August 9, 2016 | Kurt Moydell | Vice President, Americas
In a new webinar, featuring Forrester Research’s Duncan Jones and yours truly, we discuss how organizations can find and fund the right cloud migration strategy for their enterprise applications. Cloud migration is a red-hot topic for CIOs, who see the promises of modern, flexible, and easy-to-implement SaaS platforms – but are waiting for a clearer cloud roadmap and business case from SAP.
Funding Your Cloud Migration Strategy
The webinar unveils Forrester Research’s new vision for enterprise applications and why Forrester believes that SaaS is the only way to deliver their vision. However, it is important to distinguish true SaaS from fake SaaS, and Duncan provides some useful recommendations on this matter. Of keen interest to the webinar audience was advice on how to select and fund the right cloud migration strategy, of which Duncan overviewed three different paths:
- Move on-premise applications to cloud infrastructure (IaaS)
- Migrate on-premise applications to incumbent software publisher’s SaaS offerings
- Replace select on-premise applications to independent “best-of-breed” SaaS products
In one of the poll questions, 13% of total respondents see IaaS on their roadmap, 63% see a mixture of the alternatives in their future, and 25% are unsure which path is best to take.
After revealing pros and cons for each of the three cloud migration strategies, Duncan talked about how increasing numbers of organizations are taking a “maintenance vacation” from the big ERP vendors to help fund their journey to the cloud.
Third-Party Software Support
In my session, I focused on the third-party maintenance and support market – the basic offering, benefits, and the typical characteristics of those organizations making the switch. Those who move to Spinnaker Support’s third-party support model aren’t ending the relationship with their incumbent software provider, but rather are taking a 3-5 year maintenance vacation. Our customers are saving an average of 62% on SAP annual support fees. Regardless of a company’s size, complexity, or industry designation, third-party support is a viable alternative.
Why Companies Switch to Third-Party Software Support
Companies switch to third-party software support for a variety of reasons:
- They simply want more comprehensive support for lower price.
- They’re happy with their current release and opt against a forced upgrade.
- They are migrating to a new software vendor.
- They are financially distressed or have a mandate to cut costs.
The cloud has become a top driver of our business growth. I authored a white paper, The SAP and Oracle Cloud; A Market Report & Strategy Framework, which outlines why more SAP and Oracle users are seeking a third-party alternative after they have diagnosed software publisher cloud roadmaps.
Q&A with Kurt Moydell and Duncan Jones
In conclusion, I thought you might find the webinar’s Q&A section of interest – as follows:
- Does a company’s size or industry dictate which cloud migration strategy they should take?
Duncan: An organization’s complexity and how heterogeneous it is tends to drive its cloud migration strategy more so than does its size or industry designation. A company with numerous business divisions for different classes of customers often opts for a business unit-led, multi-sourcing strategy to pick independent SaaS providers that fit their array of needs.
Consequently, a more central-driven, homogenous organization often chooses more standardization and stay with their incumbent mega-vendor’s cloud offerings. There are industry-specific applications arising that might make more sense in some cases as opposed to taking a generic offering and trying to customize it to meet business needs. Such SaaS offerings should be investigated as part of the overall cloud migration strategy.
- What is the typical reaction of the big software vendor, i.e., SAP or Oracle, when a current customer notifies them of support cancellation with intention to switch to third-party support?
Kurt: The big software vendor’s reaction can vary by vendor and even by geographic region. Sometimes there is no reaction at all. But increasingly, these vendors will counter. SAP has been a bit more proactive in trying to reinforce the value its support offerings have delivered. Customers can choose to accept that as being accurate or not.
SAP and Oracle are starting to offer incentives to retain support customers. We haven’t yet seen a discount to support fees but rather trades and incentives for cloud license futures. Whether cloud licenses are an effective trade is often dictated by timing of when the customer can realize business value. All too often, the “projected” value is years away and customers demand more immediate ROI, not more shelfware. In short, we are not seeing tradeoffs that sufficiently offset high support fees.
Duncan: The relationship between customer and software vendor is important to assess. Big software vendors who collect support/maintenance checks from customers but not new software licenses often consider such customers as “dormant.”
Besides saving money, a maintenance vacation can improve and refresh a customer’s relationship with its big software vendor. After your vacation, you could come back as the prodigal customer returning and welcomed with open arms as “new.” On the other hand, if the big software vendor is not providing a reasonable conversion package to its SaaS offering, maybe the relationship isn’t worth all that much.
- What are some of the trends that you’re seeing in the third-party support market?
Duncan: Seeing a steady stream of inquiries and more acceptance of the concept of third-party support. More providers are trying to enter the market. The rules that govern what a third-party support provider can and cannot do are becoming clearer. More customers are going this direction and seeing the benefits – creating more momentum. Conversely, I do see some reaction as well from the software publishers. Some of them are doing a good job at looking at their support offerings and saying how can we make them more valuable and deliver more business value for the money we’re charging.
If you’d like to learn more about funding your SAP cloud migration strategy with the help of third-party software support, Spinnaker Support is here to guide you.