SAP Watch

Nov 7 2010   11:41PM GMT

SAP and the private cloud

CourtneyBjorlin Courtney Bjorlin Profile: CourtneyBjorlin

Are you interested in the private cloud?

It was a question I asked a few users while I was at the recent TechEd conference in Las Vegas. Keep in mind, these are the guys who like to get under the hood of these applications, see how they run, determine what makes them tick. They’re smart, they’re code jockeys. These are the guys (and gals of course) who spend an hour in a half on one of their first nights in Vegas drinking beer and watching five teams demonstrate cool applications of SAP technology in the famous Demo Jam. And the winner gets a beautiful Crystal trophy that rivals the Stanley Cup.

The private cloud wasn’t in the forecast any time soon, some said. A couple of very honest folks admitted that they weren’t even really sure what it was.

Confusion isn’t helped by the fact that like much of the cloud-related terminology, the “private cloud,” is, well, getting cloudy. It’s another one of those terms that is starting to be applied to more than one technology these days.

So what is a private cloud? A private cloud, in the purest sense, is a virtualized, automated, self-service data center behind a corporate firewall. Its goals are to increase flexibility, streamline management and more closely align IT usage and costs through a chargeback system — but very, very few data centers are at this point yet.

But that term “private cloud” is making its way out of the internal data center, and elsewhere these days.

I’ve been getting briefings from lots of vendors who tell me that they’re selling “private clouds” for SAP customers — “certified private clouds” to be exact. But by this, they mean they’re hosting and running the customers’ applications in external data centers, leveraging dedicated, virtualized servers.

These services fall under the relatively new term “virtual private cloud” or “hosted private cloud.” The interesting thing here for customers is that these services are sold by the drink — customers only pay for the capacity they use.

Virtustream, for instance, charges per infrastructure unit — a combination of CPU and memory — enabling it to bill customers for only what they use. The result? Customers save money — anywhere from 20-25% of what they may have spent building their own internal cloud, Virtustream’s CEO Kevin Reid said.

Domino Sugar recently chose Virtustream to run all of its SAP applications in production in a Virtustream private cloud — including enterprise resource planning, customer relationship management, invoice and orders systems, business intelligence, human capital management and payroll.

This model could lend more value to customers leveraging hosting providers, and their “clouds,” for running test and development environments, and it’ll be interesting to see whether more customers choose it.

For instance, HiLn, an SAP consulting firm that specializes in putting SAP applications in the cloud, is currently helping a company with an upgrade from R/3 to ECC 6.0. The organization couldn’t get a budget for hardware in the next three to four months, so it’s using HiLn’s private cloud for the upgrades. The company is paying less than $1,500 for four months to start working on these systems.

“It gives them the ability to make life easy, scale up pretty quickly, in less than an hour,” Chris Carter, owner of HiLn, said in a recent interview.

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