Welcome to the Cloud Wars Minute — your daily news and commentary show, hosted by Cloud Wars Founder Bob Evans. Each episode provides insights and perspectives around the “reimagination machine” that is the Cloud.
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In today’s Cloud Wars Minute, I share my predictions for the Q3 results of SAP, as they must be at least 20% for the company to maintain its 3-year strategic goal.
Highlights
00:04 — Approaching the release of SAP’s Q3 numbers next week, I believe the company will report cloud revenue up 23% to about $4.45 billion.
00:44 — Its cloud revenue in Q2 was up 19% and I think there are a couple of reasons why it will accelerate. After being primarily on-premise for the past half century and under Christian Klein over the last three and a half years, SAP has accelerated its transformation to being a cloud company. SAP has the opportunity to continue moving its approximately 25,000 on-prem customers to the cloud.
01:34 — SAP has done well under the leadership of executive board member Scott Russell, who is in charge of customer success. New customers to the SAP cloud who have never used SAP before accounts for around 30% of its cloud revenue.
02:07 — The company has a strategic growth plan to achieve by the end of calendar year 2025. SAP expects its cloud business to be almost $24 billion, which will require it to have a Q3 growth rate greater than 20% to fulfill this plan.
02:45 — The two-pronged approach for SAP is to convert its huge number of on-premise customers to the cloud and continue gaining net new customers. It has a full suite of applications to offer customers, including S/4HANA Cloud ERP and its business technology platform.
03:29 — The path SAP wants customers to take as they move into the cloud will be either through RISE with SAP for existing customers or GROW with SAP for new customers.
04:17 — I think SAP is innovating on the technology side and the go-to-market side as well as making strategic moves with extended partnerships. We’ll see if SAP reports 23% to almost $4.45 billion in Q3 next week.
