The Wall Street
Journal article titled “SAP CEO Says Transition to the Cloud is Boosting
Growth” talks about SAP’s steps towards providing more cloud-based services
while sticking with its core competency as a business software provider. The
business software giant has made great gross margins off its added line of
cloud services as the company continues to adapt and innovate new products for
the evolving business environment.
The key points
of the article mainly discuss the growing transition to cloud computing and how
it improves efficiency in businesses that incorporate it. First, SAP’s new
platform, the S/4 HANA is a database platform that offers a new suite of
business software that is able to work with the underlying database, allowing
data to travel faster through columns instead of added rows.[1] By
upgrading their database software, end users are receiving more “decision
support in real time that is based on data from both internal and external
sources,” changing the way end users use SAP’s ERP system.[1] Next, it is important to mention how more
investment in cloud services means an upgrade for both infrastructure and
costs. The upgrade to infrastructure is something companies constantly want to
find. According to Salesforce, “CIOs and IT directors rank ‘operational
agility’ as a top driver for cloud adoption.” [2] Businesses
want to cut costs while also getting better technology, and switching to cloud
computing is an easy solution for both issues. Cloud computing has become just
as standard as an option as SAP’s other ERP and CRM systems. Ten years ago, the
idea of cloud computing was not even conceived. The increased margins that SAP
has experienced by offering cloud-based systems and innovating them shows how
prevalent cloud computing has become.
Some unresolved issues concerning the
switch to more cloud-based systems go unaddressed. For instance, there are
obstacles when converting from the use of an in-house system to a cloud-based
service that are not covered in the article. Any implementation of a new system
must be troublesome for the company so it would be good to know what those
challenges are, seeing that only the benefits of cloud services were seen in
the article. I would have also liked to see the specific effects in cost
structure. SAP talked a lot about improved revenues and margins, but I would
like to see more about the difference in cost between an in-house system and
cloud service. Finally, SAP offers new cloud computing options but what did
they do about securing the client’s information? Having a cloud-based system
usually means more risk of being hacked and losing valuable information, and it
would have been nice to see how SAP combatted this problem. Overall, SAP’s
addition of cloud services is both wise and strategic, with a growing trend in
cloud computing as companies look to be more efficient, and it will be
interesting to see how this new line in industry evolves in 2016.
[1] http://blogs.wsj.com/cio/2016/02/04/sap-ceo-says-transition-to-the-cloud-is-boosting-growth/
[2] https://www.salesforce.com/uk/blog/2015/11/why-move-to-the-cloud-10-benefits-of-cloud-computing.html
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