SAP Cloud Apps Will Now Run on IBM's SoftLayer
German business software company SAP and computing giant IBM are teaming up in the cloud. SAP says it has tapped IBM's SoftLayer service to run its suite of cloud-ready business applications. — The plan calls for SAP to let its customers run …
Context & Ripple Effects
IBM has spent 2014 repositioning around services it rents rather than boxes it sells — opening Watson to an ecosystem of partners and to the public cloud just a week before this announcement, and buying two identity-and-access-management firms in three weeks to harden the security layer enterprises ask about first. The company has been willing to run on rivals' infrastructure before: its 2009 move to place IBM software on Amazon Web Services made that point early.
SAP putting its suite of cloud-ready business applications on SoftLayer matters because it converts that infrastructure from a hosting option into a validated home for core enterprise workloads — and the pickup shows how much weight the market gave it, with the story landing same-day at Bloomberg, Fortune, the New York Times, The Register and CIO.com among others.
First-order effects
- SAP customers gain SoftLayer as an approved runtime for the company's cloud-ready business applications, adding an infrastructure choice alongside whatever SAP operated itself.
- IBM gets a marquee enterprise-software workload on SoftLayer at the moment it is courting developers through the Watson ecosystem, giving its cloud pitch a reference account that speaks to CIOs.
Second-order effects
- Rival infrastructure providers — Amazon Web Services chief among them, where IBM demonstrated willingness to coexist back in 2009 — face pressure to court large application vendors with equivalent certification programs, since SAP's endorsement signals that ERP-grade workloads are now negotiable across clouds.
- For SAP, renting IBM's data centers instead of expanding its own shifts capital cost toward a partner whose utilization it shares, changing the economics of every subsequent country or industry rollout.
Third-order effects
- If enterprise application vendors keep certifying partner infrastructure rather than building it alone, the industry splits into application brands riding shared infrastructure layers — with differentiation migrating up the stack toward services like Watson's cognitive APIs and the security tooling IBM has been acquiring.
- The pattern also pressures hardware economics inside the infrastructure partners themselves; unconfirmed reports in August 2014 that IBM offered Globalfoundries roughly $1B to take over its chip-manufacturing operations point in the same direction, though that deal remains rumored.
The trend: Enterprise application vendors are distributing their clouds through certified partner infrastructure instead of owning every data center, turning infrastructure partnerships into competitive currency.