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In today’s Cloud Wars Minute, I discuss how SAP continues to outperform its competitors despite a broader slowdown in enterprise app demand.
Highlights
00:16 — SAP has been distinguishing itself over the last few quarters as one of the high flyers in the enterprise apps business. Over that same period of time, throughout the second quarter of this year, we’ve seen Salesforce, Oracle, and Workday, the other top applications providers, say that they are experiencing slowing demand. So what’s going on?
01:18 — SAP Chief Financial Officer Dominik Asam said, “We are aware that there are some companies that are slowing down some of their software buying. We are not experiencing that.” He said, “We’re keeping a close watch, we’re not getting overconfident.” In Q2, its Cloud ERP Suite revenue was up 33%, overall cloud revenue up 25%, and current cloud backlog was up 28%.
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02:40 — Workday, in its most recent quarter, had subscriptions up 19%, right on target. However, CEO Carl Eschenbach said, “We see signs of customers slowing down their decisions.” Salesforce, for the year, is guiding to revenue growth of only 8% to 9%. Oracle’s last quarterly report said that cloud apps’ total revenues were up 10%. There was nothing specifically about customer slowdown.
03:35 — I took away three specific reasons SAP’s been able to continue to grow at this very heady rate. First of all, Business AI is doing very well. Second, the movement of their 20,000+ on-premise customers to the cloud is accelerating. Third, Klein gave a lot of credit to their strong ecosystem.
04:51 — I would just caution anybody who is thinking, “Oh, well, this is all just a product of those on-prem customers deciding to move into the cloud now.” I think that’s way oversimplified. There’s an interesting dynamic here in the enterprise apps market about who’s staying hot and who is cooling off.
