M+E Connections

Strong cloud demand again provided SAP with a lift in its first quarter (ended March 31), this time given an additional boost by the promising start for its RISE with SAP comprehensive service for digital transformation, company executives said April 22 during an earnings webcast.

Cloud revenue grew 7% in the quarter from a year ago to 2.14 billion euros using International Financial Reporting Standards (IFRS), the company said. That was despite the continued impact of global travel restrictions due to the COVID-19 pandemic on SAP’s Concur Software-as-a-Services (SaaS) business, it pointed out.

“This was just an amazing start into 2021, and now our performance clearly confirms our strategy to drive business transformation in the cloud,” according to SAP CEO Christian Klein. “We saw competitive trends in our entire cloud business, clearly winning in a growing market with strong order entry growth across our portfolio,” he said.

RISE With SAP is “already a game-changer” and is “off to a great start,” he told analysts. “Only two months after market introduction, it’s the best offering in the market for business transformation,” he said, adding SAP is “seeing massive early success, having already closed more than 100 deals in Q1 alone.”

Meanwhile, “on the back of strong new cloud business and an uptick on renewals, current cloud backlog growth reaccelerated sharply,” he said. “Looking at the bottom line, we achieved the highest Q1 operating profit in our history. But this quarter was one of the strongest quarters in the history of SAP.”

He called Q1 a “blow-out quarter in the cloud,” explaining: “We saw the fastest growth in new cloud business in five years, which boosted our current cloud backlog up 19 percent, a sequential acceleration of 5 percentage points” from Q4.

SAP now has more than 16,400 customers wanting SAP S/4HANA, its core enterprise resource planning (ERP) solution, he also said. “In the first quarter alone, we saw more than 250 wins replacing competitive solutions underlining our relentless focus on customer value,” he noted.

As of Q1, S/4HANA Cloud had “achieved current cloud backlog of more than” 1 billion euros and also shows “momentum,” he said. During Q1, S/4HANA was the “cloud category with the largest new business contribution and, amidst the impact of COVID, revenue and current cloud backlog were up 43 percent,” he told analysts.

“And that’s just the beginning of the journey. Keep in mind, we only launched RISE with SAP” at the end of January, he said.

SAP has also “further strengthened our relationship with Google,” he told analysts, saying Google is migrating its financial systems to S/4HANA after already selecting Qualtrics, a company that SAP acquired last year, and went live on SAP Ariba, SAP’s American software and information technology services business. “We continue to expand our work with Google Cloud to support joint customers in their transformation to become intelligent enterprises” also, he noted.

“Similarly, Toshiba, selected SAP as the vendor of choice and saw tremendous value in replacing their legacy financial systems with SAP,” he said, adding: “SAP is now front and center of Toshiba’s global transformation.”