Delivering hypergrowth in the cloud as its traditional business begins to decline, SAP today predicted that its cloud revenue will triple over the next three years with the addition of its Qualtrics acquisition and the emergence of the “experience economy.”
“With Qualtrics joining SAP, we are now poised to revolutionize the business software industry with Experience Management,” said CEO Bill McDermott in the company’s earnings release, outlining the new capabilities SAP expects to gain from its mid-November $8-billion agreement to acquire Qualtrics.
McDermott’s claim about revolutionizing the industry has considerable credibility as the addition of Qualtrics gives SAP the opportunity to achieve something the enterprise-software industry has long pursued: the seamless interconnection of consumer demand to supply chain and fulfillment.
SAP believes Qualtrics will add the consumer-experience dimension, and serve as a perfect complement to the new CRM strategy that SAP rolled out early last year. That strategy promises a more-complete view of the customer by combining traditional CRM data with supply-chain data from the company’s massive ERP business.
That’s a strategic view that I’ve endorsed in a recent piece called SAP Using Blockbuster Qualtrics Deal to Redefine the Software Industry.
That new approach to business software, McDermott said, puts SAP in the leadership spot “at the forefront of the experience economy.”
It’s a bold outlook, and although SAP remains far behind market leader Salesforce, SAP’s Q4 cloud performance gives the company good reason to be optimistic:
- S/4HANA: the software formerly known as ERP boosted its customer count by 33% in Q4, pushing the total up to 10,500 customers. Here’s how SAP is now defining S/4HANA: “It detects patterns, predicts outcomes and suggests actions empowering companies across all industries to reinvent their business models for the digital economy.” Meanwhile, in this huge and hotly competitive market, archrival Oracle says it’s betting the company on its Cloud ERP business, which it said grew 44% in its most-recent quarter.
- HCM: SAP didn’t cite any revenue figures for this segment but said it added 250 new customers in Q4 for its flagship SuccessFactors Employee Central offering, bringing the total number to 3,000.
- C/4HANA: SAP’s Customer Experience suite reported revenue of $398 mllion, up 52%, and incorporating the Callidus acquisition. SAP said C/4HANA “connects demand to the fulfillment engine in one end-to-end value chain.”
- Business Network: SAP’s commerce, expense, and workforce-management applications boosted revenue by 26% to $822 million.
While SAP’s stock price took a beating due to a miss on profits, the big priority for SAP’s cloud business these days continues to be revenue growth—and by posting another 40% year-over-year increase, SAP continues to prove that it has the people, vision and cloud services to maintain its #4 slot in the Cloud Wars Top 10.
Disclosure: At the time of this writing, SAP is a client of Evans Strategic Communications LLC.
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