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 this Cloud Wars Minute, Bob Evans explains how SAP intends to become the leader in the cloud ERP space and defines how the sale of the company’s share in Qualtrics could help them achieve that.
Highlights
00:33 — Within the Cloud Wars, a segment that is “heating up” is the cloud ERP wars. Bob believes that the cloud ERP market will turn out to be the largest software enterprise application category the world has ever had, with the top two competitors being SAP and Oracle.
00:56 — On its most recent earnings call, SAP disclosed that it’s looking to sell a huge stake in Qualtrics. The company feels like it can sell its stake in Qualtrics for a few reasons:
- It will allow Qualtrics to flourish on its own
- SAP can continue to do business the way it wants
- It will “build up the war chest” for SAP’s Cloud ERP
01:49 — Looking at the cloud ERP business, there are several reasons that SAP and Oracle are both battling to be the leaders of this market:
- SAP still has between 20,000 and 25,000 on-prem ERP customers that haven’t — or are barely thinking about — moving to the cloud
- SAP is finding that small and mid-sized businesses are the perfect target for the new cloud ERP system — a huge market opportunity that both SAP and Oracle are pursuing
- There are great opportunities to “pull along sales” of HCM, CRM, and industry-specific solutions around the ERP hub
03:17 — On SAP’s earnings call, CEO Christian Klein highlighted how the sale of Qualtrics could “free up investments,” allowing the company to “double-down on our core,” which is the S/4HANA Cloud. In Q4, the S/4HANA Cloud revenue was up 101%. Bob adds that Klein’s “single-minded leadership” and courage have the ability to boldly shape and remake who SAP is and what it does. This is a “great move by SAP and certainly gives us a little bit of foresight into the incredibly competitive cloud ERP market that’s looming.”
