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SAP Cloud Computing – SAP SaaS, SAP PaaS, or SAP IaaS?

A massive cloud in the sky.

More than 90% of all companies are using already cloud computing. So finally, SAP gave in and entered the world of cloud computing as well – finally, time for SAP cloud computing.

The trend of cloud computing is obvious: The worldwide spendings for cloud computing climbed from $67 billion in 2015 to $117 billion in 2018 – the spendings almost doubled in just 4 years.

Worldwide public spendings on cloud computing from 2015 to 2020 in a chart.
Worldwide public spendings on cloud computing in billion $ from 2015 to 2020.

Therefore, it was high time for SAP to join the cloud computing train. SAP’s fiercest competitors in CRM is a prime example of the success of cloud computing – Salesforce.

Salesforce is a provider of CRM software that is offered exclusively as a cloud computing service. And Salesforce has done so since its founding in 1999. Salesforce has become the market leader in CRM software through cloud computing.

Sketch of the Salesforce logo.
Salesforce is the market leader in CRM software and offers only cloud computing since its founding in 1999.

CRM is until now the only business area of Salesforce. Who knows in which other business areas Salesforce would be the market leader by now if they would not restrict themselves to CRM.

Furthermore, Salesforce has become not only the leader in CRM software but also the leader by a large margin to its competitors.

Graph which showes that Salesforce is the market leader for CRM software.
Salesforce has become the leader in CRM – and they do cloud computing exclusively since its founding in 1999. So, there must be something to cloud computing.

Cloud Computing in a Nutshell

First of all, the old way of how things were done before cloud computing – the opposite of cloud computing: On-premise.

On-premise was the usual way for a company to run its business software. At least since the beginning of time and up to the last years.

On-premise means basically to possess and maintain an own data center: hardware, software, a huge basement, and employees who take care of all that.

On the contrary to on-premise, cloud computing means not to own any data center but to use the data center and the services regarding this data center of someone else.

It is like with a car: Instead of making a massive investment in buying a car and owning it, most people lease a car. Therefore, they do not own the car but pay a small sum every month to use it.

3 Layers of Cloud Computing

One level deeper into the term cloud computing, cloud computing splits up into three layers:

  1. Infrastructure as a Service (IaaS)
  2. Platform as a Service (PaaS)
  3. Software as a Service (SaaS)

To put it as simple as possible: IaaS means to get from the someone else with the data center almost just the servers and some software to run these servers. How much server power that is supposed to be, is changeable at any moment.

PaaS means to get from the someone else the servers, their software, and some software to develop or run other software.

And SaaS means to get from the someone else the servers, their software, software to develop or run software, and the software that is supposed run on the other software.

Whereby, all services regarding maintenance of the hardware and software is done by the someone with the datacenter. Including all updates, upgrades, and other services such as backups, security, and compliance with data privacy regulations.

As you might have recognized, the different types of cloud computing are layered. At the bottom is IaaS, on top of IaaS comes PaaS, and finally on the top SaaS.

Pyramid consisting of the three cloud computing layers IaaS, PaaS, and SaaS.
Cloud computing consists of three layers: IaaS is the foundation, PaaS can be built on an IaaS, and a SaaS relies on an IaaS and a PaaS.

Downsides of Cloud Computing

Actually, cloud computing at its core is the complete or partial outsourcing of a data center with all what belongs to it – it is outsourcing the on-premise as a whole.

To have a provider who takes care of the hassle of owning and operating a data center is for most companies, likely at first glance a great option.

Especially when it comes to guaranteed uptimes, security and data privacy standards, scalability, and to get automatically always the newest updates and upgrades for hardware and software.

But cloud computing comes with a downside, especially for the SaaS layer. Because SaaSs are only restricted or not customizable, this is because the software needs to stay easily upgrade- and updateable for the provider of the SaaS or the provider does not allow any customizations.

Plus, because of that SaaS is only restricted customizable, it is that the development of customizations are more complex and often take longer than in an equivalent on-premise system.

Because to do customization, there is the need to take detours due to the SaaS architecture. In an on-premise system, it is possible to go straight for the customization in the coding without any restrictions.

If SaaSs would be easily customizable as some leasers wish then SaaS providers would need to take care of each of those customizations with every update of the SaaS to not interfere with each custom customization.

Therefore, the customization qualities of SaaSs are on purpose restricted. However, customizations in SaaSs are, to a certain degree possible. By possible is meant in a reasonable amount of time and money.

A SaaS has extension points by which a customer of a SaaS can customize the SaaS.

A SaaS that is extended by a customer through such an extension point is upgrade-save because the SaaS provider knows that there is an extension point in the SaaS. And he knows that he does not mess with this extension point or the developments that are related to this extension point.

However, through those extension points, it is mostly not possible to customize a SaaS application in a way like in an on-premise system – in the sense of the only limit is the imagination because an extension point offers just a little peephole on a SaaS.

Very rough: SaaS is especially great for companies with a lot of standard business processes and which therefore do not need a lot of customizations. SaaS is not so great for very large companies with a lot of customized business processes and therefore require a lot of customizations.

To use SaaS applications might be cheap in the beginning due to no investing costs like hardware, software, or employees. But when it comes to customizations, then SaaS applications become quickly expensive in compare to on-premise applications – an accurate prior assessment is crucial.

That is especially valid for SAP cloud computing because of the deployment variations of some of its software: On-premise, cloud, or a hybrid version of both. Do you know that SAP has a cost estimator for its cloud services?

Digression: Cloud Computing Vs. Server

Maybe you are wondering what the difference is between cloud computing and a simple server from a hoster. And this is a great question. Well, the answer is sobering.

It is more of a virtual difference. And that even only in comparison to a dedicated server: Cloud computing is shared hardware. Your data resides in a shared virtualized environment distributed over servers which are used by other companies as well.

On the contrary, a dedicated server is physically entirely for your business as the name suggests. No other business uses this hardware too. Every single bit of the server is yours. You can install, deinstall, shutdown, and restart it the whole day long as often and whenever you like.

If a server is not dedicated and hosted by a service provider, well then it is cloud computing if you are into marketing. Or it means just shared servers which are used since 100s of years. For example, to host a simple website at GoDaddy.

Hence, at least for IaaS, there is no difference between cloud computing and a shared server which exists already for like forever. When it comes to PaaS and SaaS, then there is a difference in comparison to buying the software in so far that the PaaS and SaaS providers take care of the installation, upgrades, and updates of the platform or software as well.

Cloud computing is for one thing, like the concept of a shared server (IaaS), plus secondly leased and maintained software which is either a platform to put other software on top of it (PaaS) or the actual software for the end user (SaaS).

Marketing, marketing.

Cloud Computing: History Repeats Itself

To look at today’s data centers would be similar to look at power plants in the early 19th century: Almost all large companies had their power plants because there was no uniform standard for power supply, nor was there a grid.

Once both came to be available nationally, large companies were happy to forego generating their power. The new utility company’s delivered electricity as a core competency. And therefore, more effectively due to economies of scale – that means cheaper than a company which is not in the energy-branch could do.

Cloud computing providers are in a similar place today. Operating hardware and software is not a core area of expertise for most companies.

And on the other hand, an outsourced data center in the style of cloud computing can offer specialized services ranging from computer power and storage, to complete applications in a larger variety, security, and quality levels that any business would be hard pressed to achieve.

SAP Cloud Computing

There is a huge portfolio of cloud-based services from various companies. And now that SAP caught the cloud computing train there are now some SAP cloud computing services too.

Infrastructure as a Service (SAP IaaS)

SAP allows for access to some of the most commonly known IaaS providers – Amazon Web Services (AWS), Microsoft Azure, and Googles Cloud. But SAP offers its SAP datacenters for IaaS as well.

IaaS allows users to exploit the benefits of a provider’s infrastructure by cutting the costs related to buying and maintaining on-premise infrastructure. Furthermore, are scalability and elasticity in responding to workload variations are key reasons to use an IaaS instead of an on-premise system.

Another relevant factor in migrating to an IaaS is compliance with governance and security standards. That is primarily geared to the majority of businesses whose core business is not technology.

Cloud adoption allows the non-tech businesses to delegate security nationally and internationally to the cloud computing providers whose core business it is to maintain the industry standards in security and compliance.

SAP’s IaaS are:

Platform as a Service (SAP PaaS)

SAP has provided with the SCP (SAP Cloud Platform) a PaaS designed to assist SAP products integration, development, and business innovations.

The SCP is made based on Cloud Foundry to integrate and extend applications with agility, flexibility, and options for use.

Innovate with applications: The SCP allows to create and integrate new solutions efficiently using leading technologies like machine learning, artificial intelligence, internet of things, and predictive analysis.

Extending your options: Through the SCP, it is possible to quickly add new functionalities to meet unique business needs using cloud extensions or on-premise applications. The work can be segmented and therefore, avoids disruption to the core business.

Integration: Cloud applications and on-premise applications are easily integrated, along with securely allowing connectivity to people, processes, data, and devices.

Whether a pre-built integration package or a custom solution flow, PaaS offers business connectivity with 3rd party applications and APIs.

User experience: Personalization of the user experience can be achieved across multiple device and deployment options.

The SCP works well to accommodate collaboration across multiple channels, including mobile, web, and customized user interfaces accessing relevant business content.

Analyze and Manage Data: Anticipating business outcomes and uncovering new opportunities are assisted with the management and analysis available through the SCP.

Impactful and actionable insights are to see using predictive analysis and machine learning in real-time.

Future proofing: Future proofing applications to maximize flexibility, adaptability, and choice using SCP allows for scaling infrastructures within the cloud technologies as needed.

SAP’s PaaS is: SAP Cloud Platform.

Software as a Service (SAP SaaS)

SAP’s SaaSs make use of SAP’s IaaS options and PaaS. Therefore, SaaS is the top of the SAP cloud computing pyramid.

The advantages of SAP’s SaaSs in compare to on-premise applications are:

  • faster adoption of SAP technology updates and upgrades (automatically the newest version)
  • easy integration with other SAP SaaSs and on-premise applications
  • ability to integrate easily third-party applications to work with SAP SaaS applications
  • not to have to buy, set up, and maintain any hardware or software
  • easily accessible from a web browser

Popular examples of SaaSs from other companies than SAP include Microsoft Office 365, Dropbox, and Google Suite.

Most of SAP’s SaaSs are former applications of companies that SAP bought.

Do you know Star Trek? If yes then keep reading on otherwise skip the next paragraph, please.

SAP’s cloud computing acquisitions reminds of the Borgs: ‘We are the Borg. Lower your shields and surrender your ships. We will add your biological and technological distinctiveness to our own. Your culture will adapt to service us.’ Haha.

DateCompany NamePrice (B$)SAP SaaS
2011/12SuccessFactors3.4SAP SuccessFactors (HR), SAP Jam Collaboration (Collaboration Platform), SAP Jam Communities (Community Platform)
2012/10Ariba4.3SAP Ariba (Procurement)
2013/03Hybris1.4SAP Marketing Cloud (CRM), SAP Commerce Cloud (CRM), SAP Sales Cloud (CRM)
2014/03Fieldglass1SAP Fieldglass (HR)
2014/05SeeWhy1.1SAP Marketing Cloud (CRM)
2014/09Concur8.3SAP Concur (Finance)
2016/12Abakus-SAP Marketing Cloud (CRM)
2017/09Gigya0.35SAP Service Cloud (CRM)
2018/01CallidusCloud2.24SAP Sales Cloud (CRM)
2018/06Coresystems-SAP Service Cloud (CRM)
Companies that SAP bought in order to assimilate their SaaSs.

Right now, for SAP is one challenge to integrate all those bought cloud applications from different providers into another and to give them a consistent look and feel with SAP UI5 or a SAP UI5 style.

SAP’s SaaSs are:

All used acronyms and their full forms are in this ultimate SAP acronyms list alphabetically ordered.

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