Christian Klein’s remarkable transformation of venerable SAP into a high-growth cutting-edge powerhouse took another massive step forward in 2022 as full-year cloud revenue jumped 33% to $13.69 billion and now makes up 40% of the company’s total revenue.
At the forefront of SAP’s cloud surge is its S/4HANA Cloud ERP modular suite, whose Q4 revenue spiked 101% to $720 million. S/4HANA Cloud represents the foundation of SAP’s future for a few key reasons:
- The company is positioning S/4HANA Cloud as the ultimate destination for SAP’s approximately 25,000 on-premises ERP customers
- In a separate category, S/4HANA Cloud has also kicked open a huge new opportunity among small and mid-sized businesses, with those customers making up a big chunk of S/4HANA Cloud’s revenue
- The modular architecture of S/4HANA Cloud, plus the refactoring of all of SAP’s apps onto its business technology platform, makes it much easier and more beneficial for customers to deploy HCM and CX apps in concert with the cloud ERP suite
- The company’s novel RISE customer-engagement program has proven to be a huge success by simplifying the overall ERP-deployment process and giving customers access to powerful insights into how to optimize that entire deployment
A few other noteworthy numbers for Q4 and the entire year:
- “Cloud current backlog” is $13.11 billion, up by 27%
- “Total cloud backlog” is $37.28 billion, up by 35%
- For S/4HANA Cloud, “cloud current backlog” is up by 86% to $3.47 billion
- PaaS revenue, of which the business technology platform is a major component, was up 53% to $1.73 billion
I’ll have more insights into SAP’s Q4 and full-year results next week, along with commentary from Klein.
Klein is about to complete his third year as sole CEO, and in light of these excellent Q4 and full-year results, it is hard to imagine how far the company has come since he oversaw his first earnings call in April 2020. At that time, the full global impact of the pandemic was hitting home and SAP’s business was so rattled that it could not offer any guidance into the future of its business.
As I’ve noted before, some pinheads used that occasion to call for Klein’s scalp and the “dinosaur” term was being tossed around frequently.
But Klein never blinked, and he never wavered in his determination to lead SAP aggressively into a cloud-first future. And since that time, quarter after quarter, SAP’s results have steadily improved to the point that it is now one of the two or three fastest-growing major cloud providers in the world, behind #1 Oracle (43% cloud growth) and about on part with Google Cloud.
I believe that SAP’s turnaround under Klein’s bold leadership will become a powerful case study for not just business schools but also for CEOs across every industry who need to transform their companies in the face of massive disruption, vicious competition, and unforgiving technological change.
Well done, SAP!
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