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To understand SAP’s Cloud Strategy, it is important to retrace our steps back to 2003 and look at the journey till HANA. Another key factor in the understanding would be to look at this journey from Gary Hammel and CK Prahlad’s “Competing for the future” context, which clearly specifies Strategy, tactics and Operations as distinctive elements in execution. SAP’s strategy to the Cloud remains unchanged, the tactics change rapidly and rightly so and the nature of Operations is largely driven by the SAP Customer and Partner Ecosystem.

SAP starting 2003 till 2011:

Allow me to retrace our steps and ramble a bit on SAP’s Cloud strategy starting from Jan, 2003, when SAP Netweaver was launched during Shai Agassi’s days. The concept of ‘ESA’ was unveiled and Shai hinged the entire concept on interoperability by addressing the world of web services coupled enhanced with business semantics to drive the redesign and development of the what one would call the ‘Mother-board’ known as R/3. (Am only starting from core R/3, post 4.6c). This meant turning around all the components of SAP R/3, the extended-enterprise components and create an open platform that would follow specific standards from UN/CEFACT and derived into a methodology known as CCTS (Core Component Technical Specifications). This meant driving a common understanding between systems and enterprises to have these services understand the semantics of the business information to be known and understood with the help of a common understanding of semantics at a conceptual and a contextual level for standardizing the information dissipation across the enterprise that would touch upon the very definition of CDTs (Core data types that would be brought about from the contextual realm into a logical realm and have the GDTs (Global Data Types) defined.

Simply put, SAP took upon the massive conversion of all its objects and underlying data-models to drive a unified meta-model strategy in place that would set right the enterprise wide service meta models for A2A and B2B. This was the inside out approach which was needed for ABAP-based systems, since ABAP systems were not scalable enough and required a huge amount of interfacing between ABAP-systems themselves. Since XML alone would never be sufficient as the silver bullet to resolve the challenges around interoperability which would enable machines and humans to understand the content delivered in the proper context, agnostic of hardware, software or operating systems. These meta models would be populated inside a UDDI 3 compliant registry on-premise for the entire SAP landscape (read ABAP systems here) , where SAP or the Customer would have the option of turning this around upside down and have a cloud based model, very different from the typical ASP model. While the ‘River’ Project solely focused on supporting lightweight extensions to its on-premises ERP thereby trying to abstract out the customizations and black-box them into insulated pieces for easy maintenance, starting off with Carbon 5.0 which was for Amazon’s Elastic Compute Cloud . (We shall leave SAP’s licensing approach out of this). Although SAP indicated that the acquired the e-Commerce vendor ‘Frictionless Commerce’ in 2006 would play a central role in its on-demand strategy, yes, that changed. Again, this was a tactic change, not a strategic change since it considered the time not right to run mission critical applications on the Cloud. I shall blog more about certain topics in detail later.

A critical reason that saw Henning ahead of his time in terms of his vision, but the market didn’t view it that way. The tactic (I refer to it as ‘Tactic’ simply because the ‘Strategy’ is to have the complete portfolio – ABAP and Non-ABAP systems on the cloud in a systematic manner. What goes on the Cloud first is purely a tactic and not a strategy. Extending this logic when SAP was being viewed as an organization which was trying to turn itself into a platform vendor like IBM (which had its Service Registry/Repository before Oracle bought out  Systinet for Design-time governance and Amber-Point for Runtime-governance of the services and SAP was yet took a beating and had to change tactics with more build. So SAP now had the Net weaver Platform and it was slowly converting all objects, Inside out with ARIS process modeling for ABAP Based Systems and then had the ‘River’ project more or less prove a show-case for all ‘Powered by SAP Net weaver (PBNW)’ solutions with the Composition Environment,  which was offered to customers to re-platform on a Java-based environment on the Dual-Stack Application Server. Oracle hit SAP below the belt by buying out SUN, which again led to a change in tactics.

All the while, SAP’s strategy on the cloud remained constant with the Business Suite Offering customers an option process-based Services and the flexibility to extend with CE, instead of bastardizing the core SAP which would need to be treated as the mother-board of applications and all services would still follow the CCTS-enabled GDTs to populate extensions with the usage of PI (XI’s name changed as Business Objects Acquisition led to the need) with the help of ‘Outide-in” services which would be needed for SAP’s Cloud based strategy which demands maximum interoperability with ‘PaaS’ and the satiation of ‘ISVs’. No change in SAP’s Cloud Strategy, but more on tactics. The hitch is of course, the Master data, which couldn’t be ignored while trying to set right the industry-wide Business Semantic adoption while Cloud-based Applications really require to be scalable enough to process large volumes of data on the Cloud. And so now comes HANA with that drives the in-memory technology with SAP’s High-Performance Analytic Appliance (SAP HANA) software for flexible, multi-purpose, data source-agnostic in-memory appliance, which is an evolution (not a revolution) when one considers SAP’s BI Accelerators rolled out for customers who were looking at the plug-in models as high-performance add-on hardware components for dropping aggregates, loading large volumes of data into the main-memory and toying with the idea of ‘On-premise-Cloud-adoption’ demos (If I may use the term). HANA is simply an extension of a stable strategy with the tactics being rolled out one by one. Master data is key here and therefore one must laud SAP for sticking on to its Cloud-strategy, adopting various and varying tactics inspite of recessions-recovery, law-suits, dual-CEOs and what not. There is much more to be read in terms of what DUET is aimed at (reasons both financial and technical). I have not yet touched upon SAP’s evolution on the BPM with CE space in this blog, but will surely do so in the next few blogs.


SAP’s Cloud ‘Strategy’ has remained unchanged and heads in the right direction. The ‘Tactics’ and ‘Operations’ have changed and will continue to change wrt Business, economic, technological and other environment factors. This is just a view-point and I am not speaking on behalf of SAP, this is just a perspective from a geeky bystander and I would like your views/comments on the same.