Google's New SAP Agreement Puts Heat On Growth-Hungry Virtustream

Just as it is pressing to maximize its advantage in the enterprise cloud market, Virtustream is facing increased pressure thanks to an SAP power play by Google.

"Google is looking to differentiate themselves as a public cloud player, and they've been working hard on the (enterprise) performance side of things," said Michael Tanenhaus, CEO of Mavenspire, an Annapolis, Maryland-based solution provider that works with Virtustream parent company Dell EMC. "It doesn't surprise me that SAP would be one of Google's strategies. Virtustream was trying to stake out that market."

Virtustream, which expects to do $1 billion in bookings this year, differentiates itself from general purpose cloud providers like Google, Amazon Web Services and Microsoft Azure, by focusing solely on high-performance, mission-critical enterprise workloads, like SAP and Oracle. The company provides service-level guarantees for transaction response times and the number of transactions that meet certain performance thresholds.

[Related: Pivotal, Google Cloud Take Aim At Azure With Launch Of Kubo For Deployment, Management Of Kubernetes Clusters]

Now, though, Google has inked a "co-innovation" agreement with SAP that allows SAP HANA's in-memory database to run on the Google Cloud Platform. The move puts Google's Cloud platform on equal footing with Virtustream, partners said.

Virtustream did not return calls for comment.

"Virtustream has this enormous sales channel working for them now," Tanenhaus said. "Now there's a play [for Dell] to say have you checked out our cloud? Did you see the AWS outage last week? That's a huge thing, and I would expect to see Virtustream grow really, really fast. It'll be interesting to watch them grow. Because of their focus on mission-critical workloads, they do not have any room to make the mistakes the other cloud players made as they were growing. With mission-critical, you can never fail."

EMC acquired Virtustream in mid-2015 for about $1.2 billion. Virtustream, in fact, was considered one of EMC's crown jewels when Dell acquired the storage market leader for $58 billion in September 2016.

Dell EMC has, in fact, groomed the business for aggressive growth. Dell Technologies' has made Virtustream its preferred enterprise public cloud. The enterprise public cloud market is predicted to triple over the next three years, and Virtustream executives say customers are getting comfortable with moving big, mission-critical apps to the cloud.

Google's primary public cloud competitors AWS and Microsoft Azure already work with SAP. Dell EMC executives insist that enterprise customers won't run mission-critical SAP or Oracle apps on general purpose clouds. They say Virtustream is the premier enterprise-grade public cloud for mission critical apps.

Bill Scannell, Dell EMC president of global enterprise sales and customer operations, recently told Dell EMC enterprise sales leaders that Virtustream "will be our growth engine."

The same day, Virtustream CEO Rodney Rogers tweeted that the company is aiming to do $1 billion in bookings this year.

A top Dell EMC executive said despite Google's SAP push, an enterprise showdown with Virtustream is unlikely. "Virtustream is a mission-critical, highly secure environment that runs your biggest mission-critical apps on- or off-prem. Its primary focus is on enterprises and the large public sector segment, so I don't see that as an immediate Google overlap," the executive said.

Excited to announce today that 's Bookings goal this year will be $1 billion in CCV. Not run-rate, but delivered!

Announced by Google last week, the SAP relationship also includes making the express edition of SAP HANA available to developers on-demand through Google Cloud, making SAP's platform-as-a-service available on Google Cloud Platform and integrating SAP apps with Google G Suite.