As SAP and ASUG prepare content as well as executive, expert, and customer-story speakers for the upcoming ASUG Best Practices: SAP for Cloud conference, ASUG recently interviewed Peter Brawerman, COO, SAP North America Cloud. Brawerman discussed cloud strategies, myths, midmarket opportunities, and his take on cloud results related to ASUG Pulse of the SAP Customer 2022 research. Find more information and registration for the conference here.
This is an edited version of our conversation.
Q: How would you define this current era of cloud migration and maturation? What are its characteristics?
A: If I had to boil it down to a few words: agility, scale, and resiliency. Companies are changing their business models—in some cases reinventing themselves—to move and adapt more quickly, scale with the needs of their business, and become more resilient. In the constantly changing world we live in, faster innovation is key, and the cloud can deliver—much more rapidly—new capabilities that companies need to keep pace.
As far as maturation goes, we’re seeing more and more business leaders embrace a cloud mindset, implementing simplified and standardized business processes and working to drive that mindset throughout the organization in support of a successful business transformation.
Q: Where does SAP currently see its North American cloud customer base—where are they on their journeys?
A: Our customers see the value of operating in the cloud, and many are already well on that journey. For the majority of our customers, the question is not if, but when and how. Where our customers fall in that journey to fully operate in the cloud varies depending on their industry, market, landscape, and individual challenges. This is a very personalized journey, and we factor that into how we serve our customers. We have some customers who have 150 ERP systems that they want to move to the cloud in parallel to a system consolidation. We have other customers who have been operating in the cloud for years now. As ASUG CEO Geoff Scott says, there is no single path for how SAP customers will move their software and workloads to a cloud environment. We work with our extensive ecosystem of partners to help our customers get there at the pace and in the way that’s right for them.
Q: How do you define cloud “maturity” for businesses/organizations?
A: When it comes to an organization’s cloud maturity, you have to look at progress against both technical and business objectives. Does your organization have defined business goals linked to its cloud strategy? Are there clear cloud use cases mapped to key business objectives?
Is there a road map for implementation of future cloud capabilities and is there a plan to enable further innovation? What does the organization’s governance model look like to manage priorities for cloud adoption and utilization? You’re trying to assess the ability to scale resources as requirements grow. For that, you need skills and resources in place to continuously learn, improve, and innovate. You need full alignment with the overall company strategy, and you need buy-in across the organization in this as-a-service consumption model.
At the end of the day, what really matters is the value for the customer. Our customers often move to the cloud to improve their ability to adopt and handle change in their organization and in their industry. So, I’m less concerned with pinpointing a customer’s cloud maturity and more focused on the value for the customer today and in years to come. In our world, the work is never done, so you have to measure success and celebrate wins along the way. We are proud to be part of that journey and are always looking to evolve, innovate, and grow with our customers.
Q: What does it mean to be “cloud native”?
A: It’s about designing and optimizing solutions and systems for the cloud. Automated deployment, regular updates. Customers are drawn to cloud-native solutions because they are easy to deploy and easy to scale. There are some cases where cloud native makes sense for the speed, scale, and agility the business needs. However, most of the environments that our customers work in are not that simple and often require a hybrid approach.
Q: What are the key business and technology factors to consider, and decisions to make, when moving from early migration to cloud-based operations and maturity?
A: When an organization decides to move to the cloud, it’s basing that decision on a range of factors, including return on investment, business impact, performance, licensing, service-level agreements, security, reliability, and so on. Once they are on that journey, the focus then becomes: How do we get our teams and processes aligned with this cloud transformation and working in a way that supports this major change?
It really comes down to good change management. Is there an expectation across the organization to learn, grow, and continuously innovate? Is the organization set up for continuous innovation? Knowing that new releases with enhancements are coming, is there a plan in place to consume those capabilities to further optimize business processes? Are teams able to share data and easily collaborate, or are they operating in silos?
There’s a difference between operating in the cloud and operating with a cloud mindset. The organizations that truly embrace the cloud and embody that in how they run will get the most out of this transformation.
Q: In the early days of the COVID-19 pandemic, there appeared to be a rush toward and rapid embrace of the cloud. What did people overlook in that rush? What lessons did people learn? What were some positive results/effects?
A: There was an overwhelming initial focus on the tech, and while the technology is important, there were really two areas equally as important that were not as heavily discussed: first, the human element, and second, the business process transformation. Ultimately, that is the difference between a lift-and-shift mentality and making the changes that are going to make a real difference five, 10, or 15 years down the line. In a 2021 McKinsey survey of 1,000+ business leaders, only 11% indicated that they believe their current business models will be economically viable through 2023, while another 64% said their companies need to build new digital businesses to help them get there. This wasn’t simply an issue of needing to upgrade from a legacy system. This was a need for true business transformation. And, in many cases, there remains such a need.
We have since seen customers move away from the lift-and-shift approach to take full advantage of the benefits of the cloud. Businesses that continue to focus on the human element and reshape the way they operate—to what makes sense for a cloud-first organization—are best positioned for future success.
Q: What myths in the cloud arena need to be dispelled?
A: The one I see and hear the most is that moving to the cloud is going to cost less. It is an investment in the future of the organization to unlock greater capability, agility, and innovation. Cost is, of course, a factor in every business decision, so before starting a journey to the cloud, organizations need to know that the savings anticipated through cloud technology are linked to fast and continuous innovation, as well as their enhanced ability to scale.
I’ve also come across the perception that a shift to the cloud must be done overnight, or that it has to be all or nothing. Most global enterprises rely on a hybrid cloud model and take a multi-cloud approach. That path is often chosen for greater resilience and to meet regulatory and compliance requirements. The length and speed of that transformative process is highly specific to the individual organization.
Lastly, moving to the cloud is not the end of the journey. Having a long-term plan of success post-migration that allows for continuous innovation is important to unlocking the full value of the cloud.
Q: There is a perception that organizations are still reluctant to shift mission-critical processes and/or their most complex applications and business processes to the cloud. Do you agree/disagree? How can organizations make a compelling case and become more comfortable with mission-critical operations in the cloud?
A: Some organizations are still reluctant to move to the cloud even when there is a strong business case for doing so. In those cases, it’s important that we closely partner with the customer to understand the challenges they are facing and where that reluctance is coming from. Our depth of experience in mission-critical business processes—across all customer sizes, industries, and geographies—sets us apart and is core to why businesses are choosing SAP for their business transformation. Sometimes the organization is sitting on a lot of technical debt, has a ton of customization, is in a highly complex environment, or is in industries with tremendous regulation. Other times, the reluctance is rooted in avoiding change and that really speaks to the importance of addressing the human element of change management.
Moving to the cloud enables your business to leverage the benefits of next-generation operations and helps ensure its future success. The advanced technologies available in the cloud today could enable companies to mitigate the effects of disruption. If those critical processes are not operating in the cloud, the business is missing out on essential visibility, agility, and resiliency.
Q: There is also a perception, as well as data behind the view, that security and data privacy are compromised in the cloud. Do you agree with, or understand that perception? How does SAP work with customers to overcome this concern?
A: I don’t agree with that at all. That is an outdated mindset. Whether the apps are run on-prem or in the cloud, a company is just as susceptible to security breaches. In my opinion, unless you’re a security expert, outsourcing your security to people who are running it at scale is less risky.
There is always some level of risk, so it’s important that cloud providers recognize the importance of security and data privacy and implement robust standards that support it. We take these imperatives very seriously and have a designed set of security controls established at a global level. Across the full SAP portfolio, we have 2,500 applications with a fully harmonized security model.
Some of our competitors run their entire tech stack on their own data stack—which, from a security perspective, is what we call vendor lock-in. With SAP, our hosting model is fully harmonized across all these platforms, all these stacks. We also have a Governance, Risk, & Data Control (GRC) Suite that lets customers automate and manage risks, controls, identities, and cyberthreats across the enterprise with embedded analytics and artificial intelligence.
At SAP, we protect all customer data in accordance with the SAP Global Security Policy, which drives the technical and organizational measures and SAP business processes. SAP is committed to providing a secure environment for our people, our information, our assets, and for the information entrusted to us by our customers and partners. We strive to maintain our security posture by using industry standards and applying an informed risk-based approach to implementing a comprehensive and documented set of security controls. In doing so, we will continue to offer the level of security to which our customers are accustomed from SAP, reinforcing the SAP reputation as a trusted and secure business partner.
Q: What do you see as the most prominent operating challenges for organizations running/leveraging the cloud—performance, cost, capacity, others? How are organizations mitigating/overcoming these challenges?
A: Moving to the cloud is really two-fold: There’s the technology piece, but the human change is the hard part. This is a human journey as much as it is a technology journey. When companies just focus on the technology side of the equation, it does not work. When we’ve seen it fail, it’s usually because there wasn’t enough focus on the human element. Purposeful, effective change management is critical to the success of an organization’s cloud transformation.
Look at how the University of Toronto underwent a complete HR transformation with its implementation of SAP SuccessFactors. It had a clear, careful change management plan, one that actively engaged users early on, and, in doing so, explained why this change was coming so it could gain buy-in quickly. What was really cool about it was that it created this super user network that included representatives from each division of its HR office that could raise any issues, concerns, or ideas in the months leading up to the launch—and that engagement was essential to the success of the project. Real transformation does not come without its challenges, but it is worth it. Focusing on the people element can help the business get there.
Q: Are there specific cloud migration challenges for midmarket-size companies? What can they learn and adopt from large-scale, cloud-mature organizations?
A: Many of our midmarket customers have been cloud-first or cloud-only consumers for the past several years. In many cases, they are more agile than large organizations. Running on cloud-native apps has, for the most part, been their preferred approach. If we zoom in on the RISE with SAP offering, 80% of that volume is driven by our midmarket customers.
In general, midmarket companies don’t have robust IT staff, large security teams, or infinite resources, so they appreciate the simplicity and clean division of value in the application management services packaged in the offering. Midmarket companies also carry less technical debt, making them more agile and open to a greenfield approach.
Knowing that our midmarket customers want to continue growing, there is something to be gained from an enterprise approach. The best large enterprise customers don’t view cloud as a deployment option, but rather, as an innovation play. Because of their scale, resources, and global strategic relationships, the large enterprise space and that vast ecosystem of partners are driving some of the most advanced innovations in business. Large-scale organizations are also building several global standards from implementation, process, security, integration, delivery, support, etc. Midmarket customers can leverage all of that IT.
Q: What are your best pieces of advice for making hybrid environments work well?
A: Work with a company that has an extensive ecosystem of partners. Since every business’s journey to the cloud is unique, you may require multiple hyperscalers, insights from consulting firms, or managed service offerings to complement your non–software as a service environments. SAP offers an incredible ecosystem of over 23,000 partners worldwide.
It’s also critically important to have a very strong governance model. Clearly defined responsibilities and controls play a major role in the success of a hybrid environment.
Q: What is your best advice for creating and managing hyperscaler partnerships?
A: Do your research. There are a lot of hyperscalers available. Understand their strengths and see if those align with the needs of your business. Hyperscalers are a critical component to the success of the cloud. Years ago, SAP went into the hyperscaler business, and we learned that’s not what we do best. Now, SAP partners with all the leading hyperscalers—AWS, Microsoft Azure, Google Cloud Platform, and Alibaba Cloud—to offer best-in-class enterprise applications and expand opportunities for continuous customer innovation.
Hyperscalers are an integral part of RISE with SAP, providing the infrastructure included in the offer. RISE with SAP not only provides an individualized transformation path to move to the cloud, but also allows for the use of different infrastructure options. At SAP, we are committed to providing our customers with a choice of infrastructure to fit their specific needs.
Q: Here are some data points from the 2022 ASUG Pulse of the SAP Customer study, specific to the cloud. We allowed multiple responses. What are your comments and counsel given these survey responses?
The top five cloud migration challenges already experienced and cited by survey participants:
- Data migration: 23%
- Cost concerns: 23%
- Integration of on-premises and cloud-based apps and processes: 21%
- Lack of in-house knowledge to manage the migration: 20%
- Security issues/risks: 18%
Survey participants anticipate the following top challenges:
- Data migration: 38%
- Cost concerns: 23%
- Security issues: 36%
- Integration of on-premises and cloud-based apps and processes: 34%
- Lack of in-house knowledge: 29%
Interestingly, in this regard, two additional items rose to the top:
- Preserving on-premises customized investments: 28%
- Multi-cloud environment complexity: 23%
A: What I see in these results is good news for those considering a move to the cloud. Overall, the actual pain points (as reported by customers who moved to the cloud) are not as prevalent as anticipated (as indicated by those planning to make that move). That said, we partner closely with our customers to address each of these challenge areas. SAP offers tools and services to ease data migration, support customer enablement, and manage risk. Our RISE with SAP offering helps customers make costs more predictable, while our pre-built integrations that use application programming interfaces enable customers to leverage a connected, intelligent enterprise. At the end of the day, the tremendous value companies get from continuous innovation and optimization in the cloud far outweighs any challenges in making that move.