Cloud Services

SAP Deal Highlights Hybrid Cloud Competition

The global supply agreement CenturyLink announced today with SAP isn't hugely significant in and of itself, but it is the sign of things to come in the hybrid cloud world in terms of how companies will compete. (See CenturyLink Inks Global Supply Deal With SAP.)

The deal establishes CenturyLink Inc. (NYSE: CTL) as one of the companies providing infrastructure and IT services to help SAP AG (NYSE/Frankfurt: SAP) grow its HANA Enterprise Cloud offering more rapidly, moving more of its customers quickly and cost effectively into the cloud.

IBM Corp. (NYSE: IBM)'s Softlayer and Amazon Web Services Inc. are among the players who already support SAP HANA. The global supply agreement CenturyLink announced today adds its Infrastructure-as-a-Service into that mix, setting CenturyLink up to compete on these services, says Avi Gupta, VP of global sales and marketing for CenturyLink.

As its enterprise customers increasingly move to cloud-based delivery of SAP software, SAP isn't building out its own data centers, instead relying on partners for IaaS, including the networking involved. It then white labels the services to its customers.

"We are essentially competing to be the best partner for that," Gupta says. Among the things the partners compete on are price -- delivering the IaaS at a cost that lets SAP add its margin and still be competitive -- as well as responsiveness and flexibility, Gupta says.

See the latest happenings as telecom business services migrate to the cloud in our cloud services section here on Light Reading.

"They need us to be easy to work with," Gupta says. SAP cloud architects will reach out to a partner, seeking a specific solution at specific location and price, and it's up to CenturyLink's cloud architects to quickly provide a competitive response.

The competition is not necessarily on a project-by-project basis, he adds, but overall, the most business goes to the cloud player who can provide the best service quickly and cheaply.

There is plenty of business to go around, apparently. Gupta says SAP has alerted CenturyLink to be ready for "a tsunami" of service growth this year.

— Carol Wilson, Editor-at-Large, Light Reading

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mendyk 1/22/2016 | 1:12:16 PM
Re: Very interesting If the choice is between getting more serious about business services and counting on AOL to provide sustainable, long-term growth, I'd opt for the former.
ethertype 1/22/2016 | 1:06:55 PM
Re: Very interesting Nothing.  But neither would a doubling down on cloud IaaS.
mendyk 1/22/2016 | 1:01:07 PM
Re: Very interesting Thanks for the link. I've looked at it. What do you see there that inspires confidence?
ethertype 1/22/2016 | 12:50:28 PM
Re: Very interesting If you're implying that VZ has no strategy to grow outside its core business, check page 12 of the earnings presentation: http://www.verizon.com/about/file/11123/download?token=EZU9t27W    Sure, we can debate whether it's a good strategy, or whether they can execute, but you can't claim they don't have one. 
mendyk 1/22/2016 | 11:59:35 AM
Re: Very interesting If you look at successful digital-era companies, they are looking to expand their portfolios. Imagine if Amazon decided to focus on just shopping, or Google on search.
ethertype 1/22/2016 | 11:38:06 AM
Re: Very interesting Is that a pattern?  Maybe.  But if so, the common thread seems to be that they're going to do stuff that has a good business case.  Cloud infrastructure and FioS to the masses might not.
mendyk 1/22/2016 | 9:27:46 AM
Re: Very interesting Hi, ethertype -- my comment is on a much more general level. Verizon has been spending a lot of time telling the market what it's NOT interested in doing (expanding  FiOS geographically, and now staying involved in enterprise services). It appears to be winnowing down its focus to mobile. That's clearly a good sector to be in, but it's also reasonable to wonder why a company of VZ's size and scope would decide to be a one-trick pony.
ethertype 1/21/2016 | 8:28:38 PM
Re: Very interesting It's not clear to me that CTL is right and VZ is wrong.  

CTL needs SAP way more than SAP needs CTL.  Note that SAP didn't issue a press release on this deal, nor even point to CTL's PR as they do with other partners.  SAP is going to run on whatever IaaS platforms make sense and get requested by customers.  "Want to join the party, CTL?  Sure, we'll put you on our menu and give you a shot."  That's the easy part.  But CTL still has to go win business.  And look who they're competing against.  AWS will be cheaper, Softlayer will be more trusted, and CTL will be... what, exactly?  What is their niche or advantage as an infrastructure provider for SAP Cloud?  

I'm highly skeptical about the "caching at the edge" as an advantage.  First off, CTL only owns the edge in a few geographies and they will rarely line up 100% with specific customer footprints.  Second, AWS and the other scale leaders (Azure and Google Cloud) are aggressively extending their edge by locating mini-DCs in places like Equinix and in more and more 2nd/3rd tier markets via companies like EdgeConneX and vXchnge.

That same question will dog them across all sorts of enterprise cloud apps and services. They can't compete on price vs. AWS/Azure/Google and it's not clear they are committed to battling for a value-add leadership position among the remaining enterprise cloud players like Softlayer.  Getting stuck in the middle will not be fun. Let's check back in 1-2 years and see how well it's going for them.
mendyk 1/21/2016 | 11:22:33 AM
Re: Very interesting Yes -- CenturyLink appears to be putting some real thought into its long-term strategy. As opposed to evaluating opportunities based on weirdly aggregated market-sizing predictions, or opting out of opportunities simply because they will require some work and imagination.
CChappell 1/20/2016 | 1:14:07 PM
Very interesting Indeed - this shows that if you make the right services choices, owning a cloud and the data centers that run it is a viable business for telcos. This announcement is not just about SAP HANA - with its Cognilytics acquisition, CenturyLink can provide advanced analytics on top - so the whole soup-to-nuts, from connectivity and cloud platform to analytics and managed services, which is an attractive deal to enterprise customers that don't want to integrate so many moving parts themselves. And in the future, there's the opportunity for Centurylink to do something that IBM and Amazon can't do - at least with the latter companies' current focus on hyperscale data centers - cacheing HANA and possibly Hadoop instances at the network edge. There is a lot of potential here with IoT companies that don't want to haul back tsunamis of sensor data to a big data center for analysis. 
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