'No Drama'? Microsoft Status as SAP-Preferred Cloud Partner Fades

Microsoft is no longer the SAP-preferred cloud partner when it comes to migrations from the ERP provider’s on-premises software. SAP CEO Christian Klein says the company is leaving that choice to customers.

Klein’s remarks validate reports that the October 2019 agreement, positioned as an “extensive go-to-market partnership,” is no longer in practice.

“We are not exclusive; we are inclusive,” Klein said during a media and analyst briefing that followed the SAP Sapphire NOW keynote. He added, “We want to give customers choice.”

The question followed a report posted by CIO magazine days earlier that Microsoft’s days as the SAP-preferred cloud partner ended. The report quoted SAP S/4 HANA president Jan Gilg, who said support has expanded to include AWS, Google and Alibaba. Gilg said Microsoft Azure will remain one of the preferred clouds, especially at the application layer, according to the report.

The 2019 pact called for SAP to lead with Microsoft Azure for on-premises migrations of SAP ERP and S/4 HANA. In exchange, Microsoft agreed to resell parts of the SAP Cloud Platform with Azure. Called Project Embrace, the companies said it would make it easier to migrate SAP’s ERP applications S/4 HANA customer datacenters to the public cloud.

Earlier this year, the company launched Rise with SAP, packaged solutions that run on S/4 HANA cloud. SAP began positioning those solutions for any of the major hyperscaler clouds. The company this week expanded the Rise with SAP offering with industry solutions and a new business process intelligence option. SAP is also adding procurement and an HR module, along with Rise with SAP for Industries.

During Klein’s briefing, he said the partnership with all four cloud providers “has never been better.”

Joining Klein during the briefing was Julia White, SAP’s chief marketing and solutions officer and a member of the company’s executive board.

White, the former Microsoft corporate VP, who joined SAP in January, added to Klein’s remarks.

‘Good Relationships with All’

“Obviously, there’s been a little swirl recently and I think there’s no drama,” she said. “There are people looking for drama right now, but there is none. In terms of what Christian said, we’re working with all of the providers and have good relationships with all the providers.”

Industry analyst and business application software consultant Josh Greenbaum of EA Consult recalled the agreement with Microsoft was forged by executives no longer with SAP. Among them were former CEO Bill McDermott, now ServiceNow’s CEO, and SAP’s former co-CEO, Jennifer Morgan.

“Until recently SAP was mandating the cloud that the customer ran on, independent of the customers interests, or desires.” Greenbaum said. “I think what they are saying now is they are not going to be pushing customers in any specific direction of one or the other. What will be happening is that they will work with everybody, and then it’s up to whatever the configuration of that that relationship is to define the cloud that’s used.”

Besides giving customers and channel partners more flexibility, it’s not entirely surprising that SAP wouldn’t want to give Microsoft an edge over the other hyperscalers. After all, Microsoft is seeing continued growth with its competitive ERP suite, Dynamics 365. During its most recent quarter, Microsoft reported that Dynamics 365 revenue grew 45% year-over-year.