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An important announcement was almost was lost in all the noise that spews from the Salesforce.com Dreamforce technology/charity/inspirational/damn-near-religious event. IBM and SAP announced that they had partnered up to offer SAP Hana Enterprise Cloud applications on IBM’s Softlayer cloud infrastructure. This makes infinite amounts of sense. SAP is best known for its three letter enterprise applications – CRM, ERP, HCM etc. – and IBM really understands enterprise infrastructure. It’s true that there is some overlap between the companies, for example IBM Kenexa and SAP Successfactors, IBM Connect and SAP JAM, or SAP HANA (the database not the application suite) and IBM DB2 BLU. That’s to be expected with information technology companies of this scope. Overall though, SAP and IBM tend to compliment more than they compete. That’s because SAP is still mostly an enterprise applications vendor and IBM mostly an enterprise infrastructure vendor.

On the surface, this means that SAP and IBM customers will have a choice of an excellent cloud experience comprised of world class applications and world class cloud infrastructure. It is the same combination that works so well for many enterprise on-premises. This could also point to a direction both companies should consider – deeper partnerships and perhaps a merger. Financial details of such a partnership or merger aside, it makes sense from a product point of view. If both of these companies want to compete against Oracle, who controls both applications and infrastructure, deeper ties will make that a lot easier. The same is true of competitors such as Salesforce.com who have always delivered applications in the cloud but are now transforming themselves into a platform vendor. Together SAP and IBM would offer a breadth and depth of IT products and service that even oracle couldn’t match.

Enterprise applications are the apex predator – everything else feeds that beast. A well-fed beast is much more dangerous than an anemic one. IBM and SAP have taken a solid step forward. They should continue walking this path.

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