Whitepaper

Research Note

SAP
Operation in the Amazon Web Services
Cloud - Status quo, Benefits, Obstacles
and Recommendations

Current market situation and customer demand

Customers operating SAP on AWS
Challenges for public cloud based
SAP hosting

A Research Note from the teknowlogy Group

in Collaboration with Syntax Systems
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Introduction

In recent years, cloud computing has evolved from a niche technology to a central
pillar of digital transformation. Firms of various sizes have already migrated
application systems to the cloud. Meanwhile, this also affects business-critical
applications.

While companies have traditionally preferred their own data centers or external
hosting offerings to operate complex business applications, the number of people
using the public cloud is increasing.

The use of cloud technologies has long become a standard. An in-house hosting
platform that has been transformed according to the cloud paradigm is what we call
an Internal Private Cloud. Hosted Private Cloud is a dedicated cloud infrastructure for
a single customer in an external cloud data center.

The public cloud describes a cloud infrastructure in a hyperscaler’s external cloud

data center, such as Amazon Web Services (AWS), which shares multiple customers.

Until a few years ago, it seemed almost impossible and useful to migrate complex
SAP business applications to the AWS cloud and operate them there. Until now,
businesses have operated their SAP systems in their own data center or they have
used the services of an SAP outsourcing provider.

Although public cloud infrastructures have increasingly been used in the SAP
environment, they have been used primarily for non-productive systems, normally as
development or test environments.

Now, more and more companies are considering migrating SAP applications to the
AWS Cloud. The reason for this is the maturity and appeal of the platform, which
companies expect to make their SAP systems more efficient, flexible, and modern, as
well as the forward-looking innovations that the AWS Cloud is regularly expanding.

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SAP In The Public Cloud - A

Short Definition
47% said that
SAP hosting has long existed, meaning the
operation of SAP systems in data centers of
service providers. This market segment is
running SAP
currently changing due to the use of the public
cloud for SAP hosting.
applications in
SAP’s Software-as-a-Service offerings, such as the cloud was a
relevant part of
SuccessFactors or Ariba, are also based on the
public cloud model. However, the focus of this
research highlight is explicitly on the operation
of SAP’s on-premise software solutions, such as
SAP ECC (SAP ERP Central Component) or SAP
their IT strategy.
S/4HANA, on public cloud infrastructures.

Whereas in the past SAP customers had used the

public cloud solely for individual tasks such as
testing, they are now switching to public cloud
services for productive systems.

Today, companies use SAP hosting models, which

are partially or even completely based on public
cloud platforms. According to a teknowlogy
Group survey conducted among SAP customers
in the US, Germany and the UK in 2018, 47% said
that running SAP applications in the cloud was
a relevant part of their IT strategy (Source: “SAP:
Strategies of Application Customers, teknowlogy
Group, 2018).

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Current Market Situation and

Customer Demand
From our
The demand for cloud-based hosting services for
SAP systems is growing rapidly. Currently private
cloud-based services still predominate.
analysis, nearly
However, the dynamics in the public cloud
70% of SAP
environment are much greater. From our
analysis, nearly 70% of SAP customers who customers
who engage in
engage in public cloud-based hosting want to
include their productive systems.

By contrast, the growth of public cloud hosting

does not mean that other types of business
public cloud-
are no longer relevant. Many companies strive
to combine different operating forms (hybrid based hosting
want to include
cloud). For example, they want to combine the
public cloud, the hosted private cloud and the
in-house operation. The type of SAP application,
the requirements and the strategic orientation
determine the respective operating mode.
their productive
According to the analysis of the teknowlogy systems.
Group, about 60% of SAP customers deal with
such hybrid cloud scenarios. Nevertheless, there
will be many companies in the future who
operate all their SAP systems in public cloud data
centers, or in many cases operate them through
an external service provider.

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Amazon Web Services (AWS)

AWS was fundamental to the emergence of
the public cloud market. In 2006, the Amazon.
Today, the AWS
com subsidiary began offering IT infrastructure
services to businesses in the form of web
Cloud includes
services, today cloud computing, and has since
established itself as one of the few dominant 61 availability
zones in 20
hyperscalers on the market.

Today, the AWS Cloud includes 61 availability

zones in 20 geographic regions around the
world (“Regions” are a series of data centers
geographic
connected by a dedicated low-latency regional
network), with announced plans for 12 additional regions around
the world.
availability zones and four additional regions
in Bahrain, Cape Town, Hong Kong and Milan,
ensuring data retention and comprehensive
compliance. According to the company, it has
hundreds of thousands of customers in 190
countries around the world.

Amazon Web Services offers a wide range of

cloud services, including compute, storage,
networking, databases, analytics, machine
learning, IoT, developer and management
tools, security, enterprise applications, etc.
- on demand and with a pay-as-you-go
pricing model. The AWS portfolio is constantly
expanding with new services and upgrades.

AWS has a highly innovative culture that

produces innovations on a regular basis. In recent
years, AWS has added thousands of new features
and services to the platform.

In addition, there are thousands of third-party

product offerings pre-configured to run on AWS
through the AWS Marketplace, including desktop
applications, infrastructure software, developer
tools, enterprise software, IoT, and machine
learning.

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SAP On AWS
SAP and AWS have been working together since
2011 to certify AWS for the productive use of SAP
For large, high-
applications, platforms, and databases.
performance
AWS has certified with SAP the following
solutions for deployment in the AWS Cloud: SAP HANA
• SAP HANA workloads, AWS
• SAP S / 4HANA
•
•
SAP BW / 4HANA
SAP Business Suite
offers specially
•
•
SAP hubris
SAP Business One designed, high-
performance
• SAP BusinessObjects
• SAP database and mobile solutions in AWS

SAP provides the same product support for SAP

systems running on AWS as it does for any other
instances.
infrastructure.

A variety of SAP Cloud Platform services are

currently supported in seven global AWS regions.
SAP Cloud Platform is SAP’s Platform-as-a-
Service (PaaS) offering that enables organizations
to deploy cloud applications to handle a wide
range of business processes.

Among the available services are SAP Leonardo

Machine Learning Foundation, SAP Leonardo IoT
and SAP Cloud Platform Enterprise Messaging.

For large, high-performance SAP HANA

workloads, AWS offers specially designed, high-
performance instances.

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Typical SAP use cases

SAP customers and partners use the AWS Cloud
for use cases ranging from the single SAP test
AWS is an SAP
system to hosting a complete SAP production
environment. Examples are:
certified global
• SAP test solutions. technology
partner focused
• Disaster Recovery: The AWS Cloud can be
used as a disaster recovery site for local SAP
systems without the cost of a second physical
site and a standby infrastructure.
• SAP Hybrid Hosting is also supported:
on delivering a
Customers can migrate existing SAP
development and test environments to the highly available,
scalable and
AWS Cloud while keeping the production
environment local.
• Migration of the entire SAP production
environment to the AWS Cloud.
• Greenfield implementation of new SAP
cost-effective
systems in the AWS Cloud.
• Integrate services from both providers,
infrastructure
such as IoT, data-lake or machine-learning
services. platform in the
Service and Hosting Partner cloud.
Network
AWS strategy is not to offer SAP administration or
hosting services yourself. AWS is an SAP certified
global technology partner focused on delivering
a highly available, scalable and cost-effective
infrastructure platform in the cloud. However, the
cloud provider has built a network of global and
local service partners that offer SAP consulting,
SAP cloud migration, and AWS management and
hosting services.

Because SAP operations on AWS require

SAP know-how, operational skills, and cloud
platform skills, many customers rely on these
external service partners for AWS-based SAP
implementation or migration and operations.
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Customers Operating SAP on AWS

Until a few years ago, it seemed almost impossible to migrate complex SAP business
applications to public cloud platforms such as AWS. Although AWS has been used by
SAP customers for many years, the use cases were primarily non-productive systems
such as development and test environments or disaster recovery scenarios.

Meanwhile, more and more companies are considering a cloud migration of their
productive SAP applications. And many already operate their SAP systems on AWS.

Some examples (Source: Amazon Web Services):

Zalando

Zalando, a leading European fashion platform, was one of the first customers to
migrate significant SAP workloads to AWS. Zalando addresses big data challenges
related to customer interaction and logistics, as well as specific peak loads, in the
context of sales actions, using hybrid data architectures, by combining SAP HANA with
Amazon Redshift and Amazon EMR.

“The real value of running enterprise applications on a hyperscaler platform like AWS is
not just putting the SAP systems on the platform, it’s to understand what kind of tools
and services can be meaningfully combined with business applications. We started
our journey with AWS in the context of enterprise applications in 2016 with just four
services, such as Compute and Storage; Today, we’re talking about more than 36 AWS
services that are fully integrated with our enterprise applications.”
- Yuriy Volosenko, Leiter Enterprise Applications and Architectures, Zalando

RWE Česká republika

RWE Česká republika (CZ), a subsidiary of German RWE, also migrated its SAP HR
system to the AWS Cloud in 2016. RWE CZ’s data center in Brno was barely able to
keep pace with developments in light of the fast-growing business. The scaling was
costly, the administration time-consuming and the flexibility of the employees poor.

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BP

The BP Information & Technology Services Organization manages many SAP

applications that are used by thousands of employees worldwide. BP has achieved
significant savings in annual license, support and maintenance costs through
operating its SAP ECC lubricant system on AWS.

“BP needs the agility to be competitive as prices, policies, technologies and customer
preferences change - and that’s what we achieve with AWS. Recently, we deployed 220
virtual machines on AWS - from initial planning to app design layout to deployment
and production - in one week.” - Steve Fortune, Group CIO BP

Kellogg Company (Kellogg’s)

Kellogg’s, based in the US, is active in 180 countries and offers breakfast cereals
and other foods. The company needed a more robust application to better track its
advertising costs and decided to migrate to SAP HANA in AWS. The group now uses
the accelerated trade promotion management (TPM) SAP solution, which runs on SAP
HANA and uses multiple AWS instance types for SAP applications and the SAP HANA
database. Compared to traditional data center solutions, this move can save $900,000
in IT costs over the next five years and accelerate development by 90%. The company
also uses Amazon Virtual Private Cloud (Amazon VPC) with a direct connection
to Kellogg’s data centers, allowing employees to access SAP TPM directly via the
corporate network.

“Thanks to AWS, I can allocate the costs of the infrastructure used directly to the sales
department, which was previously not possible. In the past, these hosting costs have
gone down in the annual infrastructure budget.”
- Stover McIlwain, Senior Director of IT Infrastructure Engineering, Kellogg’s

Engie

As an international energy supplier, French ENGIE structures its activities in the three
key areas of electricity, natural gas and energy services. ENGIE has decided to upgrade
its SAP landscape to S/4HANA on AWS to meet speed and scalability requirements.

“48 hours after the AWS team delivered a full demonstration of what’s possible on AWS,
we decided to migrate our nonproductive environment to AWS. After completing this
step, we decided to migrate our entire platform and production environment as well. I
saw the difference between running SAP on premises and AWS, and it was obvious that
switching to AWS would be an advantage for us.”
- Thierry Langer, Chief Information Officer, Finance Department, ENGIE

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Visy

Visby Industries, a Melbourne-based paper, packaging and recycling company, has

improved the performance of its mission-critical SAP environment by migrating to
AWS. Database performance increased by 28% and application performance by 46%.

Kenko.com

Japanese e-commerce company Kenko.com has switched its business operations

to SAP ERP in AWS. The company reduced its costs by 65% compared to a local
architecture.

Royal flora

When Royal Flora Holland’s old financial accounting and reporting system expired at
the end of 2016, the Netherlands largest flower auction operator decided to switch to
SAP S/4HANA to bring it into line with its existing SAP Hybris billing system. To help
Finance process, capture, and analyze the millions of transactions that go through the
auction on a daily basis, RFH has moved its SAP financial accounting and reporting
system to the AWS Cloud.

“Our SAP system on AWS has been handling between 15 and 40 million euros in
transactions every day for six months, and we had no disruptions.”
- Wilco van de Wijnboom, Accounting and Reporting Manager, Royal Flora

Driver for AWS Based SAP Hosting

Maturity of the AWS Cloud

One reason for the growing popularity of AWS-based SAP hosting is the maturity
of the platform in terms of operating business-critical applications. These include
AWS investments in local data centers, high service availability, and security. This has
helped to reduce companies’ initial skepticism towards this form of public cloud-
based hosting.

SAP has also contributed to this by preparing its own products for cloud operation
at customers’ request and partnering with a number of cloud providers (including
Amazon Web Services, Microsoft, Google and Alibaba) and their platforms certified for
the SAP operation.

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Cost advantages and pricing models

Expected cost savings in SAP operation are still a key driver. Companies hope to save
both in terms of costs and internal resources. Flexible pricing is generally an important
argument for AWS Cloud. In particular, those companies whose infrastructure needs
are subject to large fluctuations may benefit from a price-effective pricing model.

Ultimately, it is precisely the combination of different price models and thus the
efficiency and “breathability” of the infrastructure that makes the AWS Cloud attractive.
This also applies to future use cases that are closely related to the SAP systems in
areas such as big data, machine learning or IoT.

Automation and agility of SAP operations

Operating SAP applications in AWS cloud data centers allows companies to automate
the degree of automation of system operation and processes, enabling new functional
building blocks to run faster or make SAP applications available to other locations in a
shorter time.

Globally available infrastructures

Especially the connection and support of international locations can be facilitated by a

uniform, globally distributed AWS cloud platform.

Integration and use of cloud technology

Beyond pure SAP operations, cloud platforms provide the ability to connect cloud-
based technologies to ERP software to further streamline processes or support new
business processes or models. Examples of such technologies include big data
analysis, machine learning, and the integration and use of networked device or
machine data (the “Internet of Things”). It also includes cloud-based platforms for
developing and operating new applications.

Migration of applications and / or infrastructure

Often, the trigger for moving to the AWS cloud is a pending migration of SAP
applications and the infrastructure for running SAP software. This could be the
expiration of an outsourcing contract, the upcoming purchase of new hardware or the
due expansion of your own data center. As our analysis show, the migration to SAP
S/4HANA is a reason for many SAP customers to think about alternative operating
models of their SAP software.

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Challenges for Public Cloud Based SAP Hosting

Complexity of SAP environments

Companies with particularly large and complex SAP landscapes often have difficulty
migrating parts of them or even all systems to the public cloud. However, this
challenge is inherent in any form of outsourcing a complex system environment, and
thus does not apply to the public cloud alone. Therefore, it is essential to fully prepare
for such a transition and to set goals realistically.

Intransparency of the total costs

On the one hand, the public cloud offers cost advantages, on the other hand, it can
be costly to determine the exact costs for the migration (staffing, external services) of
the systems as well as those for the later application operation in the public cloud.
This is especially true because the SAP operation on a public cloud is not one-to-one
comparable to traditional outsourcing, for example with regard to pricing models,
service level agreements or regular benchmarking.

Integration and management

Many companies may lack the necessary internal know-how to migrate SAP
applications to the AWS cloud themselves. In addition, integrating and managing both
the AWS cloud services and the SAP infrastructure can be challenging, especially if
multiple cloud providers are involved. In addition, the speed of innovation of AWS is
enormous; From the customer’s point of view, on the one hand, a positive aspect, but
on the other hand an additional challenge to keep up to date with developments and
conditions.

Recommendations

Develop strategy

We recommend that companies design a strategy for AWS-based SAP hosting that
sets out, among other things, the goals of the project: cost savings, technological
transformation, or greater agility in SAP operations. The strategy should also
address the risks and overall investment required for migration. Here, the long-term
transformation strategy for SAP applications, business processes and IT environment
should be the guideline - the cloud is more than just an alternative operating
environment for ERP software.
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Consider additional know-how

Companies should consider that AWS Services requires additional expertise in

managing the use of an external IT infrastructure, monitoring service levels,
controlling costs, and providing support. Either the user company must have these
skills or work together with an external service provider.

Complexity of pricing models should not be underestimated

Comparing price models of different cloud providers is not an easy task, especially
if different platform providers are involved (multi-cloud) or if the company wants to
obtain services from the hosted private as well as from the public cloud. Companies
should consider whether it makes sense to purchase AWS Services directly from AWS
or through an IT service provider that acts as a reseller and thus can reduce pricing
model complexity. The latter variant may be particularly interesting for medium-sized
SAP customers, since a large IT service provider can tend to negotiate cheaper prices.

Use AWS-based SAP operating services

In addition to managing and possibly reselling AWS cloud services, many SAP service
providers also offer managed services so that the SAP customer does not have to
worry about all the details of AWS and SAP base management.

If the SAP systems are to be managed end-to-end, companies should also consider
signing an application management contract. They can then commission the SAP
hosting provider or another service provider. Application Management covers the
functional maintenance and further development of SAP systems.

Consider overall service offer of Hyperscaler

When choosing the Hyperscaler, not only prices should decide. It makes sense to
consider the entire range of services relating to SAP as well as the supplementary
technology (data analysis, machine learning, IoT, software development, etc.) of the
respective provider. Today’s and future offer should coincide with the planned IT
transformation of the company. It also matters whether there are already contracts
with a vendor, which can be extended by the component SAP operation.

Check alternative operating models before migrating to SAP S/4HANA

Companies planning to migrate to SAP S/4HANA should consider the potential

benefits of operating in the AWS Cloud for deploying the new application software
and managing the technical ERP infrastructure (SAP HANA). This should also be taken
into account when choosing the project partner.

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Create and complete a preparation checklist

Before starting the cloud migration, a series of questions must be answered and
decisions made. A possible checklist may include, among many others, the following
aspects:

• Which adjustments and upgrades are required for the SAP applications used and
the software infrastructure (application server, operating systems, databases, etc.)?
• Do you need to consolidate and cleanse the datasets in the SAP systems before
the migration?
• What impact does cloud migration have on interfaces to other SAP applications
and to third-party systems?
• In which countries and regions should public cloud-based SAP hosting be
available?
• How are the local offices and sites connected to the public cloud?
• What are the procedures and routines available for high availability and disaster
recovery?
• How should the concept of care and the company organization (including
responsibilities) be designed?

Conclusion of Teknowlogy

Cloud computing has become established in business, and use for mission-critical
applications has begun. Companies in different regions of the world are evaluating
AWS-based SAP hosting and are starting to use it to migrate existing systems. The
public cloud will also play a role in the conversion to the new software generation SAP
S/4HANA.

Thus, teknowlogy Group assumes that in future public cloud-based SAP hosting is one
of several relevant operating variants for ERP software. However, cloud deployment is
not limited to pure SAP operation. Rather, companies are finding so many other ways
to innovate by linking cloud-based technologies to their business applications.

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About Syntax

Leading the Industry

Since 1972, Syntax has been providing comprehensive technology solutions to
businesses of all sizes with thousands of customers trusting Syntax with their
IT services and ERP needs. Today, Syntax is a leading Managed Cloud Provider
for Mission Critical Enterprise Applications. Syntax has undisputed strength to
implement and manage ERP deployments (Oracle, SAP) in a secure, resilient,
private, public or hybrid cloud.

With strong technical and functional consulting services, and world class
monitoring & automation, Syntax serves corporations across a diverse range
of industries and markets. Syntax has offices worldwide, and partners with
Oracle, SAP, AWS, Microsoft, IBM, HPE, and other global technology leaders.

S Y N TA X . C O M
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