The evolution of SAP Cloud ERP – HPE GreenLake SAP

This is Jim Ano from HPE. Um, we're going to jump into the SAP cloud ERP product and the history of how we got here. And joining me today is Kelly Smith from SAP, and on the Zoom call, we actually have, um, a valued customer, Randall Grogan, who is a customer of this solution.

So I'll let you jump right in. Kelly, if, if you'd like to. Wonderful.

Um, so good afternoon. Good morning, everybody. Kelly Smith with SAP.

Um, so you've probably heard SAP and then over the past three, four or five years, you might've heard the word rise. And, um, now we've changed it because SAP really likes to change the names of things like every six months, every year, every few years, just when you're starting to get comfortable with something. Randall's laughing because he can totally relate.

We have a dictionary of all of the, the previous, uh, SKUs and things, um, from SAP, but, um, rise, um, is an offering from SAP that is now called, uh, private Cloud, ERP. And there's options in which customers can take, um, when moving their ECC systems, Oracle systems, competitor systems, into a rise model and having SAP support it. So, if we look at the history of SAP, I, just, I'll touch on this for just one moment.

You know, we've, we've come a long way, um, from, you know, our inception of, of releasing, you know, R two in 1979, you know, running mainframe. And I think it's really interesting because a lot of the times I hear feedback from customers, you know, Hey, can we move faster? Can we get innovation faster?

And then we step back and kind of look at it, we're moving a huge ERP and transforming a an ERP that has finance, hr, supply chain, logistics, you name it, in, in one ecosystem. So the ability of us to transform it, it may seem a little slower, but in my mind, when I see product releases and roadmaps on a quarterly basis, it's innovating at a faster rate than it ever has before. And if we look at this timeline moving from 1979 to from mainframe to 93, when we offered, you know, expansion, uh, into Linux and Windows, and obviously Linux being important because of hana, you know, moving into a, a more friendly user interface interface in 2005, uh, expanding the ecosystem in which the ERP, um, you know, consisted of with CRM, et cetera.

And, you know, then looking at 2017, when SAP said, okay, well, there's something else to this ERP called Intelligent Technologies, and this is where the concept of Leonardo came into the conversation where it said, okay, there's this thing called AI out there. There's, there's something called ML out there. What, what is all of this?

And it's really fascinating because if I play ping pong in my brain from 2017 to present day, we're talking a lot about the same things of AI and ML and how we capitalize on that. But now it's more tangible, it's more realistic from an agentic AI perspective as we talk about, you know, business suite and customers moving to cloud ERP. Um, and then in 2021, I think we heard a lot about integrations and the challenges from our customers and being able to move all of their integrations over to, um, you know, rise or cloud for ERP, um, which introduced the business technology platform, right?

The main establishment foundation for all your integrations to be able to capitalize on not having to have all the third parties, but having them housed in one location so you can actually run your day-to-day operations in SAP Kelly as, as you move on that, I think you're gonna talk about the last one, the exactly Christian Klein, the CEO of SAP talks frequently about this flywheel effect. And this flywheel effect is, is exactly what we talk about conceptually, about how do we manage all of this data. And, and, you know, you, you can look at any piece of this and say, how do you get data from non SAP applications into ai, into analytics?

How do you manage what is at the edge that's never going to be in the hyperscale cloud into this? And this is kind of the whole paradigm that, that I think a lot of this, um, cloud field day discussions revolve around. And, and so I'll let you continue with this as a, so, Yeah, when you look at, you know, AI companies and organizations looking at how do we connect and, and build partnership with SAP, obviously that business technology platform is the foundation.

Um, we have now released a new product suite called Business Data Cloud, which is taking, um, your data, partnering it with a, um, machine learning company like a Databricks for example, and being able to capitalize on all of the data components and streamlining that through AI and ML across your ERP cloud. ERP is our next, um, flywheel, or I call it kind of a little bit of a rainbow here, um, where the customer has that o overall, you know, opportunity to decide upon how they want to move to SAP's cloud, whether it be public, private, and what flavor of private that we were discussing today would be. So that's what I'm gonna go back to and focus on on the next slide.

And then, obviously within the cloud, ERP comes all of the, um, components that are integrated or built, embedded in the cloud, ERP, but of course, you have third, you know, other parties like SuccessFactors or Ariba or customer experience coming into the cloud ERP system, um, in a seamless integration manner. The next layer up is obviously anything from an industry perspective. So industry built product suites that are embedded within NRS four applications.

Um, and then of course, on top of all of this is Juul. And if you've know anything, if you've heard SAP, you hear juul. Now JUUL is our ai, um, agent.

It's building out all of our embedded, um, AI components with agen AI and business ai, and allowing you to capitalize on that as you move to S four, um, as a part of your transformation. So as we look at the, the smaller portion of the rainbow, which is our focus today of cloud ERP, um, I just wanted to kind of hone in on what SAP has done, um, to, to allow customers to prioritize and focus on their business strategy and let SAP kind of take some of the, the dirty work, so to speak, the day-to-day work, um, that allows your organization and employees to focus on how to achieve more revenue across their business. So we have a commercial model that basically takes the software, the hyperscaler, and the technical managed support and put its into one commercial agreement.

And this is what was formally called Rise, now known as Cloud ERP. And the biggest component of this is that technical managed service layer. So when we look at the business value or the operational value of Rise or Cloud, ERP customers are saying, well, I have however many people on basis today.

I have however many people running upgrades and performing patches, and gosh, these, these upgrades once a year are really costly to SAP. And they, oh, by the way, I have all these security realms that I have to integrate into the ecosystem. SAP now takes care of all of that, right?

So when we look at, um, the structure, SAP has, uh, named resources that are aligned to every customer as they move into a private ERP, um, and they are their go-to person for the day-to-day run of the business. So anytime a customer says, okay, I need to perform a, a patch, or I'm going to do this upgrade, they partner with SAP on the time, the flexibility of it, and perform, um, that overall service from SAP with the customer. 996.

9. So we're offering those flexibilities for the customer to say, you know, what, what is best for you based on your business requirements? So If I, if I may, Kelly, so a couple of things, uh, interesting.

So you mentioned Hyperscaler, but obviously SAP's on the slide, HPE is on the slide. So this is infrastructure as a service, whether you purchase it from a hyperscaler or purchase it via HPE GreenLake infrastructure as a service, it looks the same, it performs better if it's dedicated 100%. 9 instead of maybe deeper into the nines.

Yep. So I understand that you can put it in your data center, right? Mm-hmm.

In this form. And, uh, it's like a bundle package hardware plus software, and, uh, you buy some specific SLA or service package to it, right? And you are managing it from the bottom to the app Up to the application layer up to the application layer.

Yeah. We don't wanna touch anything that's really Process inside, correct. It's this something else.

But what I'm saying, it's so the customers have similar experience, like you, he or she will have it in the, in the cloud, right? Mm-hmm. The question here is who make the integration of that into the customer environment?

You do it together with the customer and take care of responsibility to integrate it. I, I mean, for example, security guidance, you know, that's the, or networking, you know, this nasty things that Good question though. The first level integration can be handled directly from SAP, but as you look at multi-level application dependencies, what, what is a tax application that runs on a bolt-on, you know, there's lots of those and, and those types of, those reverse level, if they're integrating and you can see the API going from SAP or into SAP, then those are easy and those are worked on as part of the engagement.

Um, what you don't see are things that might be feeding the dependent app, which in turn feeds that API into SAP. And then those are, you know, in in h HP's example as a customer, not as a provider of this solution, but as a, a customer of SAP, we do, we have our own configuration engine that, that determines the rules around the balance of our bill of materials and what's compatible with with others. And then we have a quoting system that follows the rules of that configurator.

And then when somebody accepts a quotation, we accept the quotation and feed it through our CRM app, and then it goes into S four hana's order system. So there's multiple layers of integration below that that wouldn't be handled by this. And that's where the complexity for some customer customers come in The application level, let's say.

Yes, inside the application, even what you talk about. But what I'm saying, it's like you have the empty space in the rack, uh, enclosure, and somebody needs to come in, install it, configure, and then, uh, power it up inside the environment that is already existing. And I understand that this is the, this is included as well in the, in the, in the service that you're helping customer to start it.

Yes. So once a, um, so for this specific example, using HPE as a customer data center, um, the hardware is procured and then SAP and is doing the install mm-hmm. Um, with HPE.

And then once that start date of that agreement comes on and the lights are flipped on that data center, then the run of everything is handled through the, you know, from an SAP, from a technical managed service perspective, The end user don't have access, I assume, to that infrastructure, The end user. Like, Uh, for example, I'm the customer, I'm buying that, and, uh, my company doesn't have access to that stack because you are responsible for running it, right? Yeah.

We have no access. Yeah. Um, in our data center, that's actually even physically in its own cage that really HP is the only one that has access unless there's some sort of emergency.

All right. Thank you. And, and ultimately, you know, in the data center, I'm sorry for talking here guys.

If you, if you prefer me not to let me know. No, please do. But ultimately, um, you know, the customer has to work with HP and SAP, the line of demarcation.

You know, we effectively provide all the incoming switch, you know, for the networking and, and then they're responsible for the hardware and setting up the system. And you know, that from our standpoint is, is is hands off. Okay.

So, so where are the application integrations That that sits in our side of the fence? So all the application integrations either go through B-T-P-C-P-I, or in our case, the bulk of them, we've got more than 400 integrations. They go through PIPO.

Those remain our responsibility. Those are SAP terms for anyone that's not familiar. Those are they API terms and, and s SAP P provided a PS The bottom layer here through pt.

Yeah. But the hardware itself is effectively an appliance. They give you a switch to connect to and, and it's a black box Infrastructure as a service Good solution thing.

Mm-hmm. You can't, you cannot run anything else other than SAP on it. Yeah.

Right. Correct. Yep.

Thanks Randall. So Just to be clear, we're talking about private cloud ERP, Private cloud customer data center. So your other Hyperscaler customer data center.

Yes. When you look at, um, the other options here when you talk to a customer and moving to a private cloud environment is we have direct relationships, um, through, you know, AWS Azure GCP, um, and that model would be different 'cause obviously it wouldn't be the customer's own data center, but that would be the other flavor in private cloud, um, is to move to one of those other hyperscalers. And, and, and the current SS four hana, which you said pretty much has a lifetime forever, but is functionally frozen.

Is that how I understand that? Yeah. And I'm not sure it's functionally frozen, but the LA like the, right now, the latest AI that comes through the ag agent AI things are not available for purchase for regular S four hana.

So, And, and the normal public cloud ERP functionality is slightly different than the private cloud ERP 'cause it's much simpler, less complex. Correct. Correct.

Um, when you look at releases of ai, for example, they're hitting public cloud faster than they are private cloud by a little bit. Um, we're continuing to build out the product suite of public cloud, but it's, it's not there yet from a, for a complex customer. And that's why that private cloud option is going to be the best option for the foreseeable future.

And we're releasing all of obviously the AI components within that as well. Um, and, you know, I'll wrap with this and just, you know, the, the conversation often boils down to this is a ginormous move, it's very difficult, how do I even do this? And when we start, you know, first started the, the move to cloud ERP, we had learning lessons, right?

We had cost of implementation partners, um, times, budgets, you know, extra costs. And there were, there were obviously things that we needed to learn from. And so through the, the move and, and the rise methodology, we do have, um, I'm gonna start from the, the backside, the experts on, on the, on the space, right?

So within the rise or cloud ERP methodology, you have a project lead, you have a enterprise architect, a cloud architect, a delivery, and, um, technical services, all named resources supporting you. And from day one not, you know, when that, when that contract is executed, they are named and they're assigned. So they're there part of the build and everything, not just there to show up when you are ready to go, right?

So that helps with having the expertise from the get go and seeing things through to post go live and then being that re that still same group, running your day-to-day operations helps very much with consistency versus obviously having to bring people up to speed on a regular basis. And obviously when you have cohesive people and communication, we get a lot things done a lot better. And then if you add in some tools with that, it obviously helps as well.

So we have a, what we're calling an integrated tool chain or toolkit, so to speak, where we have, um, some applications from business processes, um, called signo, um, architectural, uh, processes or alignment through a tool called Lean ix. Um, and kind of partnering those together with some testing automation, um, allows you to actually see through a tech stack versus an an implementation cost, how you're removing your system, what business processes are vital, um, how out of, um, how out of standard are they, and if we made one or two tweaks, could that become standard, reducing technical, you know, costs to, to update that or maintain that system. Um, can I ask a question?

Yeah. Um, uh, I work in cyber and I was keen to understand how you work with the cyber folk to keep them happy so they're not the blockers Sure. For these big projects.

Absolutely. So we have a des a dedicated security team. So during the, um, you could call it pre-sales motion, so to speak, when we're going over the roles responsibility, what is the system sizing, what is the bill of materials?

A huge component of that is, uh, you know, 3, 4, 5 different workshops around security itself. Um, you know, within cloud ERP, how do the third parties, what, what does all of this mean from protecting my system? Um, so there are extensive workshops that take place from our security leadership.

There's a sign off on it. So any, before any agreement is ever executed upon, there is a cloud architect security sign off that the customer must agree upon with SAP for us to turn over an, an exec, an an ex executable agreement. So utmost importance because the last thing SAP would ever need is something like that happening because we pride ourselves obviously on the security of the system, Handles the, uh, software upgrading of the appliance.

Is that something that's automatically done by SAP team or is that done by the customer? Can the customer control when those upgrade Occur? Yes.

And a so public cloud, those are done for you, right? Understand you have no choice. I'm talking private cloud, CDC, you have the opportunity to work with us and tell you when you wanna do the upgrade and the frequency.

So if you decide SAP's release, big release comes once a year and you're saying, I'm, I'm taking a year off you, you know, you can do that. You have that optionality. We obviously wanna keep you as current as possible, but understand there's a lift there.

But through the, um, the cloud ERP model, our team supports and drives portions of the upgrade. Do you still need customer involvement? Yes, but that cost and that support does decrease from the customer side because of those dedicated resources we have supporting the system.

Is, is there a point at which you say, okay, you can only defer so many upgrades and we're not gonna support you if you get too far out of date? Yes. Yeah.

Yeah. I don't know the exact years on it. I could follow up with you on that, but of course we have customers that are so outdated, so before they even, you know, can kind of move their tackling, what does an upgrade look like first?

And then how do I move? Um, and the goal is to obviously have those be in sync, but we do have a a, a cut to say, okay, it's been X amount of years, we need to get you upgraded. I'll have to find the exact amount of time.

Is it, is it basically a matter of that version's just not supported anymore? Like we're not gonna do anything with you until A customers loves the email when they get a note saying, Hey, this specific license is running and you know, going to be coming end of life at this timeframe, we're going to offer extended maintenance on it. But that's your push and that's your nudge, right?

I'm going through that with someone right now that has had the notification, it's end of life 25, they could extend maintenance till 2030. Um, ultimately we're allowing them some additional time and, and opportunity to make that move. But there are notifications, um, that come to the customer for that.

Uh, I have a question here. Uh, so if this infrastructure, uh, called hardware and software is managed and it's responsible by you guys and your responsibility, uh, how you, uh, tackle the fact that it can be compromised and who is responsible for the fact that, for example, through this infrastructure, something will happen with customer infrastructure or the data, who's responsible For that? Sap, it's on SAP's contract.

Okay. Right. So one throat to choke, so to speak, uh, which is great and terrible all at the same time depending on the issue, right?

Yeah. Um, but we have obviously back to back agreements with our hyperscalers and with our partners. So in private, but in private, yeah, it's still sap.

You're, you are contracted with SAP P you take care of the, um, I dunno, copy of the data outside of the organization if something will go wrong. Disaster recovery, disaster recovery, all of those Disaster recovery is included and embedded in the, the, um, contract or the agreement. Mm-hmm.

And the R-P-O-R-T-O is, is a contract negotiated numbers or Set numbers. Um, if you look at, um, some opportunities, so you see the bottom there up to 12 hours and RPO up to 30 minutes. Um, we have optional services, um, that you can enhance certain opportunities, um, such as like SLAs, like I mentioned, standards 99 7, you can, you know, increase that to 99 9, you can increase certain support.

So non-prod for example, is, you know, 24 by five, if you want 24 by seven, there's opportunities to do that, et Cetera. Is it, is it, uh, so what happens if like my organization doubles overnight or triples overnight? I mean the size of the databases, is that something you guys maintain is, or is it something that's built on a size basis or what Randall, You're smiling, this was a huge question and thing that we work through with energy transfer.

Do you wanna take that? It can, it can all be solved. It just lost you.

Absolutely. So I mean, we do, we do our best from a sizing perspective to understand, okay, if there's immediate growth or what's the growth over the next year, it, you know, we procure and make that probably an upfront purchase, right? To say better to buy.

Now in case of that, here's some flexibility. Obviously if you have an acquisition or something that comes overnight, we're, there would be some prep that we would need for that to obviously move it over. But it would just be through, um, you know, a change request so much like you're able to go to marketplaces and say, I wanna buy this, this, and this today.

Um, you can come to SAP and say, I need a sandbox, I need a project environment. I need it for three weeks. I need it for a month, whatever that may be.

Or I need six terabytes forever because I'm acquiring an organization. We have certain processes through standard change requests or expedited change requests that allow that to take place and get into your environment rather quickly. That's a really important concept because if you think, oh, go ahead Randall.

We have a 25, $30 billion acquisition. I heard. Yeah, there you go.

We'll find out here. And we're, and we will accommodate that one. One of the things I was gonna say is that, you know, people get confused when we use the term cloud.

A lot of times people automatically assume it's a microservices based architecture that provides automatic capacity expansion, automatic ha because of distributed processes. This is not the case. PE is not a microservices based application.

CDC isn't, and the one in the hyperscaler four p fried edition is not either. So I mean, you can call it the tech technical term that monolithic architecture is the same. So you do not get automated scale.

You have to do a change request, whether you place PE in a hyperscale cloud or whether you place it in your own data center or polo. So that is a, a really important concept. And, and it, you know, it is cloud because you are paying for a subscription license and a subscription infrastructure as a service.

Um, and you're getting, you know, pretty quick updates to functionality and, and new features.