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Microsoft and SAP expand partnership with S/4HANA and Azure commitments

by Jason Gumpert
November 28 2017

SAP CEO Bill McDermott (left) and Satya Nadella, CEO at MicrosoftMicrosoft and SAP renewed their longstanding partnership this week with a new round of commitments that will support key offerings, S/4HANA and Azure.

SAP will run its private managed cloud service, SAP HANA Enterprise Cloud on Microsoft Azure. SAP will also "move its key internal business critical systems to Azure," according to a statement

In turn, Microsoft revealed it will deploy SAP S/4HANA on Azure to run its own internal finance processes. Microsoft has long managed its corporate finances, along with its supply chain and some manufacturing processes with SAP-based systems. An upgrade to S/4HANA indicates that SAP software will continue to play a key role in Microsoft's business for years to come.

The announcement has raised some questions about whether Microsoft ought to be eating its own dogfood by deploying Dynamics 365 when it comes to finance and operations. In theory, perhaps, but experts point to a few key factors that probably led to this week's announcement, ranging from technical to functional to political.

In practical terms, Dynamics 365 isn't the right solution for managing Microsoft's complex set of core financials, experts seemed to agree. As one veteran Dynamics AX/365 partner executive explained, Dynamics 365 for Finance and Operations, Enterprise edition (D365FOE) is simply not designed to meet the operational needs of most large software businesses, let alone at the scale of Microsoft. And what Microsoft has built around their core SAP engine over the years ...

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About Jason Gumpert

As the editor of, Jason oversees all editorial content on the site and at our events, as well as providing site management and strategy. He can be reached at

Prior to co-founding, Jason was a Principal Software Consultant at Parametric Technology Corporation (PTC), where he implemented solutions, trained customers, managed software development, and spent some time in the pre-sales engineering organization. He has also held consulting positions at CSC Consulting and Monitor Group.

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Submitted by jefflfrye on Wed, 11/29/2017 - 11:06 Permalink

I have to admit, seeing experts writing that the do-everything-because-its-cloud Dynamics favored child is not up to the job of running even Microsoft made me laugh a little bit. Many of us could see through Microsoft's guilt-laden marketing push the last couple of years, we just were not certain Microsoft itself could see through it. Will the marketing for Dynamics 365 now include the tagline of "365 will work for you on Azure because Azure works for better and more complete products like those of SAP?" Jeff Frye

In reply to by anonymous_stub (not verified)

Submitted by axfredrik on Thu, 11/30/2017 - 19:04 Permalink

As Microsofts Hana solution will be a tailor made solution, and the concept of doing finance processing in the EXTREEME scenario Microsoft is, it is no wonder that they are looking to SAP instead of inventing the wheel all over again on their own platform, that is meant to be a totaly different type of solution. I would think as an analyst like you would know that financials isn't "just" financials. D365FOE isn't designed for Microsoft corps requirements and shouldn't be either, in the same way that SAP Hana isn't designed for a run of the mill small business. Like a small auto repair shop or restaurant. It would probably work, but just not an optimal solution.
Submitted by jefflfrye on Fri, 12/01/2017 - 11:24 Permalink

Yes, but none of this was is the marketing material or tsunami of unwanted messaging (ahem, GPUG Summit 2016) regarding "digital transformation" and partners and customers falling behind if they did not wise up to the Microsoft cloud. While Microsoft cuts off the paths customers use to increase the functionality of systems Microsoft sold them, Microsoft itself is maneuvering to not use the systems it was selling as modern and up to the job. We all knew and continue to know that 365 is not up to the job for Microsoft. The dirtier secret is that it is still so incomplete that it really is not up to the job for a lot of companies. Yet it still remains the focus of Microsoft marketing and is impossible to avoid or circumnavigate on the customer facing websites. Microsoft released an incomplete product and continues to market an incomplete product like it is a replacement for everything we have. Their own "About Microsoft" on the official release goes to great lengths to avoid mentioning or celebrating the iceberg of customers and products not on the cloud and having no plans to go to the cloud. In business systems, Microsoft continues to cut off its arm to save its toe. Jeff Frye Systems Analyst
Submitted by jglathe on Sun, 12/03/2017 - 07:04 Permalink

Refreshing to read that I'm not the only one who sees it this way. My term for it was and is "unfit for business use". Almost 10 years now that Microsoft is on this path. No sign of letting up.