Microsoft, SAP Take Cloud Partnership to the Dogfood Level

Global technology companies like Microsoft and SAP SE of course often double as marquee clients for one other.

Taking advantage of their scale, prominence and ongoing strategic partnership, SAP and Microsoft this week announced a new dogfooding arrangement. The companies will each put their joint engineering efforts to get the SAP HANA Enterprise Cloud running on Microsoft Azure to work internally on running parts of their actual businesses.

The partnership to get SAP's enterprise ERP products onto Azure has been publicly discussed for over a year, and fits within a long history of cooperation in pursuit of joint business opportunities in spite of other areas where the companies directly compete. When the joint work on Azure was initially announced, for example, Microsoft and SAP also outlined an arrangement to more tightly integrate SAP offerings with Microsoft Office 365, upsetting some Microsoft partners for whom Office 365 compatibility with Microsoft Dynamics ERP products was a competitive differentiator.

Nor is SAP exclusive to Microsoft in this instance. The company has worked with Amazon Web Services (AWS) since 2011 to get its enterprise cloud products onto that public cloud and is also engaged with the Google Cloud Platform (GCP).

What's qualitatively different about the new Microsoft-SAP arrangement is the public description of the real internal systems where each company will deploy the joint solution.

Microsoft described itself as transforming its internal systems to implement the SAP S/4HANA Finance solution on Azure. The company said those internal systems include legacy SAP finance applications. The use of the word "include" implies other legacy systems are being swept up in the transformation, but those systems aren't disclosed. The plan for Redmond also calls for connecting SAP S/4HANA to Azure AI and analytics services.

SAP is committing to migrate more than a dozen business-critical systems to Azure. While it doesn't look like SAP is putting anything as central as its internal financial applications on the platform since that's not specifically mentioned, SAP will run its SaaS-based travel and expense management company, Concur, off of SAP S/4HANA on Azure. That is no small commitment, as SAP paid $8.3 billion to acquire Concur Technologies in 2014. Also, as part of the announcement, the supply chain management business SAP Ariba, already an Azure customer, will explore expanding Azure usage within its procurement applications.

On the Microsoft side, the dogfooding of the SAP S/4HANA software will certainly lead to continuing awkward questions from both customers and partners, who wonder why Microsoft doesn't bet its own business on Dynamics 365 for Finance and Operations. In the past, Microsoft officials have suggested to Dynamics AX users that the company committed to SAP before it had its own enterprise-scale ERP offering and the extensive customized applications associated with the SAP system made a migration to its own ERP solution impractical.

In fact, the complexity of migrating its own heavily customized SAP implementation into the SAP HANA for Azure environment should prove useful for joint SAP-Microsoft customers such as The Coca-Cola Company, Columbia Sportswear Company and Costco Wholesale Corp.

Look to both Microsoft and SAP for many tips and tricks, detailed migration guidance and other best practices from the dogfooding experience. In addition to co-engineering, go-to-market activities and joint support services, the companies are promising extensive documentation from their internal deployments.

Posted by Scott Bekker on November 29, 2017