Editor's note: It was a busy 2015 in the enterprise applications world, marked by major trend shifts, product launches and potential mega-mergers. The following is the first installment of a series of Insights posts looking back on the year in enterprise apps.
Cloud ERP Comes of Age
While there was ample evidence during 2015 that cloud ERP has arrived, one of the most telling examples came just a few weeks ago during Oracle's second-quarter earnings conference. Oracle added more than 300 cloud ERP customers in the quarter, bringing its total to about 1,500. That's still a small total in light of Oracle's overall installed base—what drove a stronger point home was CEO Mark Hurd's mention that more than half of Oracle's wins for ERP and EPM in Q2 didn't include any on-premises software.
Another key milestone for cloud ERP last year: Microsoft's unveiling of the new AX suite as a "cloud-first" offering initially available only on Azure. To be sure, Microsoft benefits from the move since it provides a chance to battle-test Azure for mission-critical production applications, but it speaks to customers' changing appetites for the cloud when it comes to ERP upgrade paths.
While cloud ERP gained steam in 2015, the more important word to take away might be "hybrid," as the massive on-premises implementations running multinationals around the globe aren't going anywhere anytime soon, while many cloud ERP customers are small or medium-sized, or large ones adopting cloud ERP on a divisional or greenfield basis. Things to watch for in 2016 include the potential for some consolidation of pureplay cloud ERP vendors as larger players choose a buy-versus-build approach to market.
SAP Launches S/4HANA
The single most significant ERP launch this year was clearly SAP's S/4HANA, the successor to Business Suite 7. SAP itself calls S/4HANA its biggest product since R/3 was released in the early 1990s, and chairman Hasso Plattner said the company was "dead" if the next-generation suite does not succeed.
Possible hyperbole aside, S/4HANA does represent a major strategic shift for SAP and its customers, given that it does away with the vendor's historically agnostic approach to underlying databases in favor of a dependency on HANA, the in-memory computing platform SAP has developed over the past five years. Customers have plenty of time to upgrade, given that SAP has promised to uphold mainstream support on the Suite until at least 2025.
SAP of course holds HANA as the crucial advantage for S/4, given factors such as the ability to run transactions and analytics in the same instance, a reduced data footprint and of course, higher throughput. About 1,300 customers have purchased S/4HANA since the launch in February, although wasn't immediately clear how many are live, whether on-premises or in the cloud.
The vendor's approach to S4/HANA bears some elements of risk, but could end up paying off big, Constellation VP and principal analyst Holger Mueller wrote at the time of launch. Read his full blog post here.
Meanwhile, SAP has kept its foot on the innovation gas pedal for S/4HANA, releasing a wave of updates late this year, including a significant push into logistics. The key for 2016 will be to see how successful early customers are at getting their implementations live and stable, which is something many SAP customers have struggled with over time.
The Microsoft-Salesforce Merger That Wasn't
It would have shaken the enterprise software industry to its core, had it happened: Microsoft buying Salesforce for more than $50 billion. Leaked details of the potential deal began swirling near mid-year, and it allegedly fell apart because that offer actually wasn't high enough for Salesforce CEO Marc Benioff, according to one report.
The favorite reasons why Microsoft would pay that much money for Salesforce include the simple fact of massive market share gain, as well as the chance for Microsoft CEO Satya Nadella to put a major stamp on his tenure. A deal could certainly still happen, as the companies remain close, announcing an expanded partnership around product integration during the Dreamforce conference in September.
Editor's note: Look for part II of Constellation Insights' 2015 enterprise apps rundown later this week.
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