​SAP plans CRM challenge as cloud computing business leaps forward

Cloud revenues top €1 billion as the European software giant targets CRM next.
Written by Steve Ranger, Global News Director

Inside an SAP data center

Image: SAP

SAP's cloud computing revenues have topped €1 billion in a quarter for the first time, prompting the company to make bolder plans for markets like CRM.

The European software giant said cloud subscriptions and support revenue grew 18 percent year on year to €1.07bn in its first financial quarter, while its software revenue dropped 10 percent to €625 million. Cloud and software revenue grew one percent year on year to €4.35bn, with total revenue flat at €5.26bn.

SAP's strategy is to grow its cloud subscription business and move away from the less predictable business of selling software licences. But while the cloud business is growing fast at €1bn, it's still less than a third of the size of SAP's software licence and support business, which is worth €3.2bn.

SAP said cloud subscriptions and software support now account for 71 percent of its revenue.

See more: Special report: The future of Everything as a Service (free PDF)

The enterprise software company also gave an update by product, revealing that S/4HANA now has more than 8,300 customers, up 43 percent year on year. In the first quarter, approximately 400 additional customers signed up, including Swiss Post. Some 40 percent of these sign ups were new customers. The company highlighted MacMahon Holdings and Detecon International as S/4HANA Cloud customers in the first quarter.

SAP also said its customer experience packages had "achieved triple digit year-over-year growth in new cloud bookings" with new customers including Jaguar Land Rover, Coca-Cola, and Unilever.

SAP SuccessFactors Employee Central ended the quarter with more than 2,400 customers and client wins including CaixaBank and Reckitt Benckiser Group plc, HiPP, San Francisco Unified School District and Intesa Sanpaolo. Airbus, DBS Informatik and Thyssenkrupp are among the customers that adopted SAP Leonardo in the first quarter, the company said.

See more: What is cloud computing? Everything you need to know from public and private cloud to software-as-a-service

In January SAP bought Callidus Software to bolster its customer relationship management (CRM) package. SAP said combing S/4HANA's fulfillment capabilities with CallidusCloud's sales performance management configure-price-quote offerings "will enable customers to close deals faster, drive higher volume and bigger deals and accelerate sales productivity."

"From this position of immense strength, look for SAP to be bolder than ever in markets like CRM," said a bullish CEO Bill McDermott in a statement.


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