As SAP continues to deliver impressive cloud growth, it is also making some bold go-to-market moves to build its digital future by excluding on-prem customers from its GenAI and other key innovations and positioning RISE as the hub of customer innovation.
Before getting to the key Q2 cloud-revenue figures, this comment from CEO Christian Klein on last week’s earnings call captures the big new policies the company is making and reflects Klein’s commitment to making SAP a truly cloud-first company.
“Customers are choosing SAP to help them transform their business processes, collaborate across their supply chain, and operate sustainably. RISE with SAP continues to be the preferred choice for customers adopting the SAP portfolio to transform their end-to-end business processes in the cloud,” Klein said in his opening remarks on the Q2 earnings call.
“The success of RISE with SAP is clear. This is SAP’s signature offering which helps customers move to the cloud and transform their business processes at the same time.
“It’s also very important to emphasize that SAP’s newest innovations and capabilities will only be delivered in SAP Public Cloud and SAP Private Cloud using RISE with SAP. This is how we will deliver these innovations with speed, agility, quality, and efficiency.
“Our new innovations will not be available for on-premise or hosted on-premise ERP customers on hyperscalers. For example, new ERP capabilities as well as sustainability and carbon-accounting solutions, plus all our new AI innovations, will only be available in the cloud and delivered via RISE and GROW with SAP,” Klein said.
On top of that, as I analyzed yesterday, SAP is charging its cloud customers a premium of up to 30% for those modern new services and technologies, as I outlined in this Cloud Wars Minute video and in this article headlined SAP Will Charge 30% Premium for Full Cloud-Only AI Portfolio.
For Q2, SAP continued to post very strong growth results for its cloud business’s key elements:
- Overall cloud revenue was $3.68 billion, up 22% in constant currency, matching its Q1 number
- S/4HANA Cloud revenue was $913 million, up 74% and 79% in constant currency, which beat Q1’s cc percentage of 75%
- S/4HANA Cloud backlog was $4.13 billion, up 65% and 70% in constant currency, down from Q1’s blowout figures of 78% and 79%
- Current cloud backlog was $12.81 billion, up 25% in constant currency and matching Q1’s cc figure of 25%
We are rapidly approaching the point where technological leadership and innovation in the cloud will no longer be enough to lead in the Cloud Wars Top 10. That technological strength will need to be matched by superb go-to-market capabilities and innovation, and SAP has moved to the forefront in that respect with RISE and its pricing plan for GenAI and other modern services.
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