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In today’s Cloud Wars Minute, I discuss SAP’s impressive Q3 results and the optimistic outlook shared by CEO Christian Klein during the earnings call.
Highlights
00:23 — Tremendous results for SAP in Q3, but also Christian Klein, CEO of SAP, said, in essence, there’s a lot more to come. “We’re keeping our foot down on the accelerator, and we’re just getting started with this big growth we have in the world of business.” There’s big growth in the world of business AI, of customers moving from on-prem into the cloud, the world of agents, now building that around its Joule assistant, which is now supercharged as an agent, and much more.
00:54 — The Cloud ERP Suite for SAP in Q3 is up 34% to $4 billion. That now makes up about 85% of the total cloud sales, and its cloud backlog, which is an indication of contracted business not yet recognized as revenue, was up 25% to $17 billion, showing that there’s lots of opportunity in the pipeline.
01:26 — Clearly, SAP customers believe in the story that Klein and others are telling. Klein said, “We have a huge number of new customers,” and he gave particular credit to its GROW program, which is the parallel for new customers who have never used SAP before. That’s the parallel to the RISE program for existing SAP customers.
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02:25 — Klein also said 30% of Q3 involved AI purchases, or “business AI,” as SAP calls it. Klein described a huge opportunity in the mid-market, and for that, he said, “We cannot use direct sales force to reach this,” I think this also ties into the reason that SAP asked Chief Revenue Officer Scott Russell to leave. Klein thinks that a lot more of SAP’s business will come through its partners rather than direct sales.
03:54 — There are a lot of moving pieces here, but what came through to me from all of the comments on the earnings call, and balancing those against these numbers, is that Klein is very pleased with what SAP did in Q3, but he believes it is just the beginning of what the company is capable of achieving.
