SAP announces new cloud partnership with Microsoft

Deal is intended to strengthen SAP's close relationship with Microsoft

SAP has struck a three-year deal with Microsoft to make it easier for customers to move from SAP's on-premise model to Microsoft's Azure cloud platform.

According to SAP, the new partnership, dubbed "Embrace", will help customers to run operations hosted at remote servers supported by its S/4HANA database. It would also strengthen SAP's close relationship with Microsoft and its Azure cloud division.

Earlier in 2017, Microsoft and SAP had announced a deal directed to help customers to use one another's platforms and applications with ease.

"Microsoft will bundle SAP cloud services into a bundle we call Embrace, and they'll sell these directly through their field organisation to their customers who will run SAP in Azure cloud," Jennifer Morgan, SAP's new Co-CEO told analysts on a call on Monday, according to Reuters.

Morgan revealed that many of SAP's largest customers "were very clear with us that they had already chosen to move their largest workloads to Azure or had plans to do that."

According to Morgan, SAP expects annual revenues of around $84 million from new partnership.

The new deal won't be exclusive, and SAP will continue to work with other cloud providers like Google and Amazon. It has come at a crucial time for SAP, following a major leadership change in the company earlier this month. On 11th October, CEO Bill McDermott stepped down from his post and was replaced by co-CEOs Christian Klein and Jennifer Morgan.

The move also highlights Microsoft's push to build new partnership with rivals in the enterprise software market as it competes with Amazon - the dominant player in the cloud market.

In her conference call, Morgan admired the performance of Qualtrics, the experience management platform that SAP acquired last year in an $8 billion deal.

At that time, critics of the deal said that SAP was paying a high price for the company. But, according to Morgan, Qualtrics was a major contributor to SAP's performance in Q3, and has added more than 300 clients in the past four months. She described Qualtrics' acquisition as a "bold move" that has received enthusiastic reviews from customers.