Many people see in cloud computing only the people-centric, mobile-first, and analytic-driven applications which can be purchased with a credit card. This would undervalue the transformative power of the cloud.

If your cloud vision is narrowed down to SFA (sales force automation) or even any cloud CRM, then you need to accept that your applications will be siloed and integration with the rest of the business will be ad hoc at best.

A quick fix cloud application can become a long-term business problem when there is no integration between the application and the rest of the organization, especially at a process level.

To truly leverage the cloud for your business, cloud applications need to be considered in conjunction with a modern platform (PaaS) AND flexible integration capabilities. SAP h as taken this kind of holistic portfolio approach (more details ).

Switching magically between worlds

Have you ever read a book that takes place in more than one universe or watched a movie in which characters travel between past, present, and future?  Think of Harry Potter approaching the Hogwarts Express via London King’s Cross train station to get over to the world of wizards, or Connor McLeod traveling through the centuries and fighting back the baddies in seamless cuts between the Highlands and New York.

The seamless flow from one scene to the next and the logic of the mechanisms that transport characters between worlds is a fundamental success factor for these kinds of books and movies. If the characters’ travel didn’t make sense, we would be lost and uninterested. We are drawn into stories when the transition logic works well and gates to the future or past are built into the real world with everyday objects.

This analogy often comes to mind when I talk to customers about the cloud. Just as we expect creative and smooth transitions in books and movies, cloud users expect a seamless flow between cloud applications and on-premise or third party cloud–but it’s hard to achieve.

Together, integration & interoperability are the #2  cloud-related pain point (following security), as stated in many research articles like this one recently published in Forbes about .

Integration & interoperability are valid concerns, as cloud vendors often are only able to offer limited:

  1. Experience. We are running the first three miles of a marathon in cloud computing, so there are not many companies in the market who can show successful integration projects on large scale yet.
  2. Business understanding. The early cloud entrepreneurs have been and are still pure cloud vendors. They reflect neither the customer´s on-premise history nor the need to safeguard existing investments–consequently, they prefer a “rip and replace” strategy over integration.
  3. A single hand to shake. Very few vendors deliver cloud (SaaS) solutions + integration tools + integration content + extensibility platform (PaaS) as a unified solution. (SAP is an exception.)

Why integration & interoperability matter

Companies need to avoid information islands and fragmented processes in cloud solutions. Losing enterprise context while moving into the cloud is not an option. Integration across solution boundaries is necessary to prevent application silos. It requires a strategy that encompasses cloud as well as other on-premise solutions. Business users and cloud vendors are acknowledging and responding to this need–a recent survey from shows that 67% of CIOs using cloud applications have already adopted some hybrid tools integrating cloud and on-premise solutions.

Integration is necessary to both business users and IT.

  • Business Users Perspective

Interoperability and integration offer a single source of truth and accurate data; business users can rely on what they see and spend meetings talking about facts and real-time measurements instead of about doubts about data reliability. Faster insights and better decision-making capabilities are what businesses want and need to achieve.

  • IT perspective

A large enterprise runs, on average, between 1,000 and 2,000 applications. Some of the applications will go into the cloud, some are already there, and some may never be migrated. Enterprises adopt SaaS today primarily for commoditized processes such as CRM (Lead2Opportunity, but not Opportunity2Cash), procurement, and HCM (full HCM suite). Companies do not differentiate these processes from their competition and see a value in standardization and best practice sharing. But IT needs to manage governance and control for all of these processes regarding:

    • Data security, privacy,  and compliance
    • Support of complex landscapes
    • Control of data flows
    • Processes working end-to-end
    • Choice of integration technology
    • End-to-end  monitoring and support

What does it require to interoperate cloud solutions?

It is important to separate cloud on-boarding from interoperability.

  • Cloud on-boarding: One-time initial data load from existing systems to the cloud solution
  • Cloud Interoperability: follows on-boarding with continuous upkeep to ensure data is sincrenated and processes are integrated.

Interoperability is clearly superior to the traditional “rip-and-replace” or “stitch-together-with-other-middle ware” approach that many pure cloud vendors take to cloud solutions.

What you should look for in a cloud vendor

  • Point-to-point integration for simpler and highly standardized integration scenarios
  • Integration services that connect systems with pre-packaged integration content in a pure cloud deployment
  • Option to leverage existing infrastructure: On-premise technology and data services with pre-packaged integration content for OnPremise2Cloud via pre-packaged and rapid-deployment solutions
  • Open for re-use of third-party integration providers via a partnership for specific integration scenarios
  • Option to use further third-party integration platforms using our open certification program

Is your cloud vendor considering all of the above? No? Then run away, fast.

Customer Examples…

SAP cloud for customer – A large industrial manufacturer with multiple subsidiaries on different SAP ERP clients needed third-party ERP installations integrated into the flow. The main challenge has been the very tight time frame to achieve a rapid implementation with a small team to integrate accounts, materials, sales quotes, and sales orders.

SAP Cloud for people – A large manufacturing company with SAP ERP, multiple legacy HR, and financial applications worldwide. The goal was a migration from the existing legacy HR system.

    • 120+ third-party interfaces – Integration of third-party cloud solutions
      to SAP Employee Central (EC) and EC Payroll
    • 100% of SAP-to-SAP integration and 30% of total number of required integration covered by prepackaged integration (iFlows)

We learned many lessons with each customer, but the most important has been this co-innovation approach. This is why some SAP cloud releases are up to 80% based on customer feedback: we learn together, and we learn fast.

The SAP cloud portfolio has been designed to serve the hybrid cloud reality. We bring SaaS, integration tools, and integration content together to ensure interoperability for our customers.  At the same time, it delivers on line-of-business AND IT expectations to make them operate together in the cloud.

Focus on interoperability and your business will meet its goals. For further information, download our .

In the closing scene of Highlander, Queen’s “A kind of magic” plays. Cloud integartion and interoperability may sound like magic, but it´s simply the result of four decades of co-innovation between SAP and its leading enterprise business software customers.

Let me know what you think and follow me on Twitter to stay on top of the latest and greatest about cloud computing,

Regards @SDenecken

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Read other relevant blogs:

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- Cloud Extension program

Notes: Original blog appeared on SAP SCN community.

At SAPPHIRE NOW I had the pleasure to participate in a podium discussion with my colleague (member of SAP´s management board) on the topic of clouds, particularly about the differences between public and private cloud. Our experiences co-innovating with customers and partners came out in the discussion.

There are many definitions of public and private clouds, and I think a little simplification is in order for the purpose of this blog. (This is where some of the cloud purists will jump up and down).

1. Private cloud – hosted solutions, often managed by a partner or vendor

2. Public cloud – multi-tenant solutions, managed by the vendor

We know that the move for our customers to the cloud must be a thoughtful evolution. Our strategy centers on leveraging the right mix of cloud, hosted, and on-premise technology. Customers have very specific challenges they are looking to solve and very specific investments they want to leverage. Their starting point on this journey will help define the mix that is right for them.

(predominant deployment models)

But now, lets focus on cloud.

The current heated discussion about cloud security reminds me of an interesting recent on cloud computing from Saugatuck Research. Not much has changed when it comes to customers and the way the cloud is perceived.

Security was and is top of mind for everyone, and rightfully so. I agree with Saugatuck´s conclusion:

Saugatuck believes that the reality of Cloud IT is actually the reverse of popular thought. I believe the growing prevalence of Cloud IT use, including communication and interaction throughout multiple “Internets of things,” can deliver vastly improved security that reduces the risk of data loss and system breaches by improving the ability to secure, monitor, and manage devices and software.

See detailed research here:

Every time we talk with customers, partners, and influencers about cloud computing, we have to start with a definition of cloud. We then discuss how SaaS and PaaS play together. These conversations have led us to believe that there is a symbiotic relationship between them.

Symbiosis (from Greek σύν “together” and βίωσις “ living “) is a close and often long-term interaction between different species , where both benefit from the relationship. How does this relate to the Enterprise usage of cloud services?

Enormous expectations have accompanied the birth of cloud services. Cloud computing is expected to offer an opportunity to be more efficient, agile, and innovative through more effective use of IT investments and faster innovations. If a company wants to launch an innovative new approach, it can use the cloud without having to acquire significant hardware, lowering both time and cost barriers to deployment. People associate the Cloud with innovation and easy-to-understand, user-oriented design.

Cloud delivers business velocity. To understand how it does this, we need to take a deeper look at the building blocks of cloud and how they work together.

Security is the #1 concern for enterprise organizations when making a cloud decision. This issue has been aggravated in our post-Snowden/PRISM world. Security is a serious topic that requires thoughtful discussion.

There are many pressures along the security isobars of IT, and space for value- and business-oriented conversations about cloud services that help businesses become more agile and insightful are necessary.

The SAP Cloud Strategy and Customer Co-Innovation team regularly meets customers to discuss expectations, opportunities, and concerns. Many roundtables, forums, user group meetings, and expert sessions with organizations in various countries helped to shape the thoughts in this blog.

Here is a look at the 3 most important lessons we have learned from our experiences and interaction with customers.

Have you ever used the saying, “two sides of the same coin,” indicating there are two ways of looking at the same thing, maybe two different interpretations of a situation?

If you look at private cloud services, you click on a URL, register yourself, and start enjoying the beauty of an appealing solution experience. Your data persist in the cloud; you can access it from wherever you are and whichever device you might have – the definition of online. This is the freedom of cloud applications in private life – and obviously the shining front of the coin.  Many people now have the same expectation for their work life applications…

However, if you flip this coin over, you might be in for a surprise.

I am fascinated by the role Cloud Computing plays in the business transformation that began to take shape in the last few years. Every day there is a new customer example, statistic, survey, or analyst report reminding us that we are in a new era of business performance. When engaging with customers and partners, we often hear that changes are taking place so rapidly that many line-of-business leaders are paralyzed by the speed at which they need to move—and furthermore, they don’t always know how or where to move. I discussed some of the trends influencing these changes on the SAP community network blog ( 10 trends for the year ahead ).

The convergence of cloud, social, mobile, and big data analytics has forced companies to adapt immediately to industry forces or risk becoming obsolete. And let’s not underestimate what is at stake: organizations large and small are all wrestling with how to win in their market and how to gain the competitive edge that will deliver unmatched value to their customers  and timely profits to their investors. The payoff is huge for those who execute well.

At SAP, we know this better than anyone, as our substantial customer base and vibrant ecosystem deals with this change firsthand. We deliver innovative solutions to our partners that help them keep the engine running while allowing them to change the tires for the next race. This is the single greatest challenge that organizations face: keeping the lights on while simultaneously preparing for the future and focusing on gaining a competitive edge. A key enabler is technology, and the goal is to achieve business velocity by finding the right foundation and mix of solutions.

> click to  see version on

Few companies want (or can afford) a “rip and replace” approach – nor should they even consider it in most cases. We constantly hear from long-standing customers that they want to maintain some of the core systems that serve them extremely well, but need the innovation that the cloud affords. To help them strike this balance, they also need a strong relationship with a trusted, dependable partner who supports their changing, growing needs.

So the key business question is: How do you manage change and capitalize on emerging trends in a cooperative way?

A word like “critical mass” is so often used in the figurative sense, it is sometimes hard to remember its original, technical meaning: the smallest amount of fissile material needed for a sustained nuclear reaction. This was first achieved by the great physicist Enrico Fermi, in a “pile” (and that’s the technical term) of Uranium in the unlikely location of a squash court at the University of Chicago.

It turns out that different isotopes require a different mass to go critical. So Fermi needed a pile 8 metres high of unrefined Uranium, but a ball of just 10 cm (the size of a softball) of Plutonium is needed.

Cloud Network pioneers also wonder how long it takes to “go critical”. A common target in the network world is 50pp, 50 percent penetration of the target market. I prefer the term “network effect”, and the idea here is that networks ( just like a pile of uranium-235), when they get to a certain size “go critical”, and the benefits of adding a new node exceed the costs of creating and connecting it.

Let’s look at some Network Effects over the years. They all exhibit the same chicken-and-egg effect in that it makes no sense to buy a telephone (lay rails, string cables) if there are not enough people to connect to.

Network

Started

Critical Mass

Time Required

Built by

Railroads 1820’s 1880’s 70 years Tycoons, Barons
Electricity 1860’s 1930’s 70 years Local Govts, co-ops
Telephones 1870’s 1940’s 70 years Ma Bell
Oil Pipelines 1880’s 1920’s 40 years Standard Oil
Credit cards 1950’s 1980’s 30 years Visa
Internet 1960’s 1990’s 30 years Fed Govt
Cloud 2005 ? ? Various
Source: Infrastructure History Series (Amy Friedlander) http://www.cnri.reston.va.us/series.html

One fact that seems inescapable is that things are speeding up, just as we’ll, as  investors are unlikely to want to wait decades for the network effect to take off. Also, the time taken to get to “criticality” depends on the cost of setting up the node and connecting to the network. Stations on a railroad are expensive, so are the tracks between them.

There’s certainly more to a Cloud Network than just scale, such as the classic cloud benefits of service levels and guaranteed delivery but scale matters. And of course there are many examples of networks that fail to go critical at all: Apple’s Ping, the Philips Video Disc, the CueCat, the 3DO games console.

How can you tell if a network has reached criticality? The mathematical definition states baldly that at criticality, the value obtained from the network is greater than or equal to the price paid for access. Not very helpful, but there’s one important thing that is needed: a sustainable business model .

A sustainable business model is in effect when the profits to the network administrator scale in proportion to the value that its subscribers receive. If you have to endlessly pay for more hardware (e.g. phone lines, wireless spectrum, racks at Amazon Data Services) as you get more members, then you don’t have a sustainable business.

There are plenty of Business Networks out there, and when one of them goes critical, it’s going to create a really big noise.

“The next generation of PaaS will radically change the world of development.”

From a post by Mike Kavis about the evolution of cloud computing and cloud platforms — the last in his six-series on Cloud Economics. This one’s called “PaaS is the game changer.”

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His first example that radical change involves mobile development; our next paper is about cloud platforms and mobility.