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SAP 2014: Reaching for the Cloud

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Case Review
Case # 9-614-052
SAP 2014: Reaching for the Cloud by Karim R. Kakhani, Marco Iansiti, and Noah Fisher

1) What is the business environment that SAP finds itself in at the beginning of the case? What changes must it make to its business model? Why must it make those changes?
2) What efficiencies for SAP are offered by the transition to cloud/network computing? How might those efficiencies inform your management decisions?
3) As SAP reconceptualized its core business model, it acquired companies. How does acquiring companies strengthen an evolving company's business model? What management cautions should be observed?
4) What were the roles of the Communities of Innovation? How might that approach provide you with a particular perspective on management opportunities?
5) What financial (profit) challenges are faced by the new cloud computing/subscription model? How is SAP addressing those challenges?

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In compliance with BrainMass rules this is not a hand in ready case review but is only guidance.

1. The business environment that SAP finds itself at the beginning of the case is one where the company was rising out of global recession. This was a business environment in which the private cloud market was expected to grow from $7.8 billion in 2011 to $15.9 billion in 2020. There environment was such that there were growth opportunities for SaaS, but market saturation would be reached by 2016. The IaaS was expected to reach peak global revenue in 2014. After 2014, the market was expected to reach commodization, price deterioration, and margin pressure. The market was expected to stagnate and decline between 2014 and 2020. The market moved and changed at a faster pace than what it did in the past.
The changes it had to make to its business model were that SAP had to become a cloud company, speed up its innovation process, and remain the market leader. The company had to apply agile and lean principles to innovation and speed up the time to market and time to consumption.
These changes were required to make an improvement in the products' relevance for the consumer, improving product quality radically, and achieving faster time to completion. SAP ...

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