Enterprise

Why Google Cloud sees a big opening with SAP

As SAP moves away from Microsoft as its preferred vendor, Google Cloud's work with Whirlpool is just one example of the opportunity ahead.

Christian Klein, co-chief executive officer of SAP SE

SAP CEO Christian Klein told reporters Wednesday that SAP remains vendor-agnostic and its cloud partnerships "have never been better, with all of them."

Photo: Alex Kraus/Bloomberg

For the last three years, Google Cloud has worked to expand its partnership with SAP in an attempt to tap into the German company's vast customer base, a sizable portion of which hasn't yet moved its historically on-premises software services to the cloud. But there was one glaring problem: SAP's partnership with Microsoft.

The company has been SAP's preferred cloud partner since 2019, which meant that if a customer didn't have a strong cloud-provider preference, SAP would route them to Microsoft. SAP, however, still separately worked with all of the hyperscalers to service customers who did care about their cloud provider.

Now that preferential part of the relationship is poised to end. And Google Cloud sees a big opportunity to not only take SAP's on-premises customer base to the cloud, but to take advantage of the data stream that SAP CEO Christian Klein is trying to build across the ecosystem of products that support supply chain, finance, manufacturing, sales and nearly every other operation within an enterprise.

"At the end of the day, cloud is about choice, cloud is open source and cloud is about making certain that you are not tied to proprietary-type environments. And that's what [we] offer," Google Cloud Sales President Rob Enslin told Protocol. "SAP customers will ultimately get the choice that they want."

Klein struck a similar tone, telling reporters Wednesday that SAP remains vendor-agnostic and its cloud partnerships "have never been better, with all of them."

Still, Google Cloud has had a string of successes with SAP customers.

Whirlpool, for example, is in the midst of moving all of its SAP products to the vendor, a project that is 80% done, according to Chief Information Officer Dani Brown. It's expected to be completed by the end of the third quarter, according to an announcement slated to be released on Thursday, and will encompass a range of SAP products, including ERP, finance and supply chain tools. Overall, it totals nearly 50% of Whirlpool's overall cloud spend.

"Data is at the core of our strategic imperatives as a company," Brown told Protocol. "When it comes to exposing data … Google is our main cloud environment."

'There's no drama'

There are several reasons why SAP customers may see benefits from partnering with Google Cloud.

Google's back-office software product line isn't as competitive with SAP's, which could make it more of a neutral vendor. While Microsoft doesn't offer SAP's bread-and-butter ERP products, for example, it's investing heavily in Dynamics, a competitor to SAP's own CRM product.

Finding other potential advantages could get more complicated. Enslin, for example, touted Google's AI capabilities, an area in which both Microsoft and AWS offer competing products. Enslin also highlighted the company's vertical solutions that can work on top of SAP's. But Google Cloud isn't alone in that effort. Microsoft is also bringing on big names and launching equally large partnerships to support a similar pivot — including co-developing products with SAP.

And there's reason to think that, despite the preferred partnership ending, SAP's tie-up with Microsoft will remain strong. For one, newly minted Chief Marketing and Solutions Officer Julia White, who is poised to play a leading role in the company's new cloud-first future, came from the Azure business.

"There's no drama, there's people looking for drama," she said during Wednesday's press conference. "We have good relationships with all the providers."

But Google Cloud, which is considered the third-place vendor in the infrastructure market but is quickly gaining traction, can reap big advantages from claiming even a portion of SAP's customer base. The company sells across industries but it is huge among industrial companies, a user base Google Cloud has very openly been trying to court along with rival Microsoft. And it's had some big wins there as well, including new partnerships with Ford and Renault.

Overall, the sector presents a huge opportunity for hyperscalers. When it comes to the pace of the proverbial "digital transformation" underway across corporate America, manufacturers have moved faster than other industries. Data analytics company Confluent, for example, said in its S-1 filing that information from IoT devices is expected to grow to 73.1 zettabytes by 2025, up from 18.3 zettabytes in 2019.

But industrial companies still face even more disruption ahead. Those internet-enabled sensors that are being used more and more on plant floors, for example, are creating huge demand for new artificial intelligence tools. As those sensors proliferate, their users will require deeper investments in tech like edge computing. And while they are still likely years away from ubiquitous use, more futuristic applications like digital twins, which are exact virtual representations of equipment, will require massive amounts of data from a variety of sources.

These are areas of investment for Google Cloud, and it remains competitive with rivals like Microsoft and AWS. Still, SAP is one of the most pervasive software firms in the world.

If Klein's vision becomes reality, it will almost surely create enough business opportunities for Google Cloud to make those investments worthwhile and further solidify the company as an industry leader.

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