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The prevailing consensus in the business world today is that the cloud may be the future of interconnected business. In the last few years, SAP has dedicated itself to shifting away from being a vendor for software licenses to a vendor for cloud services. The indication here is to move away from the traditional software licensing model and instead focus on the cloud model of software delivery. For us to fully appreciate how the cloud affects SAP in its entirety, we need to look at the different levels at which the cloud operates.

Cloud Levels - What happens Where?

In essence there are three distinct levels of cloud operation. At the topmost level, what we'll call the Application SaaS level, the cloud functions as a complete system, incorporating the other two levels lower down in the hierarchy to deliver a complete application run from the vendor's servers. The second level, which we'll call the Middleware PaaS level, offers a software platform to the client, configured and run by the vendors, allowing the client to build their own custom apps using this platform as a basis. The third level we term Infrastructure IaaS, and at this level, the vendor offers to the client a virtual server that replaces their on-premise server room and saves them from having to invest in costly hardware (and upgrades for that hardware in the future). These levels are the subject of our discussion, since they outline the ways the cloud has overwhelmingly changed the SAP ecosystem.

Level I - Application SaaS

Software-as-a-Service has quickly become a standard consideration for many businesses because of its prevalence and dependability. On entering this particular market, SAP didn't have the required depth of development in this particular area to compete with the larger vendors such as WordPress which allows for blogging and making money as revealed by WPislife. In order to build their presence and marketability, SAP acquired a lot of specialized vendors for SaaS such as Ariba and SuccessFactors. By utilizing the proprietary systems offered from these companies and combining it with the ideal of an SAP ERP, the SAP S/4 HANA database system was developed and designed to run on cloud systems, delivering a complete package that can be accessed from a cloud server, adding to its extensibility.

Level II - Middleware PaaS

Sap's foray into this area is the SAP Cloud Platform - a system most SAP developers will be familiar with by now. SAP's attention to its development has led to it being a major competitor in the Platform-as-a-Service space. The platform serves as the backbone driving application development for SAP and related systems. By offering this platform as a cloud subscription, it opens up the market to third-party developers and allows for a wider range of custom applications to be built, increasing SAP's overall flexibility across multiple different industries.

Level III - Infrastructure IaaS

Most SAP installs for a business are so mission-critical that companies tend to prefer having their SAP server on-site and within their control at all points in time. The Infrastructure-as-a-Service ideal turns that paradigm on its head by offering a completely controllable, secure, accessible server installation on a cloud server. The hardware for SAP servers can be quite costly and once a server runs the length of its lifetime, a company must decide whether they want to buy a new server or upgrade the current one, both of which are not cheap considerations. The alternative offered by IaaS is to sign up with an IaaS provider and use their services for a monthly fee. There are both public and private operators that cater to the needs of businesses that want an IaaS solution. Private cloud systems tend to offer more specialized solutions that public cloud systems, but because of this they tend to be costlier to subscribe to.

The Move to Cloud Data Systems

As more and more companies upgrade to one of these three levels, physical on-premise SAP installations are slowly dwindling. Companies are realizing how much money they can save on their SAP systems by adopting the cloud. The reduced hassle combined with high levels of customization and solutions that fit a company's needs specifically make for a compelling argument to switch over to the cloud. There will always be companies that think that having an on-premise server is a necessity, but as time goes along, they will find themselves in an ever shrinking minority as more and more users realize the benefits of cloud computing on a business environment.
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