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

Microsoft 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 ...