Facing the Crossroads of ERP Modernization

The path to a modern ERP environment is often paved with uncertainty. At the heart of many transformation conversations is the move to cloud-based ERP, which promises streamlined adoption and business innovation—but the journey is far from linear.

Nick Miletich, COO at Proterra, summarizes the core challenge: “I would say the biggest challenge and the biggest conversations we continually have is about how to navigate this journey.” For many organizations, aligning legacy systems, cloud readiness, and business goals introduces both technical and strategic friction.

SAP customers, for example, must manage the integration of SAP S/4HANA or RISE with SAP, SAP Business Technology Platform (BTP), as well as newly introduced offerings such as SAP Business Data Cloud. The combination of these solutions can introduce complexity that often overwhelms customers. As Miletich explains, “Some clients haven’t even started using cloud-based data stores. This makes the jump to multiple new solutions a big pill to swallow. And they come to us to talk through what that journey is going to look like.”

Steele Arbeeny, North American CTO at SNP, points to another pressing issue: articulating the value of modernization efforts. “You need a better story than that,” he says, referring to the difficulty in justifying investment when the visible gains may seem incremental. “It’s a struggle to connect that story to the size of the investment.”

Strategic Modernization: Start Small, Think Big

To avoid analysis paralysis, many leaders are adopting phased, pragmatic approaches to transformation. According to Miletich, “A lot of clients automatically expect that it is necessary to update underlying data platforms, ERP systems, and infrastructure at the same time. And that’s not the case.” Instead, 80% of Proterra’s work involves gradual steps—starting with an initial move to cloud-based infrastructure, then layering in an ERP update and introducing modern development principles.

This modular mindset also aligns with SNP’s “selective migration” approach. As Arbeeny explains, organizations can “pick and choose what you want to migrate and what you don’t,” allowing for surgical modernization while optimizing cost, time, and impact.

The Power of Platform, Data, and Business AI

ERP vendors today are doing more to expand their platform ecosystems, reshaping how organizations build digital capabilities. However, even when the solutions offered are fully managed software-as-a-service offerings, Miletich points out that “you still need technical teams to do what we would consider standard administrative tasks,” reinforcing the need for clear ownership and skills alignment across technical teams.

Data strategy is becoming a linchpin of the ERP modernization roadmap. This is because having cleansed and harmonized data is a vital part of centralization projects and preparation for future innovation. But organizations are also looking to ensure that they aren’t replicating data unnecessarily. This shift reduces latency and improves data integrity across systems.

It also lays the groundwork for business-grade AI, where contextually trained algorithms operate on real-time data, not stale extracts. But as Arbeeny warns, “If your data isn’t good, you’re not going to get value out of it.” Modernization is the moment to cleanse, archive, and reshape data into an AI-ready foundation.

Partnering for Progress

Technology partners remain essential allies in executing digital strategy. Miletich highlights their indispensable role: “The augmentation and innovation of what the partners bring has been absolutely beneficial to everything we’ve done.” From strategy and compliance to migration and integration, experienced partners offer the vertical expertise and solution depth that ERP customers need to accelerate value realization.

As Arbeeny notes, partners are often the crucial translators between the ERP vendor and customer business needs: “Here’s how we can use data from the ERP system, data from other systems, and third-party data to make this end result better.”

Rethinking Skills for the Modern Professional

In this hybrid future, IT professionals must evolve. Traditional skills—like ERP administration—remain relevant, even as new capabilities like managing cloud platforms and enterprise architecture gain prominence.

Cloud-based ERP offers streamlined adoption and business innovation, but the journey is far from linear.

“The cloud skill set I think is going to be the hot commodity,” says Miletich, citing the need to monitor resource usage, manage environments, and optimize connectivity. Other industry experts are focused on the value brought by enterprise architecture which bridges technologies to deliver real business value and is tremendously important when most organizations are running solutions from multiple vendors in a variety of landscapes.

Importantly, Arbeeny calls out the enduring importance of functional insight: “What is the customer doing?

How can we improve the customer journey with all these tools, right?”

Act with Purpose, Engage with Strategy

For organizations still in deliberation, the message is clear: delay only increases risk. Miletich encourages teams to understand and grasp the changes that are occurring within ERP systems today. Having that knowledge is key to planning for future innovation. The journey can be taken in phases, but there must be a starting point.

Arbeeny adds a final note of focus: “Start with doing it for the right reason. Everything should begin with a value discussion.” By grounding transformation efforts in business outcomes, ERP leaders can avoid tech-for-tech’s-sake initiatives and chart a path that aligns IT execution with enterprise growth. ERP modernization is not a single project—it’s an ongoing commitment to agility, intelligence, and innovation. Whether simplifying the core, embracing cloud platforms, activating business AI, or building a future-proof workforce, success requires proactive engagement, clear business alignment, and trusted partners. As ERP ecosystems continue to evolve, technology leaders who act with clarity and conviction will be best positioned to turn transformation into sustained advantage.

What This Means for ERP Insiders

Prioritize a Phased Approach to ERP Modernization. Avoid the trap of “big bang” transformations. Instead, break your ERP modernization journey into manageable phases. Begin by enhancing cloud readiness, then layer in an ERP upgrade or initiatives that will streamline manageability over time. This approach reduces risk, accelerates time to value, and aligns better with resource availability and organizational readiness.

Build a Unified Data Strategy to Unlock AI Potential. Invest early in data quality, governance, and integration—especially if AI or business analytics are part of your roadmap. Leverage enterprise platforms to eliminate replication, enable real-time visibility, and extend insights beyond just the ERP system. Clean, well-structured data is foundational to realizing meaningful business outcomes from AI and automation initiatives.

Engage Partners Strategically for Transformation Expertise. Partners bring critical experience, industry-specific knowledge, and technical capabilities to navigate complex migrations, integration efforts, and new platform adoption. Collaborate closely with partners who understand your business model and can help translate evolving offerings into clear, executable value-driven strategies.

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Months after the departures of Chief Marketing and Strategy Officer Julia White, Chief Revenue Officer Scott Russell, and Chief Technology Officer Juergen Mueller, SAP has announced a new leadership structure in its FY2024 earnings call. Amid the departure of three SAP Executive Board members last year, it is surprising that only one new position has been created. This is for a new Strategy and Operations board area which will be led by Sebastian Steinhaeuser. Steinhaeuser, who will become SAP’s Chief Operating Officer on February 1, joined the company in 2020 as the Chief of Staff to CEO Christian Klein, and became Chief Strategy Officer in 2021. Prior to joining SAP, Steinhaeuser worked in multiple roles at The Boston Consulting Group.

While Steinhaeuser is the only new member of the Executive Board, SAP announced multiple other leadership changes. This included appointing Philipp Herzig as global CTO in addition to his existing role as Chief AI Officer, as well as Jan Gilg and Emmanuel (Manos) Raptopoulos who will jointly lead SAP’s Customer Success organization as co-Chief Revenue Officers. Raptopoulos, currently the regional president of SAP EMEA, will manage the SAP EMEA, MEE, and APAC regions. Gilg, currently president and chief product officer for Cloud ERP, will oversee SAP Americas and the Global SAP Business Suite. Both Gilg and Raptopoulos are long-time SAP employees with nearly twenty years of experience with the company. Gilg, Raptopoulos, and Herzig will all report to Klein.

Although no additional new leadership positions were announced today, SAP did confirm that Ada Agrait will continue as Chief Marketing Officer, a role she has been filling on an interim basis since White’s departure. Agrait, along with Herzig, Raptopoulos, and Gilg will all be part of a new Extended Board which will act as a strategic advisory body for the company. Other members of the Extended Board will include Michael Ameling, General Manager for SAP BTP, Sebastian Behrendt, Head of Global Finance, Thomas Pfiester, Head of Global Customer Engagement, and Monika Schaller, Chief Communications Officer. The General Manager for Business Suite will also be part of the Extended Board once that position is filled.

The goal of the Extended Board is to create a diverse team that can scale the reach of the Executive Board, discuss a broad range of portfolio topics, and act as a strategic advisory body that will assist in driving the company’s AI-first, Suite-first strategy. In speaking about the Extended Board’s role during the earnings call, Klein emphasized that the Executive Board has been in discussion with the Supervisory Board and has looked at the way other technology companies run.

Financial performance

SAP also had a very strong fourth quarter resulting in an exceptional FY 2024. The headline was that the company met or exceeded all their financial outlook parameters for the year. This included a 32% increase in current cloud backlog to €18.1 billion, a 43% increase in total cloud backlog to €63.3 billion, a 25% increase in cloud revenue to €17.1 billion, and a 10% increase in total revenue to €34.2 billion. In alignment with this performance, SAP also saw a 28% increase in non-IFRS cloud gross profit to €12.6 billion, gross profit by 11% to €25 billion, and operating profit by 25% to €8.2 billion. Based on these performances SAP have raised their 2025 outlook.

SAP highlighted a particularly strong cloud performance in APJ and EMEA. While some of this is because these regions have lagged in cloud adoption compared to Americas, they are now catching up. But this highlights SAP’s success in accelerating cloud adoption in every region with cloud revenue in APJ and EMEA increased by 37% and 31% respectively compared to 19% in the Americas.

Impact of AI

SAP does not separate AI performance metrics as it is embedded in every solution the company offers. However, Klein highlighted that AI use cases are now embedded in 50% of deals and that 34,000 customers are now actively using AI. SAP also sees agentic AI at the nexus of business and technology and a continued investment area that will be a major factor total revenue acceleration.

Part of SAP’s confidence stems from the strategic approach SAP is taking toward AI. Klein stated that SAP is committed to building the strongest foundation for businesses which require access to both unstructured data and business data. This is achievable by embedding and delivering AI out-of-the-box, a capability that, Klein emphasized, cannot be achieved with on-premise solutions. This is because SAP recognizes that no single LLM fits all use cases. By maintaining an agnostic approach, SAP identifies and integrates the most suitable AI technology for each specific scenario. This flexibility allows them to prioritize customer needs, leveraging the best AI solutions to deliver optimal outcomes.

What this means for ERP Insiders

SAP withheld announcing these changes to  ensure a strong 2024-year end. With this achieved, SAP is now moving forward with multiple leadership changes, including a return to having two Customer Success leaders who report to the Klein. SAP previously had a similar organization structure when Jennifer Morgan and Adaire Fox-Martin both reported to Bill McDermott. The difference is that both Morgan and Fox-Martin had a strong history in sales. While that is true of Raptopoulos, that does not seem to be the case with Gilg. Although Gilg has been very successful leading Cloud ERP, it remains to be seen whether that success can be emulated in his new role.

However, SAP has not commented on some of the existing regional sales leadership. While some will retain their roles, changes at the top often trigger a ripple effect as new leadership brings in familiar and trusted team members. It is also possible that SAP is reshaping its sales leadership to align with SAP’s “AI-first, Suite-first” strategy, departing from a more traditional sales model. Given that SAP needs continued cloud growth to be successful, this will be a priority for the new sales organization.

While some disruption in sales is expected as the leadership transition occurs, there will be minimal impact on deals already in progress. A stronger emphasis on the Global SAP Business Suite and the AI-first approach is the most definite approach that SAP will take. While the exact components of the Global SAP Business Suite remain unclear, SAP’s decision to appoint the new General Manager for Business Suite to the SAP Extended Board shows that this is a priority for the company. This development could tie into SAP’s planned announcement for February 13th, which CEO Christian Klein described as “the next breakthrough innovation.” With 2025 being heralded as “the year of data,” it’s likely this announcement will shape SAP’s strategic direction in the years ahead.

One area that may be of concern to both employees and customers in the Americas is the lack of regional representation in new leadership positions. Since Klein became sole CEO there has been a swing towards a greater German representation on SAP’s Executive Board, something that is now also reflected in the Extended Board. SAP has always had a back and forth between Walldorf and the US, with McDermott’s period as CEO perhaps being the furthest the company has seemed from its German roots. How this will play out remains to be seen, but Gilg will have significant work to do to build strong relationships in the region.

Given these changes, and SAP’s strong performance and ongoing focus on AI and the Global SAP Business Suite, what should SAPinsiders keep in mind?

• Focus on ERP transformation plans. Although Klein mentioned that 40% of customers had now started a transition, no additional mention of RISE with SAP or SAP S/4HANA adoption was made during the call. This leaves many customers still needing to determine a path forward. While SAP may now be offering an alternative that will allow customers until 2033 to complete a transition to RISE with SAP, it continues to be vital that organizations focus on ERP transformation plans.
• Expect a continued emphasis on business AI and generative AI copilot Joule. AI is having a significant impact on SAP’s bottom line, and SAP sees their approach as being a better one for SAPinsiders. Rather than acquire an AI company or LLM which may fit some needs but not all, SAP’s agnostic approach gives them the ability to use the best model for every use case. Customers are already starting to reconsider RISE with SAP based on the ability to access business AI, and this will continue to be central to everything SAP does in 2025.
• Concentrate on achieving internal goals. Changes at SAP can be distracting. Like any large company, SAP undergoes organizational changes every year with significant restructuring every few years. Do not let these changes distract from the goals organizations need to achieve. This may be a cloud transformation, replacing aging legacy systems, modernizing data and analytics, or making huge volumes of data relevant. SAP has the tools needed to support these goals, but organizations must remain focused on making that happen to ensure their own success.

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A specific example is that, when an organization moves SAP workloads to the cloud, SAP manages protecting, monitoring, and responding to threats impacting the cloud infrastructure, networking, data stores, and cloud operations. These are the parts of the environment that the customer cannot access directly. Similarly, SAP has no access to the secure configuration and transactions within an application running in an on-premise infrastructure, for example, where customers are responsible for tasks like user provisioning and authorizations, business process configuration, and deciding who can access data and functionality in the system. Even for responding to tickets, SAP cannot access a customer system unless allowed.

Understanding these responsibilities is crucial for customers because unclear roles can lead to oversight of critical elements. This is particularly important because cybersecurity attacks continue to increase in volume and impact. Even if an attack doesn’t directly impact SAP systems, it may indirectly affect these systems through cross-contamination, which can force organizations to shut down SAP systems to prevent them from being impacted.

However, even with a clear understanding of roles, customers may be unsure how to proceed in the event of a cybersecurity incident. SAPinsider research has highlighted that when it comes to threat detection and incident response, organizations still need assistance. The research reveals that 37% of surveyed organizations require guidance on handling detected threats, 34% require guidance on identifying potential threats, and 33% need help understanding how to best use threat detection tools.

Organizations can address these challenges by reporting new security issues to SAP. However, what SAP can achieve will be limited by the access that they have to the system, and a security incident may exceed the expertise or capacity of in-house teams. To support organizations in addressing this, Onapsis has partnered with SAP to provide faster investigation and incident response assistance to SAP customers. Onapsis’ SAP Incident Response enables organizations to use an SAP-endorsed incident response when faced with an attack. Having access to expertise, support, and technology when managing a security incident can help hasten investigations and accelerate recovery.

What this means for ERP users

Security is one of the most important topics for ERP Insiders today with, for example, 66% of organizations citing it as a key factor when choosing a cloud provider for RISE with SAP. This is because cybersecurity incidents are increasingly impacting SAP systems either directly or indirectly. Ensuring that systems are secure is top of mind for both SAP and IT organizations. But recognizing security as a priority does not equate having the capabilities or expertise to respond to a security incident. This makes solutions like Onapsis’ SAP Incident Response, a big advantage for organizations as it enables them to use the knowledge and resources that may not be available internally. Given the security challenges faced by organizations today, what should ERP users do to be prepared?

• Ensure that there is a clear understanding of roles and responsibilities when it comes to securing SAP solutions. SAP has published guides such as the Shared Responsibility Model for RISE with SAP, but such detailed documents do not exist for all SAP solutions. This is why it is critical to ensure that SAP teams and the customer’s security and IT teams they work with have a clear understanding of their responsibilities when it comes to securing SAP systems. Creating RACI charts can be a starting point, but it is also imperative to understand what SAP will secure and not secure when it comes to cloud-based solutions.
• Follow security trends and put in place response plans that can be activated when threats or vulnerabilities are detected. Having a detailed response plan in place can be critical when a new threat or breach occurs. Ensuring that team members know where and how to access this plan, and have practiced doing so, can be the difference between something that is quickly stopped and a major breach. While response plans should include the steps that internal teams need to perform immediately after detecting a security incident, this can also include the ability to reach out to SAP or security partners to receive assistance in dealing with such situations.
• Ensure that SAP teams collaborate closely with customers’ IT teams or dedicated security teams when it comes to managing the security of SAP systems. Historically, SAP teams were responsible for managing the security of SAP systems. This not only included managing system and data access but also patching and reacting to security incidents. However, it also meant that the customer’s IT and security teams had little insight into the way these systems were managed and secured. While this has evolved, it is still vital to ensure that SAP teams collaborate closely with the customer’s IT or dedicated security teams to ensure that SAP systems are properly secured.

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Less than three months after her exit from SAP, Amazon has appointed Julia White as its new Chief Marketing Officer and Vice President of Amazon Web Services (AWS).

Prior to her role as the Chief Marketing and Solutions Officer at SAP, White spent nearly 20 years at Microsoft, with her last role as Corporate Vice President responsible for product marketing for Microsoft Azure, Developer Tools, and Platforms. Combined with her three-year stint at SAP in which she focused on cloud and AI messaging, White brings significant experience and expertise to her new role at AWS, also highlighted by AWS CEO Matt Garman who emphasized White’s “extensive experience with cloud, AI, and product messaging and positioning” in a memo to AWS employees. Garman also indicated that White would be joining his leadership team and will succeed Raejeanne Skillern, CMO since July 2023 and whose departure was announced in the same memo.

Although White secured this new role not long after leaving SAP, NICE had announced that they had appointed White’s colleague and executive board member Scott Russell to replace retiring CEO Barak Eilam even before he left SAP. Russell will take over as the chief executive officer of NICE on January 1^st, 2025.

While little has been discussed about the former SAP CTO Juergen Mueller since his departure from SAP in September, officials from the Heidelberg Public Prosecutor’s Office have indicated that they are investigating a former manager from a large software company based in the Rhein-Neckar district owing to allegations of sexual misconduct. However, the officials have asserted that it is under investigation and it is unclear if there are sufficient evidence to press charges.

What Does This Mean for ERP Insiders?

While Julia White’s separation from SAP may be a cause of concern for customers using AWS and looking for a continued strong relationship between the companies, this is unlikely to be the case. AWS has been a strong SAP partner for many years and is competing daily with Microsoft Azure and Google Cloud Platform (GCP) for business from SAP customers. Although SAPinsider research finds that more customers are more likely to choose Microsoft Azure as a cloud service provider for SAP S/4HANA and RISE with SAP, Microsoft Azure and AWS are very close when it comes to broader cloud deployments of SAP workloads. Moreover, AWS is much bigger than a single market vertical such as SAP and has surpassed $10 billion in quarterly profits with revenue exceeding $27.4 billion.

However, it has been easy for many large enterprises to extend their existing relationships with Microsoft to include offerings such as the Microsoft Power Platform and Microsoft Power BI. This has resulted in more significant competition between AWS and Microsoft Azure for the enterprise market, something that White will need to address if AWS hopes to continue to grow revenue and profits in the coming years. White will need to draw more on her experiences at Microsoft in this role than on her tenure at SAP, although SAP’s AI focus may provide some benefits as White’s role will continue to facilitate AI driving AWS growth.

If anything, end users may see a deepening of the relationship between SAP and AWS. This change may be an opportunity for White and her team to establish a closer partnership with SAP, solidifying AWS as a compelling choice for hosting SAP workloads.

ERP Insiders should also remember that AWS is responsible for running a significant portion of the Internet. While White may look to improve AWS’ relationship with SAP, this is only a part of the broader AWS business and that is where her priorities will reside.

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Current cloud backlog for the ERP giant increased 27% at constant currencies to €15.4bn while total revenue was up 10% at constant currencies to €8.5bn. Once again cloud revenue, which increased by 27% at constant currencies to nearly €4.4bn, accounted for more than half of SAP’s total revenue and 59% of cloud and software revenue.

This performance was strong enough for SAP to raise their full year outlook for 2024 for cloud and software revenue, operating profit, and free cash flow. Cloud and software revenue is now expected to be between €29.5 and €29.8bn, raising the midpoint by €400m. Non-IFRS operating profit is now expected to be between €7.8 and €8.0bn, up from €7.6 to €7.9bn. And free cash flow is expected to be between €3.5 and €4.0bn, with the previous outlook expected to be €3.5bn.

As was the case in the second quarter, CEO Christian Klein stated that deals including premium AI use cases were a significant proportion of all deals this quarter. While much of the AI discussion at TechEd was focused on Joule, this is not the only way that SAP customers can access premium AI use cases. Europe’s most valuable tech company has focused on delivering Joule uses cases, which are only available in SAP’s cloud applications and through RISE with SAP or GROW with SAP premium packages, but users can also leverage the AI Foundation as part of SAP Business Technology Platform (BTP) to access AI models from many premium AI partners.

Transformation to SAP S/4HANA

As has been the case for several quarters, there were no specific adoption numbers mentioned in the third quarter earnings call. However, Klein did mention on multiple occasions that only a quarter of customers have started their transformation journey to SAP S/4HANA. Taking into consideration that around half of all SAP S/4HANA customers are net new and that there are approximately 25,000 customers who have licensed the offering, this means that over 35,000 customers are still to make any move off their existing SAP ECC, SAP Business Suite, or even SAP R/3 deployment.

What Klein and CFO Dominik Asam focused on during the call were the benefits of a cloud ERP bundle in general and RISE with SAP specifically. Klein also mentioned that RISE with SAP has finally become the methodology offering that he had always aspired for it to be. This methodology, based on the SAP Activate deployment and implementation methodology, includes best practices from customer implementations and a new generative AI-powered assistant that can help manage projects. The RISE with SAP methodology includes guided onboarding, partner competency requirements, an integrated tool chain that supports different phases of the methodology, and the ability to accurately define target architectures.

While there has recently been coverage that speculates that RISE with SAP adoption is extremely poor, the topic was not addressed during this quarter’s earnings call. What Asam did highlight was that deals exceeding €5m made up more than 60% of the order entry for the quarter. SAP needs this growth in large deals in order to continue to ramp up cloud revenue and current cloud backlog. But what this may mask is that an equivalent, or smaller, number of deals are being closed even while they are providing additional revenue. Given that SAP is focused on a “land and expand” sales policy where they start off with small deals that can then grow significantly, deals to large customers with complex environments can have a significant revenue impact – thus the vendor now becoming Europe’s most valuable software name.

Can SAP remain Europe’s most valuable tech firm?

The day after the earnings call SAP hosted a virtual event titled “Rise into the Future” which focused on the benefits of moving to cloud ERP and some of the latest features in SAP S/4HANA Cloud. The three topics covered at the event were new AI innovations, the RISE with SAP methodology, and an easier path to clean core with SAP Build. While none of this information is new, the packaging and push reflects that SAP still has much work to do to bring the bulk of its legacy ERP customers to cloud ERP.

Although it was not discussed during the virtual event, the question-and-answer section made it clear that all new Joule announcements were only available to customers running SAP cloud applications or via RISE with SAP and GROW with SAP. While Joule is not yet embedded in every SAP solution, it is currently available in SAP SuccessFactors, SAP Start, SAP S/4HANA Cloud Public Edition and SAP S/4HANA Cloud Private Edition, SAP Customer Data Platform, SAP BTP Cockpit, SAP Build Code, SAP Product Lifecycle Management, SAP Asset Performance Management, SAP Digital Manufacturing, and SAP Integrated Business Planning. Another answer response stated that there is no paid license associated with Joule itself. This means that to access Joule customers will need to license a no-cost SAP SKU which will then trigger the provisioning of Joule and the creation of the terms and conditions. These conditions must be accepted in order to use the generative AI co-pilot. Whether this provides just an initial level of usage was not stated.

SAP is at a crossroads. Although Klein thanked both former Executive Board members Julia White and Scott Russell for their contributions to SAP’s success (and perhaps understandably, only them and not other recent departees) it is clear that the needle has not yet moved sufficiently when it comes to converting the €11bn of maintenance revenue from on-premise ERP solutions to SAP S/4HANA let alone RISE with SAP. 2027 is fast approaching and given the size, cost, and complexity of transformation projects many customers will still be running existing ERP systems after 2030. However, to achieve their cloud ambitions SAP needs these customers to move. How many will do so and when that will happen is the challenge.

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Take SAP, for example. There were about 50,000 ERP customers around the time of the S/4HANA release. Of those, around 25,000 licenses for S/4HANA have been sold, but half of those are net new. That means only about 12-13,000 of those 50,000 customers have moved to S/4HANA, let alone cloud ERP. With Rise with SAP, adoption numbers are around 6,500. There might be more S/4HANA Cloud customers, but in terms of the Rise construct, only about 6,500 have adopted it. That leaves 35,000-38,000 on-premise ERP customers who haven’t moved those workloads to the cloud.

When looking at cloud adoption, it’s often the financial products and older ERP systems – manufacturing planning, data warehousing – that are slow to move off-premise. CRM, on the other hand, has seen faster cloud adoption, driven by Salesforce, which has become the de facto CRM platform for large organizations. 

This brings up the need for integration between cloud and on-premise systems, especially when using non-SAP or non-Oracle solutions. Old financial solutions, ERP systems, and similar workloads are slower to move off-premise. Despite cloud being central from an infrastructure standpoint, there’s still a long way to go.

A significant challenge for ERP vendors like SAP and Oracle is the lock-in approach they use compared to the more flexible “what would you like to do?” approach of the hyperscalers. This makes hyperscalers more appealing to organizations, particularly those with enterprise agreements that provide cloud credits. Organizations don’t want to lose those credits, so they have an incentive to use them, even if their ERP vendor would prefer them to stay on their platform.

One hyperscaler, AWS, has been very competitive, particularly in the manufacturing sector due to its IoT capabilities. Companies like Oracle and SAP, which also have their own hosting solutions, find themselves in a complex competitive landscape. For example, with Rise with SAP, the deployment is in SAP’s environment on whichever cloud provider you choose, whether it’s Google, Microsoft, or AWS, but it’s still within the SAP contract. Interestingly, very few organizations use just one cloud provider; almost all use two or three, and the larger the organization, the more they have.

Lastly, it’d be remiss to not talk about AI, around which the cloud conversation has definitely been evolving. AI has introduced new considerations, particularly around automation, data analysis, and operational efficiency. But in my research, it hasn’t moved the needle on ERP adoption yet, as people are waiting to see what happens. They’re also waiting for use cases – and to see what it’s going to cost them. This is why so many vendors are partnering with hyperscalers as it’s still very expensive to develop AI. As always, even if everyone is talking in as high pitched a volume about cloud and AI as they possibly can, money always talks louder.

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While AWS, Google Cloud and Microsoft Azure remain highly competitive, few organizations today are relying on a single cloud provider for all their cloud services. This is partly because they are using software-as-a-service solutions to address CRM, HR or ERP needs, each of which may have unique infrastructure, but there are also concerns about avoiding lock-in with a single provider which might limit future flexibility.

Oracle’s announcements and partnerships herald a change in this perspective. By collaborating to make Oracle Database available on all three major cloud providers, while providing a unified experience with OCI, it demonstrates a willingness to meet customers where they are, regardless of their preferred cloud platform.  

For both AWS and Google Cloud, this represents a new collaboration. In each case, customers will be able to run Oracle Autonomous Database, a fully automated and managed Oracle Database service, and the Oracle Exadata Database Service on their preferred cloud provider. Microsoft Azure will make Oracle Database@Azure available in six additional Microsoft Azure regions, with fifteen more to follow. 

Customers have been able to run their Oracle workloads in the cloud for many years. The change that these announcements represent is that they could now seamlessly connect services from AWS, Google Cloud and Microsoft Azure with the latest Oracle releases. In addition, Oracle Cloud Infrastructure will be deployed inside datacenters hosted by the cloud providers, ensuring that customers have exceptional performance. 

Enterprise workloads have been migrating to the cloud for over a decade, a move that will continue to accelerate. These announcements recognize that Oracle wants to cater to the diverse needs of businesses while promoting greater cloud innovation. This is partly to secure Oracle’s position in the cloud and also a recognition of the reality that organizations have established relationships with public cloud providers that they don’t want to end. However, what is clear is that the cloud landscape is entering a new era of collaboration and flexibility.

What Does This Mean for Customers?

For those already using Oracle solutions in the public cloud or looking to do so without changing existing relationships with cloud providers, there are several advantages:

• Increased flexibility and choice. Customers will now have the freedom to use Oracle’s latest database solutions within their preferred cloud environment and link them to other services from those providers. This provides significantly enhanced flexibility and choice when it comes to cloud transformation.
• Enhanced innovation around cloud services and capabilities. Collaboration between Oracle, AWS, Google Cloud and Microsoft Azure will lead to greater potential for shared innovation. This may yield new solutions and advancements that customers can leverage but will at minimum provide the opportunity for customers to combine services from Oracle with those offered by cloud providers to offer new avenues for innovation.
• Improved scope for negotiation in cloud contracts. Given that Oracle is making it easier for organizations to use their provider of choice while still leveraging Oracle solutions, this will allow organizations more scope and flexibility in their negotiations both with Oracle and with the cloud providers. This may help provide improved contracts and service level agreements from vendors as well as time and expense savings.

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