SAP on Google Cloud: 2 analyst studies reveal quantifiable business benefits and ROI
Snehanshu Shah
Managing Director, SAP
Cloud migration is top of mind for most companies with SAP applications. While the advantages of the cloud for SAP customers is generally understood, the move itself can be complicated and disruptive. So what actually are the business benefits and cost savings? How long will it take to recoup such an investment? Two recently published reports from Forrester and IDC can help to quantify the benefits and ROI.
Getting answers to the million-dollar questions
Forrester and IDC bring different methodologies to the table; they asked somewhat different questions and used different models to calculate their financial KPIs. This allows you to get two different points of view on the same basic questions about value, risk, and ROI.
As it turns out, both reports found that customers who migrate their SAP environments to Google Cloud see an impressive return on their investments. From uptime and infrastructure to efficiency and productivity—both Forrester and IDC identified major benefits to companies that have made the move to Google Cloud.
Let's walk through some of the highlights from both reports.
Forrester's TEI model spotlights the power of uptime improvements
Based on in-depth conversations and quantitative research with six companies, here are the key findings from the Forrester Total Economic Impact (TEI) study for companies running SAP systems on Google Cloud:
Direct cost savings. When they compare cloud subscription and related costs to what they spent on legacy systems and infrastructure, most IT leaders expect a cloud migration to deliver up-front savings. But according to Forrester, the companies interviewed reported average savings of more than $3 million a year, including eliminated hardware purchases, right-sized software licensing, staffing efficiencies, and other operational cost savings.
Dramatically improved uptime. Customers told Forrester that migrating SAP to Google Cloud pretty much eliminates downtime—planned or unplanned—as a significant IT concern. According to Forrester, companies realized an average of $1.5 million in savings per year by avoiding the revenue and user productivity losses that had once been a fact of life for their IT teams.
Significant efficiency gains. Because Google Cloud works to mitigate performance bottlenecks, infrastructure mishaps, network delays and more, the companies Forrester interviewed reported a yearly average of $500,000 in productivity gains for SAP business users and frontline workers.
Companies also reported an annual average of $500,000 in additional IT efficiency gains after migrating SAP to Google Cloud. This quantifies what happens when IT practitioners no longer have to deal with the bottlenecks that come with legacy systems, and are able to spend their time on tasks that actually build value and help the business. Based on the Forrester analysis, the companies interviewed could expect average three-year net benefits of about $15.4 million.
“We benefit from any technical innovation in the infrastructure area because Google Cloud is doing that for us,” one customer told Forrester. “So, whenever there’s new hardware available or new processes or whatever, I don’t have to run the specific project to migrate from A to B.”
IDC finds that good things happen when SAP downtime is reduced
The IDC report highlights four areas where Google Cloud generates the most value for customers:
1. Cutting infrastructure costs. According to IDC, customers running SAP on Google Cloud spent 31% less on infrastructure each year, or an average of $233,000 less per company. The ability to scale SAP environments dynamically and to keep them right-sized was a major factor; so were the advantages of automated infrastructure monitoring and savings on software licenses once these companies could stop overprovisioning.
2. Giving a team better things to do. IDC found that the infrastructure, database, and security teams of the companies they interviewed reduced the time they need to maintain and manage SAP environments by an average of 66% per year, for a savings of $443,000, per company. As a result, these companies got the equivalent of a major staff expansion from their SAP migrations—giving them both the staff time and the expertise to focus on far more valuable activities.
3. Limiting unplanned downtime. These companies reported to IDC an average 98% reduction in unplanned downtime. Migrating SAP to Google Cloud significantly reduces the threat of downtime and saves the business an average of nearly $770,000 per year in lost revenue and user productivity. For some firms, the downtime savings topped $1 million per year.
4. Making users more productive. The companies interviewed told IDC that by avoiding downtime and disruptions associated with upgrade and maintenance tasks for their legacy SAP systems, they saved an average of $363,000 annually in user productivity. But there's an even more interesting under-the-hood stat contributing to these gains: These companies reduced the time required to deploy new SAP compute and storage resources from an average of 8.8 days to 1 hour.
When IDC added up these and other savings associated with running SAP on Google Cloud, it found an average three-year savings of more than $3.5 million and a five-month payback period.
“We acquired another company, so basically overnight we needed to be able to deal with that increase,” said one customer IDC spoke with. “We doubled our footprint overnight, and we had to take on hundreds of additional employees. We needed a platform that we could easily scale up if we required, and that’s the benefit of running SAP on Google Cloud for us.”
Explore the reports
There is a lot to think about when considering a move of SAP systems to the cloud. The cloud has many advantages, but migration can seem complicated and tricky; we appreciate that you are looking to understand the full picture. These papers are a great place to start.
Download the reports—Forrester's "Total Economic Impact of SAP on Google Cloud" and IDC's "Business Value of SAP for Google Cloud Environments." Then, get in touch.
