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China Telecom is extending its partnership with SAP to offer cloud services in China

China Telecom is extending its partnership with SAP to offer cloud services in China

In a bid to capitalise on growing demand for cloud-based services in China, SAP and China Telecom announced Wednesday that they are extending their partnership to offer SAP’s cloud-based recruitment and HCM (Human Capital Management) suite from China Telecom datacentres.

SAP and China Telecom have previously partnered to offer mobile device management services to the operator’s enterprise customers but the latest move will see China Telecom roll out the HCM offerings that SAP acquired from SuccesFactors in February last year. The services will be offered in China through China Datacom Corporation, a joint venture between SAP and China Telecom subsidiary China Communication Services (CCS).

“Through the cooperation with China Telecom and CCS, we are now able to provide world-class cloud solutions from SAP to our customers in China, from a datacentre in China,” said Bill McDermott, co-CEO of SAP AG. “This is a significant milestone in our ‘Innovation in China for China’ strategy and our long-term commitment to the Chinese market.”

Mr. Yang Jie, president of China Telecom said the extension of its partnership with SAP is a win-win and will help speed up Chinese enterprises’ adoption of cloud-based services – a set of technology platforms in which the telco has invested billions. The company currently has a massive cloud-focused datacentre in Inner-Mongolia and another under construction in the Guizhou Province, with four datacentres in Beijing, Shanghai, Guangzhou and Chengdu offering a mix of colocation, managed services, cloud and traditional hosting.

China’s Telecom is among a growing stable of telcos and internet companies building out datacentres in China, with Langfang City in Hebei Province emerging as a growing hub for IT infrastructure services (as of 2016 the City will house the world’s largest datacentre, at 6.2 million square feet). Much of that investment has been stoked by the high levels of growth in cloud-based services in China, and the fact that China, due in part to the Golden Shield Project (otherwise known as the ‘Great Firewall of China’), remains a fairly closed market when it comes to international data transfers. This forces companies like Microsoft and SAP to joint-venture in order to provide their cloud-based offerings locally.

According to Dr. He Jian Ying, vice president of CCID Consulting, an IT consultancy catering to Chinese businesses, China’s cloud market grew 34.6 per cent in 2013 and is on track to hit $8.2bn by the end of the year. He said the news is a big win for SAP, which can now up-sell into the telco’s extensive enterprise base.

“SAP has always been strong at delivering enterprise applications on premise. With its increasing shift from on premise to on demand, this move into the SaaS space gives SAP the potential to become a heavyweight in the SaaS market in China,” he said.