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SAP and Microsoft are making their cloud relationship almost exclusive with a new program.
SAP Embrace was announced in May as a program to help SAP customers move workloads to public cloud hyperscalers Microsoft Azure, AWS and Google Cloud Platform (GCP). Earlier this month, SAP and Microsoft announced a new development in the program with a three-year agreement to use Microsoft Azure as the preferred hyperscaler infrastructure provider for SAP systems. The deal is intended to address SAP’s issues in moving customers both to the cloud and migration to S/4HANA by providing a simpler, more cost-effective and risk-mitigated path.
SAP Embrace is intended to provide SAP customers a path to the cloud on Microsoft Azure infrastructure, according to the companies. SAP and Microsoft, along with systems integrators, including Deloitte, Accenture and IBM, will offer SAP customers bundles of cloud services, including unified reference architectures, road maps and market-specific information to help mitigate costs and risks of moving to the cloud. Microsoft field sales teams will sell the SAP Embrace bundles directly to customers and Microsoft will also embed and resell components of SAP Cloud Platform in Azure.
SAP worked with Microsoft, AWS and Google to develop the initial phase of SAP Embrace, but subsequent development over the summer led to the partnership agreement with Microsoft to use Azure as its preferred public cloud provider, said David Robinson, SAP senior vice president and managing director of the cloud business group.
SAP customers are in large measure satisfied that any of the three public cloud providers can handle SAP HANA database workloads and run HANA-based applications, Robinson said, but they are looking for a clear and simple path to the cloud, which was the main goal of SAP Embrace.
“[Customers] would like to understand that, as they migrate to S/4HANA in conjunction with the lift to the cloud, they can follow a path that leads to the intelligent enterprise and will give the most cost-effective and risk managed journey,” he said.
SAP customers lean toward Azure
The SAP-Microsoft partnership came about mainly because the majority of customers that SAP worked with to validate the SAP Embrace model were already leaning toward Azure, Robinson said.
This was primarily because Microsoft had demonstrated that Azure provided a consistent enterprise degree of engagement and support beyond just the compute network and data store, such as support services and lifecycle management, according to Robinson.
“Microsoft understands the enterprise to speak the enterprise language, and has processes wrapped around their compute network and storage around Azure that are more aligned with what SAP customers need to be able to consume and drive their S/4HANA environment,” he said.
SAP and Microsoft relationship may get cozier
It’s unusual that SAP would go with something that’s relatively exclusive, said Joshua Greenbaum, principal at Enterprise Applications Consulting, but it may be a sign of more to come from SAP and Microsoft.
“We know that Microsoft’s SuccessFactors implementation runs on Azure and they’re moving their ERP to Azure, so we know Microsoft wants as many workloads as it can get on Azure and they’re willing to incent SAP to do it,” Greenbaum said. “But I think there’s more to this. There will be another component of this deal coming, because I’m pretty sure that the numbers don’t add up for just this much exclusivity.”
Although the Microsoft Azure deal is not exclusive, the other two hyperscalers were not pleased at the recent addendum to SAP Embrace, Greenbaum said.
He pointed out that Robert Enslin, Google president of cloud sales and former SAP executive, and Thomas Kurian, Google Cloud CEO, are likely tapping their considerable experience to develop enterprise applications.
“It’s pretty clear that they’re going for an apps play that can compete with SAP,” Greenbaum said.
For AWS, on the other hand, Amazon’s relentless expansion into virtually every business may give potential customers pause before they entrust their systems to AWS.
“On the Amazon side there’s a lot of customers — retail, logistics, you name it — where Amazon the mothership is encroaching into a lot of core business areas, so a lot of folks are getting nervous about putting their enterprise software on the Amazon cloud,” he said. “In a way, Amazon sort of backed itself into this position.”
Other public cloud options still available
SAP customers still have the option to deploy S/4HANA and SAP HANA-based applications in any public cloud provider they want, Robinson said.
“If a customer still wants to run it on AWS or Google, they can still do it; the support is the same and we continue to certify these workloads on AWS on GCP,” Robinson said. “The difference now is not the support or the ability to run, certify and upgrade — we will always certify that these infrastructures perform on database workloads as we design. But with Microsoft, we’re adding an additional degree of abstraction on top of that around the harmonization of the cloud platform services.”
Making a presentation to the board of directors can be a minefield for CIOs. Navigate it successfully, and you emerge as a business leader — and as a potential candidate for another company’s board. Get tripped up, and your reputation as a business pacesetter can take a hit. But, in today’s technology-centric business climate, the days are long gone when presenting to the board upped the odds of a CIO’s getting fired.
“Ten years ago, that might have been possible,” said Wayne Sadin, chief digital officer and CTO of Affinitas Life, a senior living company based in New York. “Today, just telling the story of IT can only help; telling it well can help more.”
Sadin currently serves as an advisory board member for two IT services companies, and he has been a National Association of Corporate Directors fellow since 2012. In his experience, many boards of directors today are “scared to death” by technology. They know it is critical to the business, but are confused by it.
“These are folks who grew up as managers 30 years ago,” he said. They know finance and operations, but “they never dealt with technology” — or with IT leaders.
Sadin noted that, 30 years ago, he wore a white coat and walked on a raised floor in a room with tiny windows — the better to see the mainframe screens.
“That’s what a lot of board members think when they think of technology. Now, we’re telling them we’ve got to manage digital interaction, IoT, have AI that is smart enough to run your factories or cars — and they don’t have a clue,” Sadin said. CIOs should view a presentation to the board of directors as an opportunity to translate “what technology can do for the business.”
Jay Ferro, CIO of Quikrete Companies, a large manufacturer of packaged concrete based in Atlanta, is a board director for two startups and two not-for-profits. He said he is finding more boards are demanding that CIOs be present at meetings.
“All companies are, to a certain extent, tech companies, so there is really no reason for any board not to be interested in the technology strategy of an organization,” he said.
Sadin and Ferro were among the experts who offered advice on maximizing an appearance before the board at a recent event for IT leaders held at Boston College and moderated by Ginny Hamilton, community manager for The Enterprisers Project at Red Hat, based in Raleigh, N.C.
Here is a rundown of the panel’s expert advice, including which IT topics are of most interest to boards, how CIOs get their foot in the door, tips on demeanor and speaking style, and the importance of not upstaging or undermining your CEO.
Cybersecurity: Board of directors’ top concern
“Cybersecurity, cybersecurity, cybersecurity, cybersecurity and anything that puts the company at risk,” Sadin said in answer to an audience question about the IT topics of chief concern to boards of directors.
Calibrating and mitigating a company’s risk are among the top fiduciary responsibilities of board members — and getting it wrong can put them in jail.
The panelists agreed, however, that while cybersecurity is “what gets you in the door,” as Sadin put it, CIOs should view the security conversation as the steppingstone to a broader discussion about two other current topics of high interest to boards: growth and innovation.
“Once the board realizes you have command of the business beyond its risk — which is the No. 1 thing they are interested in — you can land and expand,” Ferro said.
Tim Crawford, the CIO strategic adviser at AVOA and host of the podcast “CIO In the Know,” said he’s been privy to a number of CIO presentations on cybersecurity to the board.
“They are all over the map, from CIOs who have had no interaction with the board” to old hands who “try to scare the bejesus out of them just to open up the purse strings and get money, which they ultimately may use for other purposes,” Crawford said.
Asked if that gambit was a legitimate strategy, Crawford said, “It works for them, but it is not something I would recommend.”
Indeed, transparency and never lying to the board — especially when presenting bad news — were cited as givens by the panel.
An audience question from Isaac Sacolick, president of StarCIO and a former CIO at McGraw-Hill Construction and Businessweek, added another subtlety to the discussion around board interest in cybersecurity.
“Let’s say you have an interest [in investing more] in cyber, and your CEO and C-suite want to invest in growth and innovation. Can you use the board to influence management decisions?” Sacolick asked.
“The CIO is not in the position to use that leverage. My guidance would be to never go down that path,” Crawford advised.
Sadin said those situations are rare in his experience. “Boards don’t manage; they govern,” so it is unlikely that boards will be debating with the CIO about strategy anyway, he said.
Unless there is fraud, in which case the CIO should raise that with the audit committee and not before the whole board, CIOs should think long and hard about doing an end run around their CEOs when presenting to the board, the panel argued.
CEO role in CIO presentations to the board of directors
That’s because, in almost every case, CEOs are the ones who bring CIOs to the dance, the panel said.
Establishing a “relationship of trust” with the CEO is a prerequisite for presenting to the board of directors, said Ferro, who recounted an experience that mirrored the exact scenario raised by Sacolick.
As a CIO at a large enterprise, Ferro said he was approached by the chair of the company’s audit committee and told that, if he needed more money for cybersecurity, he should let that person know. Ferro and his CEO had agreed cybersecurity could use more money, but it was not the top priority for the CEO.
“Now, imagine that conversation. I have a CEO who won’t give me everything I want. Do I ask [the audit chair] to put some pressure on [the CEO] to get me those dollars?” Ferro said. The answer was and should always be no, according to Ferro.
“I danced around it. I said, ‘We were making significant investments. We’re making terrific progress. And if something comes up, I will reach out to you.’ Then, I went back to the CEO and said, ‘By the way, this is what [so-and-so] just said, and I said we are making terrific progress,'” Ferro recounted. “The CEO rolled his eyes and said, ‘Thank you for sharing that with me.'”
He added that CIOs should not lie in situations like this. If necessary, they can say, “I’ll get back to you.” But going around the CEO is a “ticking time bomb. Remember who pays you.”
The panel agreed it is important to respect the chain of command in interactions with the board. In situations where CIOs, with the CEO’s blessing, are presenting to a board member tête-à-tête, “just make sure that whatever you say is the same as what you would say if the CEO were in the room,” Crawford added.
Keys to effective board communication
When presenting to the board of directors, CIOs must remember that the job is not to talk about technology, but about the opportunities technology offers the business, including being a vehicle for business model transformation.
Communicating effectively requires knowing your audience. The panelists agreed it is important to do your homework about the board members to understand what motivates them and what their interests are — and peg your talk to their experience.
It is important to remember that board members will also do their homework before meetings, reviewing notes from previous meetings to remind them what was said and what was promised. They are looking at the long-term narrative.
“If you are presenting points in time, and you’re not showing improvement, you’re going to lose them,” Ferro said.
Board members are typically compensated for their time. The panel cautioned the CIO audience to beware the boardroom newbie, eager to show his or her worth. “They will dive in and ask a million questions, and you need to be prepared for that,” Ferro said.
Act like you belong
Finally, keep your cool.
“Some CIOs, when they get their chance [to present], they think it is their one shot and get diarrhea of the mouth: ‘Oh, I’m at a board meeting. I can’t believe it, and I’m going to show them how smart I am.’ For God’s sake, do your homework and don’t look around starry-eyed,” Ferro said. “Act like you’ve been there before.”
Acting like you’ve been there before will not only raise your profile, Ferro said, but also redound to the company’s benefit.
“I’ve had CEOs come to me and say, ‘You made us all look really good. Thank you.’ And it wasn’t because I was amazing; it was because I showed the board that there is a senior executive at the wheel for IT.”