Cloud Computing’s Greatest Danger–and Richest Opportunity

People around the world were drawn to the cloud—even if they’d never heard the term or cared to understand the concept—because it let them take control over everything from managing their own investments to selecting travel options to online shopping and entertainment and news consumption and much more.

But in the business world, the shift to the cloud has been complicated greatly by the incumbency of traditional on-premises systems and infrastructure and applications, plus all the myriad layers of complexity and cost that were required to string together disparate software and servers and networks and middleware and so on.

And while cloud computing offers the promise of liberating businesses from much of that clutter, different cloud approaches and philosophies have arisen within the tech industry with significant differences on essential questions:

*What does “open” mean, and how open is each cloud approach?

*Is the cloud product set optimized for customer choice or vendor lock-in?

*How seamlessly can the cloud solutions integrate with deeply entrenched legacy systems?

*Is a particular cloud vendor’s approach liberating or restricting?

*Will a cloud solution merely save you a few dollars in the short term, or will it put you on a path to widespread renewal and innovation that will benefit your company for many years to come?

At SAP, the cloud computing strategy is woven deeply within the company’s vision of a renewed approach to IT that lets customers strip out decades’ worth of layers and complexity and cost and infrastrucuture and licenses while nondisruptively replacing all of that over time with truly modern technology designed to give customers maximum choice, flexibility, and openness.

Under this approach, customers can integrate cloud computing without being shackled by the stifling tradeoffs of the past in which they could have old technology or new technology, but not both; beauty or functionality, but not both; cloud or on-premise, but not both; openness or performance, but not both.

Instead, through the process of “simplifying renewal” espoused by SAP executive board member Vishal Sikka, SAP’s solutions—whether in the cloud or on-premise or some combination of the two—will embrace the “power of and,” meaning they can transcend those old, restrictive limitations to give customers both beauty and function, both elegance and simplicity, both stunning peformance and reasonable costs, and both air-tight security and pervasive mobility.

For businesses, this approach means they can design business models and business processes that are optimized for opportunities and growth, rather than being limited by the rigidity of either legacy systems or short-sighted cloud strategies predicated on tactical efficiency rather strategic advantage.

This vast renewal, Sikka says, revolves around three powerful and relatively new technologies—pervasive mobility, cloud computing, and SAP’s own HANA in-memory technology—but also around a less-tangible but equally imporant philosophy involving the liberation of high-value content from inflexible containers.

“I think what is going on is atoms are rapidly converting into bits—it is very clear when you look around us: there is an unmistakable dissolution of layers and structures; physical artifacts, wherever possible, are being replaced by bits, by digital artifacts,” Sikka said in a recent keynote address at SAP TechEd Las Vegas.

“And in that dissolution, there is incredible value that is being created—it is not that systems are disappearing, so that value is being lost; the value—in many cases the essential value—transitions to different parts of the spectrum into different layers, and it gets captured at different endpoints. But unmistakable value is created, and what is happens is that technology-enabling and better connectivity makes these layers go away—and when these layers go away, the endpoints become much more powerful and the end users become much more empowered: we take more control of our own destiny.”

And just as atoms are being transformed into bits, Sikka said, so too are we seeing an equally profound transformation as modern technology allows people and businesses to separate content from its traditional containers, and recombine it all in new and more relevant and fluid ways.

“That is something at the heart of what is going on and I think that fundamentally, beyond the disappearance of atoms into bits, there is a timeless separation between content and containers. We see a most obvious example of that in books: bookstores are disappearing, and books, in many cases, are disappearing. But of course it is not that we’re not reading any more.”

Similarly profound changes, Sikka said, are beginning to ripple through the IT operations of some large customers who are embracing this sense of renewal and simplicity within which cloud computing is not the destination but rather an essential part of the journey.

“And closer to our own home, we have been seeing some unmistakable signs of this: today we see the enterprise landscape littered with systems, capabilities and services in software that are trapped inside hardware containers, and other types of software containers, and services of all different sorts. Transactional systems, data warehouses, data marts, etc. The former CEO of one of our customers once told me something similar to this idea of the factory inside the 3D printer. She told me, ‘Vishal, the only reason I have a warehouse’—she was not talking about a data warehouse, she was talking about a physical warehouse—‘is because I don’t have real-time information on what my suppliers have. If I had real-time information on my suppliers that I could make decisions on, then I don’t need this warehouse.’ ”

And the dissolution of these containers is the key that unlocks the IT dungeon and lets CEOs and CIOs begin to dismantle the sprawl of servers and networks and databases and middleware and workarounds and expensive integration requirements that, until very recently, were believed to be the inexorable price to be paid for life in our modern, mobile, and consumer-driven world.

“So we are seeing the first signs of this already,” Sikka explained. “In the case of Hana, for instance, data marts are already disappearing: many of our customers have already turned off their traditional data marts and replaced them with Hana. We are seeing increasingly signs of data warehouses being replaced with HANA and of course, as Hasso talked about, our direction is very straightforward: we intend to replace and unify the entire data-processing layer in all of our applications: from HANA Analytics, to planning, to new transactional applications, to traditional applications.

“And it is not that we are replacing all the litter that was there with more litter, or with a different kind of litter; we believe that a grand unification of all these layers is possible. That, in fact, we have the ability to separate the capabilities that are in our software, from scaling and delivering those capabilities. And we can separate these layers, and one single, modern infrastructure is capable of delivering the entire essential content: whether it is the traditional content that you have painstakingly built over the last 20 years, or new content that you want to build. It can all be served off the same infrastructure.”

And part of the beauty and simplicity of Sikka’s vision is that customers are free to choose how they want to deploy that infrastructure: with the content (software) liberated from its traditional hardware shackles, customers are free to use the cloud, or the traditional on-premise model, or some mix of both.

“And the entirely new infrastructure actually can be delivered in the way that you choose,” Sikka said. “This unifying software, we believe, can be delivered on the next generation of modern hardware built out of commodity—high-end, but commodity—x86 processors, large amounts of memory, massively multicore processing, delivered either in integrated appliances built by the community of the best appliance builders, or delivered as an app in the enterprise cloud that you manage, that you scale up and down, no matter how many applications run in that infrastructure, no matter what kinds of workloads run in that infrastructure, whether it is one user doing a single query that is distributed to thousands of cores, or a thousand applications with millions of users running on those cores. All the way from small to medium to large, the entire provisioning of the infrastructure can be done on the inside of an enterprise cloud. We have been working with many of our customers on this already, and, of course, delivering these new capabilities—mobility, in-memory computing—in our own cloud.”

Just as this approach allows customers to renew event element of their IT operation—from architecture to infrastructure to platforms and on out to applications—so too does its impact extend beyond the company to the larger context of the business networks within which it operates.

In that context, SAP hopes to usher in a new generation of business-network optimization in which companies can do more than just share information: instead, they can collaborate in deeper and richer ways, and in real time, in a combination of processes that can fulfill such dreams as fusing supply chains and demand chains; being able to do extensive cost-and-profitability analysis instantly; planning, scheduling, and doing real-time adjustments to trade promotions; and peering over the horizon into the future with analytics tools that are inseparable from transaction systems.

In this way, these force-multiplying business networks become the ultimate manifestation of a transformational idea expressed by SAP executive board member Vishal Sikka: the liberation of high-value content (ideas, software, information) from its increasingly inflexible containers (antiquated hardware, restrictive software, outdated processes).

Business networks of the past were limited and isolated by physical separation, culture, languages, and customs; more recently, technological silos have limited the effectiveness of these commerce hubs to a mere fraction of what could be achieved in a world where openness and complete freedom of customer choice extend beyond platforms to applications and out into the real world of retailers and manufacturers and logistics and consumers and bankers and hospitals.

In conclusion, I find it interesting—actually, I find it somewhere between amusing and absurd—that in the face of this new reality that SAP is creating, in which cloud computing is an inextricable element of HANA’s foundation—that some folks are today trying to portray SAP as anything but an aggressive and innovative and customer-focused supporter of cloud computing in all of its variations.

Perhaps that’s because those detractors are so dazzled by the cult of the cloud that they are unable to see that what the cloud is really about is the liberation of high-value content (whether software, or business processes, or information, etc.) from the traditional hardware or software containers that until now have locked it down and limited its value.

Cloud computing’s represents phenomenal value for customers, and cloud computing is today and will continue to be a huge part of SAP’s future. But the core value that SAP offers to customers isn’t that we can offer any type of cloud solution they want—rather, it’s that we help them turn their atoms into digits, and unlock their valued assets from their prisons, and rip out layers of low-value complexity, and be able to devote more time and money and focus to customers, growth, innovation, and opportunities.

It is time for customers and for the IT industry to look beyond the cloud to a renewed approach in which IT is no longer a limiter but is indeed the liberator.