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SAP becomes one of the most successful enterprise cloud companies

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SAP shows strong growth in cloud services market

In its press release to announce the Q1 2014 earnings, SAP mentioned that its annual cloud revenue run rate is now approaching $1.5 billion, which is a growth rate of 38% over the same quarter last year. During the conference call to announce the earnings, SAP mentioned, “We have over 36 million users in the cloud, easily the most successful enterprise cloud company in the world from the user adoption perspective. Unlike our cloud competition, we offer the breath and depth of functionality that allows companies to run their entire business. We’re running industry-specific mission critical processes in the cloud, which our competitors just don’t do.”

Cloud Services Spending

Cloud services market poised for a strong growth

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According to IDC, worldwide spending on public IT cloud services will increase from $47.4 billion in 2013, to $107 billion by 2017—a compounded annual growth rate of 23.5%. Some ETFs such as First Trust ISE Cloud Computing Index Fund (SKYY) and SPDR Technology ETF (XLK) have a substantial stake in cloud players. To leverage the cloud services market growth, many tech players are quite excited to invest in this market. In March this year, Google (GOOG) took a big step in announcing that it’s slashing its cloud service prices by 30% to 85%. A day after this announcement, Amazon (AMZN) followed Google by slashing its cloud services prices by 10% to 65%. Google claimed that cloud network operators aren’t cutting average prices quickly enough by following “Moore’s Law.”

SAP’s cloud solution caters to different industries’ needs

On the topic of providing its services to different industries, SAP’s management mentioned, “We help retailers with omni-channel, we help banks with corporate-to-bank connectivity, we help insurance companies with international regulatory compliance, we help professional services companies manage business process outsourcing and we do all of this in the cloud, which our cloud competitors simply cannot do. And significantly, we are the first to do all of this in real-time in the SAP HANA cloud. In Q1, approximately 60 customers including Nestlé have made the strategic decision to run core business processes on the HANA cloud platform. Our new HANA cloud subscription allows companies to do all of this without any upfront CapEx.”

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