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SAP doubles cloud revenues to €2.3bn in 2015 financial year

SAP saw its cloud revenues nearly double to €2.3bn and 11% of its overall revenue of €20.8bn for the 2015 financial year

SAP has announced 2015 cloud revenues of €2.3bn, 11% of its overall revenue for the 2015 financial year of €20.8bn, and a near-doubling of the proportion of the company’s overall revenue attributable to cloud since 2014.

Cloud bookings are said to be 103% up from 2014 to 2015.

The enterprise software supplier also announced it now has 2,700 customers for its S/4Hana enterprise resource planning (ERP) system, launched in February 2015, up from the 1,300 claimed in the Q3 2015 results. S/4Hana is SAP’s core business applications portfolio, optimised for its in-memory database Hana.

Cormac Watters, managing director UK and Ireland at SAP, said the results demonstrated “no weak areas”, with healthy growth in both cloud and on-premise.

“Cloud adoption is soaring here in the UK market,” he said, adding that “every customer wants to have the conversation” in the area of expense management, represented by SAP’s 2014 acquisition of Concur, a cloud-based technology.

But it is progress in the adoption of S4/Hana that has to be the most significant metric for SAP.

“S/4Hana, as the digital core of SAP, catching a new wave of ERP is of huge interest in the UK and EMEA,” said Watters. He cited Walgreens and Boots moving to S/4Hana as an example. “The UK side of that was prominent in that decision process. And net new customers are looking at S/4Hana straightaway.”

“Cloud adoption is soaring here in the UK market. Every customer wants to have the conversation”

Cormac Watters, SAP

According to SAP’s earnings statement, US-based pharma company Merck “is turning to S/4Hana for fast data access, enhanced user experience, and productivity through simplified business processes”.

S/4Hana is likely to be primarily an on-premise system for the time being. “Most customers will want to move to the cloud in their own time,” said Watters. “There are very few large customers who will move en masse, big bang, to the cloud.

“We are seeing customers looking for us to offer S/4Hana in a public cloud. That’s more of an SME conversation.”

CIO marginalisation

In relation to large corporate customers, Watters, a former CIO himself at global bakery company Aryzta from 2005 to 2010, downplayed the marginalisation of the CIO that is often mentioned in the context of organisations undertaking digital transformation programmes.

In the UK and Ireland, he said, most CIOs are taking on the chief digital officer role. “I’m seeing more CIOs being more business-savvy, and our best interactions with customers tend to be where that is the case. But if you don’t make the move to digital [and away from infrastructure], you will get marginalised.”

He added that SAP in the UK and Ireland is taking on board feedback from the UK and Ireland SAP user group conference in November 2015 that ‘digital’ was being overhyped. “We’ll be dehyping. We have [as an industry] a tendency to use grand terms and to overhype. Customers are utterly more pragmatic. Digital transformation can be hyped to the point where it becomes unachievable for a real customer.”

SAP has drawn fire from Oracle about its cloud properties, such as HR system SuccessFactors, not running Hana. Oracle does make a lot of noise about that, said Watters, and the “absolute intention is to move to Hana. But what I like is that we are customer-driven, and when they see business value, that move will gather pace.”

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In its financial results statement, SAP said that new cloud bookings for its customer engagement and commerce products, which “connect the front and back office in real-time and fulfill e-commerce in one end-to-end value chain”, exhibited triple-digit growth in 2015.

Watters said UK customer interest in e-commerce and customer relationship management (CRM) was strong. More generally, he said, the UK business is a “dominant part of the EMEA jigsaw. Customer satisfaction numbers have grown too.”

The SAP results statement showed that the EMEA region had an 11% increase in cloud and software revenue, including double-digit software licence performance in Germany and Russia. Cloud subscriptions and support revenue in EMEA grew by 53%.

The Americas region saw cloud and software revenue rising 27%, while the Asia-Pacific and Japan region had cloud and software growth of 18%.

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