SAP: Why Cloud Migration is Crucial for Business Agility
The global cloud computing market is experiencing unprecedented growth, with projections indicating it will grow to US$1.5tn by 2030.
Due to cost savings, flexibility and scalability, data security, data storage and team collaboration, research from Research and Markets has found that about 70% of firms have already shifted to cloud-based computing for at least part of their services, with benefits such as the simplicity of deployment and lower total cost of ownership likely to raise cloud computing demand in the upcoming years.
However, the transition is not without its complexities. CloudZero’s State of Cloud Cost in 2024 report found that over 20% of organisations have little to no understanding of their cloud-related costs across different aspects of their business. This lack of visibility is compounded by the sheer volume of data involved in cloud operations, with the FinOps Certification noting that a single cloud bill can comprise hundreds of millions or billions of rows of data.
With this in mind, businesses today face a decision between migrating to cloud-based systems or maintaining on-premises infrastructure. Richard Howells, Vice President for ERP, Finance, and Supply Chain at SAP, argues that the perceived risks of cloud migration are outweighed by the very real risks of remaining on-premises.
While many companies have established processes and customised systems, Richard points out that the business environment is changing at an unprecedented pace. “COVID taught us all lessons about the fragility of fewer suppliers, longer lead times, and just-in-time delivery,” he says.
The limitations of on-premises systems
On-premises systems, which are installed and run on computers within an organisation rather than at a remote facility, are increasingly struggling to keep up with new business models and delivery mechanisms. Richard argues that these systems lack the flexibility to adapt quickly to market changes and emerging technologies – leading to businesses falling behind competitors who have embraced cloud solutions.
- Global cloud computing market could grow to US$1.5tn by 2030
- 70% of firms have already shifted to cloud-based computing for at least part of their services
- Over 20% of organisations have little to no understanding of their cloud-related costs
“On-prem systems aren't built to welcome new technologies, adapt to lightning-fast change, or keep up with the exponential data you're creating,” he explains.
The benefits of cloud migration
As Richard highlights, Cloud ERP (Enterprise Resource Planning) systems, which are hosted on remote servers and accessed over the internet, offer several advantages over their on-premises counterparts. These include improved integration across business processes, real-time data access, and enhanced collaboration with suppliers.
Dr Jenny Kranich, Director of Supply Chain at MYKITA GmbH, a German eyewear manufacturer, attests to these benefits: “We can see exactly where something is in the supply chain – from raw materials to final piece – in real time. Our transparency has never been better.”
Teoman Paylar, CIO of Federal Mogul Powertrain Otomotiv A.Ş., a Turkish automotive parts manufacturer, echoes this sentiment: “Our business has moved into the fast lane. By harmonizing our operational and manufacturing processes on SAP S/4HANA Cloud, we've lifted efficiency and are now more agile, with the flexibility to meet fast-changing market needs.”
Overcoming migration concerns
Despite the potential benefits, many businesses remain hesitant to migrate to the cloud due to concerns about disruption to existing processes and potential risks. To address these concerns, SAP offers RISE with SAP, a product designed to facilitate cloud migration.
Richard claims that RISE with SAP offers businesses “a clear, confident path to the cloud” and helps “compress the time it takes to get to the cloud with proven, tested, and clearly defined roadmaps.”
While the decision to migrate to the cloud remains complex, Richard argues that the risks of staying on-premises are becoming increasingly apparent. As cloud technology continues to evolve and mature, businesses that fail to adapt may find themselves at a significant competitive disadvantage.
As Richard concludes: “RISE with SAP eases your move to the cloud and erases the risk your on-prem systems now pose.”
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