German software giant SAP teams up with AliCloud to drive enterprise cloud services in China

Companies betting big on increased adoption of technology by small and medium-sized enterprises

PUBLISHED : Tuesday, 26 July, 2016, 9:58pm
UPDATED : Wednesday, 27 July, 2016, 5:51pm

SAP, the world’s largest supplier of business management software, and Alibaba Cloud (AliCloud), a subsidiary of e-commerce powerhouse Alibaba Group, plan to soon launch a new range of online solutions designed to ramp up cloud computing adoption by enterprises across mainland China.

“We see our key to success in China is increasing penetration of our cloud solutions into small and medium-sized enterprises,” Edward Chen, the chief business officer at SAP Greater China, said on Tuesday.

The launch this year follows SAP and AliCloud’s strategic partnership, which was announced at an event in Shenzhen in April.

Cloud computing enables companies to buy, sell, lease or distribute online a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are managed inside data centres. “Cloud” refers to the internet as depicted in computer network diagrams.

Simon Hu Xiaoming, the president of AliCloud, said in April the strategic alliance with SAP

aims to help Chinese companies accelerate their “digital transformation”.

German software giant SAP has about 11,000 corporate customers, many of them large enterprises, across the mainland, Hong Kong and Taiwan. A growing number of those clients are cloud users, it said.

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SAP has been stepping up efforts to get more of its 320,000 customers in 190 countries to adopt its latest S/4 Hana suite of financial and operational planning software, which is a cloud solution available for subscription.

According to SAP, AliCloud will jointly market and help deploy its Hana One and other “software-as-a-service” solutions on the mainland.

Hangzhou-based AliCloud, which was founded in 2009, is the mainland’s largest cloud infrastructure services provider, with more than 2.3 million domestic clients as of March 31. These users include companies in the finance, transportation, genomics, medical and meteorological sectors, according to Alibaba, which owns the South China Morning Post.

Morgan Stanley equity analyst Robert Lin said in a report that AliCloud had 500,000 paying clients, including half of the top 35 Chinese “unicorn” internet companies – start-up firms with a US$1 billion valuation as determined by public or private investment.

Lin said AliCloud started making its broad product offerings commercially available in 2014, “implying ample revenue growth opportunity”.

China’s public cloud service market appears primed for rapid growth, with research firm Forrester predicting that it will reach US$3.8 billion by 2020, up from an estimated US$1.8 billion last year.