Current SAP customers have struggled to justify spending on cloud when they have already invested in similar products on-premise. To address this, SAP announced a cloud extension policy last year. The model, the first of its kind in the software arena, allows customers to reallocate parts of their on-premise services to be hosted in the cloud, replacing the license for the relevant products with a cloud subscription.
Sven Denecken, strategy cloud solutions vice-president at SAP told ComputerworldUK: "It was important to have that offering to lower the barrier for customers to go to cloud. The extension policy allows flexibility."
Denecken argued that putting a number on policy uptake may not be representative of enterprise cloud adoption.
"When we put that it in place we did not have any KPIs in mind. We cannot measure that in the sense, 'many conversions is good', or, 'no conversion is bad', so we just wanted to get that flexibility out there, and see how that turns out," Denecken said.
"We will never disclose a number on that [licensees who have extended to the cloud] because you could argue it both ways and both might be wrong. For example, if many companies convert it might be a good thing because they are in an industry that is completely about cloud computing transformation, but others say 'hey, I want to keep using what I have but extend with cloud."
As the UK is always 12 to 16 months behind the US market, adoption in the UK is always slower, but the gap is shortening, Denecken said.
"We're pretty happy with UK adoption," he added. The delay is often beneficial as customers receive a mature product that is more prescriptive for niche businesses.
To counteract enterprises increasingly hybrid infrastructures, SAP announced that it will provide 25 industry specific cloud-hosted systems as a whole. It has already created a product relevant to the chemicals, financial services, healthcare, higher education, industrial machinery, professional services, public services, retail, sports, and travel verticals.
Denecken said: "We don't believe rip and replace is a good approach."
"Many people struggle with digital transformation. they put technology underneath existing processes. That is not innovation, that is not digital transformation", he added.