SAP announces three-year cloud partnership with Microsoft

SAP’s partnership with Microsoft is set to strengthen both companies’ grip on the cloud services sector

SAP’s deal with Microsoft has helped double its new cloud bookings and eased any concerns customers may have had about moving to its remotely hosted services

On October 21, Europe’s largest tech company, SAP, officially announced a three-year cloud computing deal with Microsoft. The deal will make it easier for SAP’s larger clients to migrate their business processes to the cloud. In return, Microsoft will sell its new partner’s cloud tools to its wide customer base.

Cloud computing has become central to the operations of several big tech companies

The partnership, called Embrace, will help clients run operations hosted at remote servers supported by SAP’s S/4HANA database, according to the company’s new Co-Chief Executive, Jennifer Morgan.

“This partnership is all about reducing complexity and minimising costs for customers as they move to SAP S/4HANA in the cloud,” Morgan said in the announcement. “Bringing together the power of SAP and Microsoft provides customers with the assurance of working with two industry leaders so they can confidently and efficiently transition into intelligent enterprises.”

The deal has helped SAP double new cloud bookings in the third quarter and eased any concerns customers may have had about moving from SAP’s traditional onsite model to its remotely hosted services. It is understood that SAP is also working with Amazon and Alphabet’s cloud platforms as it seeks to attract more customers.

Judson Althoff, Executive Vice President of Worldwide Commercial Business at Microsoft, said: “SAP’s decision to select Microsoft Azure as its preferred partner deepens the relationship between our two companies in a differentiated way and signals a shared commitment to fostering the growth of the cloud ecosystem.”

SAP’s announcement of its partnership with Microsoft arrives following the departure of CEO Bill McDermott, who headed the company for five years. Shares responded positively to the news, rising 2.3 percent. In an earnings report released earlier this month, the German tech company also revealed that its third-quarter revenue grew 10 percent compared to the same period last year, while profits grew 15 percent.

Cloud computing has become central to the operations of several big tech companies. Amazon, which migrated the rest of its databases from Oracle to its own service earlier this month, relies heavily on its cloud service for the majority of its profit. The company is currently locked in a contest with Microsoft to secure a $10bn ‘war cloud’ contract with the US military, which is expected to be announced in the coming months.

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