Cloud remains revenue growth driver for SAP in APAC

Software vendor says its cloud subscriptions and support revenue in the Asia-Pacific region, including Japan, climbed 43 percent for its fiscal 2016, where its total revenue hit US$3.59 billion.

SAP has reported higher revenue in the Asia-Pacific region, where it says a strong SMB (small and midsize business) clientele indicates it has moved past its reputation as a company with expensive and complex products.

The software vendor said its cloud and software revenue for the region climbed 9 percent and 5 percent, respectively, for the quarter ended December 31. Cloud subscriptions grew 54 percent while support revenue increased 48 percent, it said, adding that revenue from software licenses also saw double-digit growth rates in both Japan and India.

For the year, cloud subscriptions and support revenue grew 43 percent, while cloud and software revenue saw a 6 percent growth. Overall revenue for the region touched €3.38 billion (US$3.59 billion), up from €3 billion the previous year.

In a phone interview Tuesday, SAP's Asia-Pacific president Adaire Fox-Martin said Asia-Pacific accounted for 15 percent of the vendor's global revenue. She could not reveal what proportion of its revenue in the region came from cloud. She did say, however, that 61 percent of its total revenue was now "predictable", suggesting a significant subscription-based clientele compared to a traditional software license model.

Some 60 percent of S/4HANA customers added in 2016 also were SMBs, which Fox-Martin described as a key growth pillar for SAP in Asia, especially as these organisations digitise and globalise their business.

Its growing SMB customer base further indicated SAP had left behind its previous reputation as a software vendor with expensive and complex offerings, she said. Through its 45-year history, she noted, the company had gone through several iterations of tech landscapes, from mainframes to where its products now ran on mobile devices.

She added that its software had evolved rapidly alongside market changes and re-engineered to provide "ready-to-use templates" that business customers could utilise quickly. SAP also had made significant investment in tweaking user interfaces and the design of its software stack to reduce cost and complexity for its customers, Fox-Martin said.

Amid a cloud consumption era, she added, the vendor also had learnt to support customers accordingly, for instance, dropping software upgrades at a different level of frequency.

She said SAP aimed to play an advisory role to organisations in Asia-Pacific and support their strategies around digital transformation as well as cloud.

"Digitalisation is reshaping the operating landscape for private and public organisations, [offering] an economy of limitless opportunities for some or a matter of disruption and displacement for others," she said.