Welcome to the Cloud Wars Minute — your daily news and commentary show, hosted by Cloud Wars Founder, Bob Evans. The next three minutes are packed with insights and perspectives around the “reimagination machine” that is the Cloud! Today’s Topic: Microsoft & SAP Partnership Faces Challenge as Dynamics 365 Grows
0:25 – There’s an emerging area of tension between longterm collaborators Microsoft and SAP. While these two tech giants have worked together for nearly 40 years to serve customers looking to combine the best of each vendor’s technology, new competitive headwinds might change the dynamic of their partnership.
0:55 – Back when Microsoft just produced desktop hardware and SAP was the leader in enterprise applications, there was little conflict between the two when it came to serving customers. Over time, as each company has evolved, that has changed. The partnership is still extremely strong in some areas, like migrating SAP applications to Azure and integrating Teams with SAP apps.
1:30 – But signs of increasing competition are starting to show, and the recently announced Q4 earnings numbers for each company include a perfect example. In Q4, SAP’s cloud revenue (which represents applications and their platform) grew 28%. In the same time frame, Microsoft’s enterprise applications (which includes Dynamics 365, a direct competitor to SAP apps) grew 45%. Bob guesses that D365 is at or approaching an annual run rate of $4.5 to $5 billion.
2:35 – While there are lots of example of “coopetition” between tech vendors, it’s a very tricky balance to maintain. And now that there’s no question that Microsoft D365 is the fastest growing set of enterprise apps of any vendor, the direct competition between Microsoft and SAP can’t be ignored.
3:05 – Bob says that he imagines that Microsoft and SAP have more to gain from sustaining their partnership than they would from embracing harsh competition. We’ll be keeping an eye on how this plays out between the two companies.