cloud performance

cloud revenue

Strong Cloud Revenue Propels SAP in Q1 SAP opened 2024 with a strong start, the first quarter results laying a solid foundation for the remainder of the year. The strongest growth area was the current cloud backlog (CCB), which grew 28% at constant currencies to €14.2 billion. This was followed by cloud revenue with a 25% increase at constant currencies to €4 billion. SAP also saw strong growth in Cloud ERP Suite revenue that increased 32% at constant currencies to €3.2 billion. With this performance SAP has confirmed guidance for the full year as well as 2025 financial ambitions. Cloud ERP Suite revenue, a new metric SAP started reporting this quarter, refers to the portfolio of software-as-a-service (SaaS) and platform-as-a-service (PaaS) solutions tightly integrated with core ERP solutions, included in packages like RISE with SAP. The following offerings contribute to Cloud ERP Suite revenue: SAP S/4HANA Cloud, SAP Business Technology Platform (BTP), core solutions for HR and payroll, spend management, commerce, customer data solutions, business process transformation, and working capital management. SAP earlier reported separately on SAP S/4HANA Cloud revenue, but it made up only a portion of what is now the broader Cloud ERP Suite reporting number. SAP will also report a Cloud Extension Suite number including the remaining SaaS and PaaS solutions that supplement and extend Cloud ERP Suite. While there are no specific numbers in the quarterly report, Klein emphasized that business AI influenced many first quarter deals. This was also underscored by both Klein and SAP’s Chief Revenue Officer, Scott Russell, who highlighted that AI is a topic of discussion in all C-level conversations occurring today. But Klein also emphasized that there are now 27,000 customers using business AI although most of these are likely to be using the embedded AI scenarios within solutions like SAP S/4HANA where there are over 200 AI use cases available today. For customers that have remained on the fence about cloud ERP adoption, the window is rapidly closing on moving to SAP S/4HANA outside a cloud environment, if it has not already closed completely. Cloud ERP Suite is now the sole focus of the SAP customer success team and CRO, Scott Russell. Organizations running any on-premise ERP systems are being considered as potential opportunities to increase cloud revenue at a multiple of the existing on-premise maintenance value. SAP is also exploring selling additional services up to seven times the value of the initial investment as these customers transition to the cloud. SAPinsiders must be prepared for the future as SAP will continue to focus on cloud ERP and business AI use cases connected to the broader suite of cloud solutions. This is where executives have stated that development investments will focus, and updates and announcements only reinforce these statements. This means customers must start preparing for the future, today.

Apr 24, 2024

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5 minute read