SAP on Azure | Interview Prof Scheer & Sabine Bendiek, CEO of Microsoft Germany
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8 May 2020 

SAP on Azure | Interview CEO Microsoft Germany Sabine Bendiek and Prof A.W. Scheer

SAP on Azure | Interview CEO Microsoft Germany Sabine Bendiek and Prof A.W. Scheer

Peter Färbinger of E-3 Magazine spoke with Sabine Bendiek, CEO of Microsoft Germany, and Professor August-Wilhelm Scheer about the trends and challenges of cloud computing for existing SAP customers.

It all started with IBM’s mainframes. The resounding success came with SAP R/3 and much help from Hewlett-Packard. Today SAP has the widest B2B software offering and users are looking for the optimal infrastructure. Parallel to SAP’s success, Microsoft developed an open IT ecosystem: cloud computing for all SAP business processes.

Cloud computing is simple and complex at the same time. The cloud initiatives of Microsoft, SAP and their partners show a trend and also solutions, but do not always provide the right answers. The challenge with cloud computing is that the entire operating model is changing! Whether private, public, or hybrid cloud – the user in the high-bay warehouse, the CFO, and the entire IT team are affected. Cloud computing questions everything and at the same time opens up fantastic answers.

How does Sabine Bendiek explain the phenomenon of Cloud Computing in a private environment at a taxi stand?

If you switch on your mobile phone or tablet in the queue at the taxi stand to watch a film about Netflix, Sky, and the like or get the information from home via WhatsApp that “Dinner will be ready at 8 a.m.”, then use the cloud. The Microsoft boss describes the daily use of the cloud. And so documents, photos, computing power, or even entire software can be called up from the cloud. And we still need a taxi, Mrs. Bendiek, don’t we? Anyone who orders a taxi using an app is already using Cloud services and no longer has to get local phone numbers from the phone book, call the taxi driver to ask how long he needs and have change ready for payment. Others will take care of that for him. That’s how Cloud works in a taxi!

Even classic SAP on-premises customers are increasingly having to deal with cloud topics. More and more applications are only offered by SAP as cloud solutions. SAP supports existing customers with many hybrid scenarios. For example, customers can leave their systems classically on-premises and connect them to the SAP Cloud Platform PaaS solution or SuccessFactors SaaS solution through the SAP Cloud Connector.

It’s not just a question of technology, it’s also a cultural change, explained SAP co-CEO Christian Klein to the E-3 editor-in-chief in the summer meeting (see E-3 magazine September 2019, page 24). Openness to new things, the will to map new business processes is becoming increasingly important. We have to take people with us in this process. My job is to communicate and explain the change. Why do we have to change certain processes, certain workflows in order to continue to be successful in the future? I think that’s also what moves many customers when they implement SAP S/4HANA.

Microsoft positioned itself very successfully with cloud computing a few years ago – when some experts already believed that the connection to AWS and Google was lost. The success certainly has a lot to do with the person of Satya Nadella, but also fundamentally with a new openness at Microsoft and the will to change and constantly learn new things. Even classic SAP on-premises customers are increasingly having to deal with cloud topics. More and more applications are only offered by SAP as cloud solutions. SAP supports existing customers with many hybrid scenarios. For example, customers can leave their systems classically on-premises and connect them to the SAP Cloud Platform PaaS solution or SuccessFactors SaaS solution through the SAP Cloud Connector.

SAP co-founder Klaus Tschira († 2015), Microsoft CEO Bill Gates and SAP CEO Professor Henning Kagermann (from left to right) at SAP headquarters in Walldorf in 1997: the foundation of a successful partnership between SAP and Microsoft.

When Satya took on his new role as CEO just over five years ago, he wrote to us all: Our industry does not respect tradition, only innovation! And that was no empty phrase. Against the background of digital change, it meant: Old recipes for success have an expiration date – even if they are currently still profitable. We recognized early on that the future lies in intelligent and technologically open cloud platforms.

All of this with a clear goal: to give customers, partners and developers the greatest possible variety of services while at the same time enabling integration. Incidentally, this also includes a hybrid option in which on-premise, private and public cloud scenarios can be combined,” adds the Microsoft Germany boss. The digital change is complex because it affects the structural and process organization of existing SAP customers.

There is a tension between process and resource optimization,” Professor August-Wilhelm Scheer defines in the E-3 interview. “If you want to speed up processes, you have to use more resources, and if you want to reduce the use of resources, more queues arise and the processes slow down. From his many years of very successful research and professional experience, Professor Scheer knows that in the IBM mainframe era with time-sharing operating systems, due to the very expensive hardware, maximizing utilization dominated at the expense of application throughput times. With the cheaper client-server systems, the focus was then on optimizing business processes, while the hardware was only marginally utilized. Cloud computing uses this optimization potential and virtually brings the mainframe back virtually for better resource utilization and the server parks can be utilized globally 24/7/365,” explains Scheer. It is, therefore, all the more important to ensure that this does not happen at the expense of process efficiency. In addition, there is greater pressure in cloud computing to standardize processes, and capacity expansions are not reflected in the balance sheet as investments, but as rental expenses in the P&L with a corresponding reduction in liquidity. In addition, the user does not incur maintenance and operating costs, and the easy scalability of resources is also important for a dynamically developing company.

Sabine Bendiek adds accordingly: Cloud computing offers access to powerful and state-of-the-art IT capacities or applications at any time and without advance notice and at low costs, which are only billed according to actual consumption. Instead of rigid capital commitment and depreciation, the costs are allocated to the operating budget, thus reducing financial risks. We are just experiencing the beginning of a gigantic wave. Microsoft Azure is the environment that consistently supports the increasingly demanded hybrid scenarios, integrates existing investments, and can be seamlessly integrated with other systems such as Office 365. In addition, Microsoft and SAP have a very close partnership, operate their SAP systems on Azure, and therefore know exactly what challenges but also advantages this brings. In the future, customers will also benefit from the S/4 cloud solution. The SAP Cloud Platform, SuccessFactors, and numerous other “As a Service” solutions are already operated by SAP in the Microsoft Azure Cloud.

This motivates customers to also operate their traditional on-premises solutions in Azure. SAP makes this possible through a multi-cloud strategy. Customers can run their SAP solutions on AWS, Google and, of course, Microsoft Azure. Interestingly, SAP IT has a very clear, exclusive Azure strategy despite its multi-cloud strategy and is currently migrating other SAP systems to Azure. Many customers are following this example.

More innovation through cloud

Cloud platforms offer users in a marketplace an enormous wealth of innovation opportunities through new services for digitization, which they can use simply with their credit card, says Professor Scheer, who is a successful entrepreneur. But the user must be open-minded in terms of organization and technology and develop his new automation concepts in terms of content. Then the automation of business processes will be easier and more successful through technological innovation in the cloud. Scheer believes it is important to use cloud services that offer open standards in order to link them with other standard services or services developed in-house.

The Microsoft Azure Cloud, for example, with its many open interfaces such as OpenAPI or OData and open source services can help here, he explains, adding: Standardized processes are effective, but do not always support a differentiated business model. Standardization in those areas that do not directly add value makes sense and does not stand in the way of differentiation in the core business. It appears that the existing SAP customer does not have to worry about anything. In many cases, this is the ideal solution. But it must also fit because SaaS also comes with the least flexibility and adaptability. Here, the middle way via a private or public cloud is often a better solution. In Microsoft Azure, the customer gets his own environment, his own virtual network in which he can install his SAP system. He does not have to worry about the data centers or servers, but can also access networks and compute resources almost at will. The classic on-premises or hybrid operation offers customers the highest degree of control,  Sabine Bendiek knows from many conversations with customers. Hardware, network, storage, and servers remain in the customer’s own hands and can be offered as a service – in the form of a private cloud. Of course, you are responsible for everything and have to manage and operate the entire infrastructure, she warns against going it alone. And she raises the question: But is this really necessary to successfully support your business?

Many services can also be obtained from a public cloud for cost reasons, as high up-front investments in specialized hardware are unnecessary and can be adapted to current needs. We believe that there are good reasons and advantages to both models. Therefore our recommendation is a hybrid model. This allows you to leverage Software-as-a-Service solutions like SuccessFactors and Concur. At the same time, it optimizes costs, leverages innovation, and provides the flexibility to adapt to changing needs. Existing systems can also be integrated,” explains the Microsoft Germany boss. But the fact is: We currently see a clear trend towards hybrid environments and support this with our portfolio!

Cloud: More than infrastructure

In the past, customers have perceived cloud as an infrastructure issue for “lift and shift” or “lift and migrate” SAP applications. But Azure is more than just an infrastructure platform for SAP applications, emphasizes Bendiek. Azure is a platform for innovation. With the existing services, customers can operate and develop their technical and business applications and expand them with AI and IoT services, for example. With Office 365, Teams and the connectors to Dynamics 365, Microsoft and SAP offer an innovation platform that enables customers to make the journey to digital transformation with a secure future and a secure investment. This is also the core of the motto of our partnership between SAP and Microsoft: Driving Innovation together. This ‘together’ then also includes our partners and customers, explains Sabine Bendiek in an E-3 interview.

SAP is not complicated, but it is complex: What are the most important cloud arguments for an existing SAP customer? From the business, organizational, technical, or licensing area?

Microsoft boss Bendiek: Especially from the first three areas: From a business perspective, the change from CAPEX to OPEX is of course interesting. More interesting, however, is the possibility to flexibly commission and adapt your systems or to switch them on and off as required. Experience in the SAP community shows that costs can be saved immediately. From an organizational point of view, it is important that existing SAP customers can add, resize, or remove systems in the event of organizational changes, such as the takeover or sale of parts of a company.

The technical view is extremely interesting due to the available integration and automation options and standardization. Sabine Bendiek hopes that nothing will change in terms of licensing law. If a cloud infrastructure is worthwhile for the customer from a compliance and cost point of view, he should transfer and dedicate the freed-up resources to new or higher-value tasks,” says Professor August-Wilhelm Scheer, and he differentiates: Processes and machine controls that require almost real-time interaction with high data volumes should be handled locally.

Then process efficiency will once again take priority over resource efficiency, see above. The reservations about data protection and data security often voiced by midsize companies in the SAP community are sometimes exaggerated. Hyperscalers in particular offer many precautions that a midsize company can hardly implement in its own data center, as Professor Scheer knows from his company’s collaboration with Microsoft.

Now the question arises: With regard to the transformation to the cloud, does the existing SAP customer “only” have to optimize his business processes, or do he have to redesign and plan them a new?

Professor Scheer: Basically, the transformation is a good opportunity to rethink its business processes. Although the change in infrastructure alone already generates benefits, the greatest benefits are achieved with simultaneous disruptive innovations. During transformation, a distinction must be made between which applications are to be moved to the cloud. In the case of support processes that do not differentiate in competition, Professor Scheer believes that standard solutions, without modifications based on best practices, should be mapped in the cloud or in cloud applications if possible. With core processes, on the other hand, more careful consideration must be given to which special features should be retained and which new functionalities can be added by using cloud services”, warns Scheer. In general, however, the same principles apply to the cloud as to an on-premises installation: Customers should constantly optimize their core processes and then make disruptive changes if new business opportunities are to be implemented quickly, emphasizes Professor August-Wilhelm Scheer.

Hybrid: Organization and technology

A plant engineering company that significantly strengthens its sales and service orientation and also supplies the software for production data analysis as an extension of its business model can, for example, combine on-premises production planning and control with cloud applications in customer management and service as well as with machine data analysis in a hybrid constellation. If the existing processes are already organizationally optimal, then it is only a matter of technology transformation and the exploitation of the business advantages of the cloud, explains August-Wilhelm Scheer. The capacities of employees freed up in the process can then be used for new applications within the processes. For example, decisions can be supported more strongly by using AI and the detailed workflows of the processes at the workstations can be improved by RPA. RPA makes an important contribution to relieving the burden of routine tasks such as manual booking processes or reading out information from e-mails, thus promoting the more targeted use of employees for higher-value activities.

Is there a difference between on-premises and cloud in terms of the use of tools such as RPA, neural networks, etc.? Whether a tool runs on-premises (installed in the company’s own data center) or is used in the cloud is no longer a differentiating factor, says Professor Scheer and explains: Since the advent of open source AI platforms such as TensorFlow, the differentiating factors have been the knowledge and ability of the user to use these technologies, methods, and models correctly. This includes knowledge of innovative business processes and where to achieve meaningful results with tools such as RPA or AI. With AI, the proximity to the required data plays a special role, whether it is better used locally or in the cloud. A cloud AI is built up much faster and offers functionality and scalability that cannot be found on-premises. If the data volume explodes exponentially, on-premises may have to wait one or two years to build a new computer room.

With the cloud, you can flexibly switch the required resources on or off. So there are several arguments that need to be carefully weighed up against each other. One trend that can be observed in the SAP community is that the specialist departments themselves control their requirements, receive immediate feedback on the result, and see the direct added value. One example is the reporting of SAP key figures using Microsoft PowerBI, a NoCode reporting solution for business users. These services are always accessible and highly up-to-date, no matter where you are. And with Azure, in particular, Microsoft also offers the possibility of implementing hybrid solutions. The decisive factor here is often the protection of investment and inventory while at the same time providing access to innovation. In fact, the cloud offers the opportunity to involve the business more deeply in decision-making and also to transfer more responsibility. Sabine Bendiek knows from many discussions with customers that IT and business departments are moving closer together.

Partnerships between Scheer and Microsoft

How important are partnerships with SAP service partners such as Scheer for Microsoft, especially in SAP business? And with other IT providers and also SAP partners such as NetApp and Suse? Microsoft Germany boss Bendiek: Partnerships with the companies mentioned and all our many other partners are essential for Microsoft. Especially in the SAP and Azure context, almost all implementations are realized through partners. Microsoft has set up its own team in the partner organization to support the partners and provide them with the necessary training. Partnerships with global consulting firms such as Accenture, KPMG, Ernst & Young, Capgemini, PwC, Deloitte, etc. are also very important from a Microsoft and SAP perspective. Here, customers benefit from the fact that almost all major system integrators are both SAP and Microsoft partners, even if the respective teams have not always been optimally connected in the past, describes Bendiek the market situation. But that has changed. The representatives of these consulting firms are consulted by their customers on cloud strategies. In order to be able to provide very well-founded advice here, an intensive technological and strategic exchange is necessary. For this reason, together with SAP, we support our partners in acquiring the special expertise of SAP and Azure. And this applies equally to regional service providers.

Hyperscaler and SAP

The Scheer company works with Microsoft, among others, in cloud computing: Are there fundamental differences between hyperscalers for existing SAP customers? And how popular is the SAP Cloud Platform itself?

Professor August-Wilhelm Scheer: The product portfolio of the major hyperscalers – Microsoft with Azure, Amazon with AWS, and the Google cloud platform, GCP – differs primarily in the range of software services offered. Microsoft has great experience and distribution in the office products as well as in the IT infrastructure with Exchange and the Active Directory Services. With PowerBI, the user gets a simple and powerful BI solution that is open and can be connected to SAP, and the new Microsoft team combines a collaboration solution in one product. AWS has its roots in the web service and e-commerce business. Here you can find concepts and offers around this topic and especially for software developers. GCP stands in between and has a web-based office solution and innovative AI solutions. In the IT infrastructure, all providers have very good solutions and few distinguishing features. In addition to the product specifics, however, it is also important for the SAP community to take a look at the compliance and industry focus mentioned above. In Professor Scheer’s opinion, Microsoft is ahead in this area and has the most comprehensive range of certifications and audits. We can see this in the acceptance in the SAP community and this is also confirmed by the investment surveys conducted by DSAG this year, explains Scheer.

The Microsoft Azure Cloud has already been audited with an introduction of Office 365 to the management, the business department, IT, the works council, and especially data protection and IT security. The path to further cloud services thus appears to be paved and open. Professor Scheer says it is still too early to say exactly how much demand there is for the SAP Cloud Platform, SCP. SAP is working hard to raise awareness of the platform and is loading it with a lot of innovation and products. Our customers are taking their first steps, and some have already built an entire microservice architectures. The SAP cloud platform is on the strategic agenda of most customers. At this year’s DSAG annual congress, 56 percent of SAP customers voted for Azure as their preferred cloud platform, reports Sabine Bendiek, not without pride. This drives us to offer our customers the best cloud platform for their SAP workloads and to support them in their digital transformation. And there are two main areas of focus for users when migrating SAP to the cloud. Hybrid solutions and the integration of data, services, and products such as Office 365 or tools for data analysis. These are just two of the topics that can also be found in our own DSAG working groups and can be ideally realized with Azure. In addition, Microsoft has always had a very competent partner ecosystem that not only knows our platform but also knows the requirements of our customers.

Last but not least, it is certainly the unique partnership with SAP: Both companies have their SAP systems on Azure and learn from each other, emphasizes the Microsoft Germany boss in the E-3 interview (see also a double interview in E-3 September, page 18, with Hinrich Mielke, SAP Director at Devoteam-Alegri and deputy DSAG working group spokesperson, and Marcus Sommer, Business Lead Microsoft Cloud Infrastructure).

Partnerships between IT providers, DSAG, and SAP partners have a very good tradition in the community: Can SAP and Azure” be implemented without Microsoft and SAP partners? Even if it is possible to implement it on your own, we recommend implementation by partners, says Sabine Bendiek. Microsoft attaches great importance to partner competence here. In addition, we provide resources and technical support for projects and customer activities from within the Microsoft partner organization. Together with SAP and our partners, we support SAP customers, for example, through the Move-S/4-Hana-on-Azure program. Through proven process models and SAP-and-Azure-certified experts, we offer the best possible support. A special connection in the SAP-and-Azure context: Suse and Microsoft have had a partnership in sales and technology for over a decade, explains Sabine Bendiek. The Suse solutions for Microsoft Azure provide a proven, reliable, and secure platform for cloud computing. Customers know that they can rely on the seamless integration of Azure Azure’s Suse solutions. Suse and Microsoft demonstrate this close cooperation in sales in joint workshops with Suse, Microsoft, and SAP. Where we show how existing SAP customers can work with Suse solutions on Azure, Bendiek describes the status. In addition to the sales cooperation, Suse and Microsoft are constantly working on providing optimized solutions on Azure for a joint market approach. In addition to their cooperation in research and development, Suse and Microsoft are also linked by their long-standing good cooperation in the SAP Linux Lab.

A further asset in the SAP and Azure scenario is Office 365 already mentioned. In addition to technical points – for example, single sign-on or the long-supported integration of SAP data into existing Office products – there are also many non-technical advantages, says Sabine Bendiek. For example, Microsoft has had intensive discussions with Office 365 customers with regard to data protection and security. These usually include detailed discussions with works councils. This is also a starting advantage for migration from SAP to Microsoft Azure, Sabine Bendiek is pleased to say.

Holistic approach

The status of the connection of Office 365 to S/4 is sufficient: “We are satisfied, but the Microsoft Germany boss knows that we are still at the beginning. The Embrace program launched by SAP at the From 2019 event in Barcelona (Field Kick-off Meeting at the beginning of this year) will show some very interesting further integration scenarios. It is important to note, however, that the foundation for this integration has already been laid today: All customers expect a single sign-on between Office 365 and S/4 during the integration. This is guaranteed, emphasizes Bendiek. Due to open standards, further integration is relatively simple. Numerous partners are already active in this area and offer successful integrations in Excel, Outlook, PowerPoint, or even Microsoft teams. And not only in one direction. The SAP Fiori user interface used in S/4 also allows easy integration of Office data. For example, documents from OneNote can be easily integrated into an SAP Fiori application, e-mails can be accessed or chats from Microsoft teams can be integrated.

Sabine Bendiek knows that there are no limits to the ideas here. In the future of cloud computing and as a conclusion: In our experience, the hybrid cloud is still often the standard at present. In the case of SAP systems, we have observed that customers first migrate the non-productive systems to Azure and then migrate the production systems, explains Sabine Bendiek, head of Microsoft Germany. Hybrid scenarios are not trivial and require more effort, but can be useful and also necessary. Microsoft and its partners have many years of experience in both worlds and can, therefore, provide the best support. In the E-3 summer talk, the current SAP co-CEO Christian Klein said: Both and. We continue to see a very high demand for S/4HANA on-premises from many of our existing customers. Therefore we will continue to invest here. In addition, we are well-advised to provide hybrid support to our customers. In the future, there will continue to be customers who want to run their applications in their own data center. And Christian Klein went on to explain: The change was important for us in two respects: on the one hand, we are bringing products into the cloud, and on the other hand, we are initiating operational changes. After all, what does it mean for internal processes if the service is no longer provided on-premises at the customer’s premises, but in the cloud? New processes had to be set up here, which also reflected the digital change at SAP itself.

In conclusion, Professor Scheer spoke about future cloud computing in the E-3 discussion:
What is important is not a formal cloud architecture, i.e. where the workload lies, but how the user meets the challenges of speed, agility, and differentiation in his processes. Cloud architecture is helpful here, but not the primary driver. Platforms that enable low code and thus citizen development, i.e. supporting application development by the business department, are more likely to provide the decisive drive. The cloud is the vehicle for this and accelerates innovation and introduction.

About the author
During almost his entire career Gerard has been involved in SAP implementation projects, both as a business consultant and as project manager. During the more than 25 years of SAP experience, he has been involved in mostly long-term projects in a large number of industries: chemicals, beverage and food, steel, but also central and local government. In recent years Gerard has assumed a leading role in the implementation of S/4HANA Cloud and SAP Cloud Platform at a multinational and he is responsible for the SAP on Azure Managed Service for Scheer Nederland. By building trust - promising what you deliver, and delivering what you promise - Gerard has been able to maintain long-term relationships with the various customer organizations.