SAP Sees Cloud, Support Revenue Topping Software by 2018

SAP Sees Cloud, Support Revenue Topping Software by 2018
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The company has raised its revenue forecast for 2017

German business software maker SAP expects its revenue from cloud subscriptions and support to be higher than its revenue from software licenses in 2018, reflecting an industry trend.

This would be a dramatic shift for a company, which earlier had licenses and support of its business software as its mainstay business. There was considerable skepticism whether it would be able to quickly make the transition to the cloud with a new revenue model based on subscriptions rather than one-time payments.

The market has moved significantly for SAP and its rivals like Oracle from on-premise software and services to applications delivered through the cloud on a subscription model.

In the fiscal year ended Dec. 31, 2015, the company’s cloud subscriptions and support revenue was €2.3 billion (US$2.5 billion), up 110 percent from the previous year. Revenue from software licenses and support was still the key component of its business at €14.9 billion but at 13 percent year-on-year growth did not increase as fast as the cloud business. New cloud bookings, a key measure of SAP’s sales performance in the cloud, increased 103 percent in the full year to €883 million.

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SOURCE: Computer World
John Ribeiro


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