IBM and SAP have long ago realized that the "enemy of my enemy is my friend." SAP developed its database HANA to stick it to its arch rival Oracle. HANA is known as an "in-memory" database, able to crunch through huge amounts of data really quickly.
Oracle has its own in-memory database, and it is selling it on its own hardware. In the process, Oracle execs have thoroughly trash-talked both SAP and IBM.
Meanwhile, IBM has banked its future on cloud computing, and it wants
IBM isn't alone. All the big enterprise IT vendors are shooting to best Amazon's cloud including Oracle, HP, and Microsoft. And there are new players wanting to grab some cloud-computing game like Google and hot startups like Digital Ocean.
SAP has been offering its Oracle-killer database, HANA, as a cloud service for a while because SAP wants to be known as cloud royalty, too. Early on it signed on a cloud partner to sell a limited, cloud version of HANA. That partner was Amazon.
But IBM has one-upped Amazon because IBM will be selling the full version of SAP's database in the cloud, known as SAP HANA Enterprise. This is a critical difference for enterprises. While enterprises might test HANA using Amazon's cloud, they couldn't really use HANA for big apps. And the point of HANA is to use it for big apps.
IBM has been selling SAP apps for enterprise customers for decades. So it makes sense that SAP would turn to IBM to help it host its cloud.
There's another benefit to the agreement. The NSA spying scandal has made European companies (particularly in SAP's home country of Germany) suspicious of using cloud services hosted in the United States, such as Amazon's. IBM has over a dozen data centers in Europe and is in the middle of building 15 more outside the US, too.
With this agreement, SAP pushes its database out on a cloud around the world. And IBM gets some bragging rights over Amazon.