Continuing to project and deliver ambitious growth in a challenging economy, SAP CEO Christian Klein capped off a rousing Sapphire Orlando event by boosting the company’s 2025 cloud-revenue target despite saying goodbye to about $2 billion in revenue from the imminent sell-off of its massive stake in Qualtrics.
Let’s put this in perspective:
- 2022: SAP cloud revenue was $12.5 billion and total revenue was $32.5 billion, meaning the cloud made up 38.5% of total revenue.
- 2025: SAP is projecting cloud revenue of $23.7 billion and total revenue of $41.25 billion, which would mean the cloud accounts for 57.3% of total revenue.
Here’s how SAP graphically presented the more-aggressive ambition during its financial analyst meeting during Sapphire:
Where oh where are all the know-it-alls from 2-3 years ago who were declaring that SAP was a woolly mammoth that wasn’t even aware it had two legs in the tar pits? Where are the geniuses calling for founder and chairman Hasso Plattner to get rid of youthful protege Klein?
Despite those moronic declarations, SAP has become one of the fastest-growing major cloud providers in the world and is now very publicly and confidently stating that its cloud business will continue to grow around 23% for the next few years.
I’ll share comments on the boosted outlook from Klein and CFO Dominik Asam in a moment, but first here’s another slide from the financial-analysts meeting that reveals two substantive ideas:
- Shows the booming cloud TAM (total addressable market) that SAP’s pursuing and thereby explains some of the company’s optimism — after all, you can’t get much more bullish than professing in big fat letters to a room full of financial analysts that “We have massive growth potential ahead of us.”
- Sets up an interesting debate between SAP and arch-rival Oracle over which company really and truly is the leader in the cloud ERP marketplace. While Oracle chairman Larry Ellison has said his company’s cloud-ERP market share could be in the range of 90%, SAP tells a totally different story by saying that it and not Oracle is #1 in big chunks of the cloud ERP business.
Here’s how CEO Klein outlined the heightened ambition in a press release announcing the upwardly revised numbers.
“Today’s Ambition 2025 update demonstrates SAP’s momentum in this new phase of our transformation,” Klein is quoted as saying. “Our strong, resilient cloud growth drives accelerating total revenue and operating profit growth. We are increasing our total revenue ambition for continuing operations by close to $4.4 billion, and expect significant further acceleration of revenue growth towards 2025 and beyond.”
I’ll leave you with a final slide presented by Klein that encapsulates much of the work that he and chief marketing and solutions officer Julia White and global head of customer success Scott Russell have been focused on for the past couple of years: laying out the SAP value proposition through the eyes and priorities of its customers.
I’m always amazed to hear some tech-industry executives whine about how their technology is so much better than someone else’s. Don’t get me wrong: great technology is essential. But the key is relevance to customers — and I think this slide hammers home the very legitimate reasons that Klein and SAP believe they can continue growing aggressively in the cloud for years to come: because “our technology focuses on our customers’ biggest opportunities.”
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