None of the announcements, which included joint validation for SAP HANA on the Azure platform, were earth-shattering, but they do speak to the significance of the relationship between the two long-time allies and how they see the market moving.

ORLANDO – At SAP’s SAPPHIRE NOW customer event, long-time strategic partners SAP and Microsoft deepened their relationship amidst joyful mutual expressions of admirations by the companies’ two CEOs. The announcement involved joint plans to deliver broad support for the SAP HANA platform deployed on Microsoft Azure. They also announced new integrations between Microsoft Office 365 and SAP cloud solutions, and provided enhanced management and security for custom SAP Fiori apps through Microsoft Intune.

“The combination of Microsoft and SAP has always been extraordinarily special,” said Bill McDermott, SAP’s CEO. “We have a very high trust between the companies. I consider this man [ Microsoft CEO Satya Nadella] to be open, very honest and thoughtful and a great friend.”

Microsoft’s Nadella, for his part, said that the SAP partnership was critical to Microsoft’s own strategy.

“It is a core underpinning of what we are trying to do,” he said. “Our identity has always been a platform company, and for us, partnerships are absolutely necessary, more so now than even in the past.”

Nadella said that digital transformation has created an environment where all companies are becoming software companies, because of the data they can produce and potentially leverage to their advantage. “We have always talked about digital transformation, but for the first time, whether you are a retailer or a healthcare provider or a manufacturer, you are no longer just consuming digital technology, you are producing it. When we say every company is becoming a software company, its happening. We should think of customers as other ISVs, and we should leave behind digital capability. That’s the real difference going forward.”

Nadella said that one of the unintended consequences of this process of digitalization becoming pervasive was the collapse of traditional cybersecurity.

“The traditional model where you protect, detect and respond, which is more passive, doesn’t work any more,” he said. “Even the protection has to be behavioral or machine learned.” The result is that Microsoft now takes all the data they gather and shares it with their customers.

McDermott said this pervasive digitalization was completely reshaping strategy.

“Business model innovation is a big part of this,” he said. “If you don’t enable it with technology it fails.” He spoke of a recent conversation he had just had with a Canadian retailer who had built a large brick and mortar family-owned business.

“He said the future is e-commerce, so how do I make that bigger than my current retail business.”

The two CEOs stressed that their expanded partnership will better enable organizations to use the cloud to deal with these modern issues.

They begin with the certification of Microsoft Azure infrastructure services for SAP HANA. The two companies have certified SAP HANA to run development, test and production workloads on Microsoft Azure, including SAP S/4HANA.

“This partnership is one of the broadest things we have done,” Nadella said. “What we have done is taken the best of SAP and the best of our hyperscale cloud and brought them together, so that these SAP applications are certified on Azure.”

“Azure will be another large channel for HANA and S/4 HANA in combination with Microsoft,” McDermott said.

The second component of the announcement is new cloud services integrations to provide joint public cloud solutions from SAP and Microsoft’s Office 365. They combine Office 365 communications, collaboration, calendar, documents and other data with cloud solutions from SAP, including Concur, SAP Fieldglass, SAP SuccessFactors, and SAP Ariba.

“These will demonstrate the power of Office 365 and SAP enterprise applications, coming together in simulated use cases,” McDermott said. “I think the more the customer says ‘I want to see more use cases for my particular industry and specific line of businesses,’ that we will push the envelope on what’s possible. That is the game plan.”

This first wave of integrated Office 365-SAP solutions will be available starting in the third quarter of 2016, with plans to release additional integration features in the future.

Finally, SAP will enable its customers to build and deploy custom mobile hybrid SAP Fiori apps on SAP HANA Cloud Platform with an open standards plug-in framework. This will let them build apps that can be managed, deployed and better protected with Microsoft Intune, as Microsoft Intune management capabilities will be embedded in the apps, leveraging the same capabilities used by Office 365 mobile apps. The integration is expected to be available in the third quarter of 2016.

“SAP Fiori and the applications you build can be managed so you can set security principles for data loss protection, a combination of integration that will accelerate the growth our customers really seek,” Nadella said.

So what does all this mean? None of the announcements will surprise Microsoft or SAP customers. Indeed, the remarkable thing here is that absolutely everything announced is a predictable extension of the strong working relationship between the two companies. That’s really the most compelling takeaway – that the new integrations are simply a further way-station to what the companies hope and expect will be bigger and better things ahead.

“I think that this is just the beginning,” Nadella said. “We will learn a lot from the feedback and keep at it.”

“I think we are just getting started,” McDermott said. “These solutions are just the beginning of a long journey of excellence.”