem app and hosting it in a data centre. It’s really the physical movement of a computer from here to there.

“That’s not cloud. That’s not SaaS. So, I’m not sure that we really think of them as a core SaaS competitor.”

Plattner had earlier stated that “in the cloud is our version to aim for” when it comes to getting customers onto its next generation ERP solution S/4HANA, which works on top of the in-memory HANA database.

Later on, he responded to the criticism from Hurd by saying that Oracle is a competitor and that Hurd is “not a software guy”, before going into detail for how he sees SAP’s S/4HANA cloud strategy playing out now that the ERP system can be run on the three most popular public cloud providers (Google, AWS and Azure), as well as SAP’s own private Enterprise Cloud offering.

Plattner, who can only make strategic recommendations as chairman of the supervisory board at SAP, admits that the company is still in the process of adapting to the software-as-a-service (SaaS) model. “For forty five years the customer has operated the system, large systems. We do it now together with the customers and SAP is learning how to operate and we are getting better and better and we are getting profitable now,” he said.

SAP’s total cloud subscriptions and support revenue grew 34 percent year-over-year to $905 million in its Q1 2017 results.

Although Plattner says that SAP now gives customers the “full spectrum” of cloud ERP options, he naturally believes that running S/4 with SAP is the better option for customers. “HANA Enterprise Cloud has more traditional flexibility for the customer, in the HANA public cloud there are more restrictions,” he said.

Plattner also took the opportunity to explain to the Sapphire audience how important the new-look Leonardo platform is for SAP. Leonardo started life as SAP’s IoT platform when it was released earlier this year, but has been rebranded as a “digital innovation system”.

Ever the engineer, Dr Plattner calls Leonardo a “bounding box”. He explained: “It is a box around a set of objects, so this is a box around a set of tools to build a system which then, with machine learning algorithms, finds insights which we can attach to transactions.”

Plattner reiterated that what makes SAP’s approach to AI and machine learning unique is that customisers have all of the important business data right there underneath them, in the SAP transactional systems, and they don’t have to ferry data outside of core systems to run algorithms out at the edge.

He said: “It is the age of AI but we do it inside, we do not run around with our valuable data and go from system to system.” Plattner added that keeping the data in one place is the best way to safeguard it.