Classic Hosting Service for SAP ERP
The market for SAP hosting is changing. After a decade of private cloud transformation, the public cloud now brings about major changes.
In the past, mainly the SAP test and development systems were operated in the data centers of large hyper scalers (such as Alibaba, Amazon Web Services, Google, IBM and Microsoft Azure) as well as in the SAP Cloud platform. Now, customers are starting to host their production systems there or have them operated by service providers in the public cloud.
Across all hosting variants, the SAP hosting market now amounts to two billion Euros in Germany and a quarter of a billion Euro in Switzerland.
I had the opportunity of talking to Robert Schuhmann, managing director at FIS-ASP Application Service Providing und IT-Outsourcing GmbH, about the development of classical hosting services for SAP ERP and the requirements of medium-sized companies.
I interviewed him at the Grafenrheinfeld headquarters on July 21, 2020.
R. Simons: Robert, you are looking back on nearly 30 years of FIS experience, 11 of which as managing director at FIS-ASP. Your responsibilities include, for instance, the development, expansion and hosting operation of SAP ERP. What, in your opinion, are the current requirements of medium-sized companies?
R. Schuhmann: Companies tend to consider dependency and effects to be more important for the SAP area than for other IT products in the company. It is of particular importance for companies in the upper midmarket segment to influence operations and implementation speed. However, there are two reasons why the business of SAP hosting providers will not collapse in the medium term:
First of all, classical providers are much more inexpensive in a direct cost comparison than the public cloud solution of large providers, at least when it comes to SAP hosting.
Moreover, the public cloud platform “only” provides an infrastructure solution. However, in order to keep SAP highly available in the public cloud, services are needed that have to be acquired from a Managed Services provider in addition. As a result, the public cloud solution increases costs and requires more contact persons. In no case can a decision in favor of the public cloud solution be a decision on costs.
R. Simons: Are there, in your opinion, any other aspects that are relevant?
R. Schuhmann: Yes. It is crucially important, for instance, to have personal and competent contact persons who are available every day and around the clock, which means a 24/7 service. The availability of applications is only in some respects part of the infrastructure. Compared to the “Big Cloud 4”, Managed Services providers often also guarantee the availability of the application. Alibaba, Amazon Web Service, Google or Microsoft Azure do not.
R. Simons: How do you asses the commitment of cloud providers such as Amazon, Google, IBM, Microsoft etc.?
R. Schuhmann: The big cloud providers show considerable deficits in this respect. They have not yet found an answer to the requirements of medium-sized companies. They are still not flexible enough for medium-sized companies, particularly with regard to warranties, liability and penalties.
R. Simons: Can you give an example?
R. Schuhmann: Let’s talk about data protection, which is becoming more and more important also for medium-sized companies.
It is not astonishing that according to a 2017 report of the National Initiative for Information and Internet Security (NIFS), 79 percent of those questioned pay attention to the data protection regulations IT providers are subject to when selecting an IT provider. Not even every tenth of them can be satisfied with the US data protection level and would like to have its corporate data hosted by a corresponding provider.
Most of them prefer providers being subject to German or, at least, European data protection law. Keyword: General Data Protection Regulation (GDPR). For decision-makers, there are still a number of question marks hanging over the cloud area.
R. Simons: What do you think: Is there a difference between corporate groups and medium-sized companies?
R. Schuhmann: Basically, there is no difference between the SAP IT business of the upper midmarket and that of the corporate groups. Medium-sized companies as well operate branch offices all over the world and need uninterrupted SAP system availability and, at least, the legally required data protection.
R. Simons: Are there any savings potentials irrespective of this?
R. Schuhmann: Generally, savings potentials are an advantage provided by the public cloud when it comes to particularly short contract terms.
R. Simons: How do you asses the hosting of SAP systems by specialized providers?
Apparently, SAP itself has now started to promote SAP operations based on HEC (Hana Enterprise Cloud), which have been reanimated several times in the recent past, more defensively, but definitely with less success.
Managed Services providers offer customers the advantage of having more influence and control possibilities and implementing projects more quickly. Here as well, speed remains a crucial parameter.
R. Simons: What do you think of the wide range of SAP services and the requirements for service providers resulting therefrom?
R. Schuhmann: In view of the growing SAP portfolio and the influence of cloud computing, providers, such as FIS-ASP, are in demand who are extending the scope of their competences to more than one SAP product or have already done so.
For them, this does not only mean to increase consulting competence in the area of SAP roadmap and architecture strategy but also to restructure their own offers in the field of SAP hosting and SAP application management.
In addition, capabilities concerning platforms as well as the implementation and integration of cloud solutions with local applications are more and more required. FIS and FIS-ASP are very well prepared in this respect.
R. Simons: That was a nice closing statement, Robert. Thank you for the interview.
Author: Raimund Simons, FIS Informationssysteme und Consulting GmbH