SAP has been slow to move many of its products into the cloud. Although the company has allocated a higher percentage of its profit margins into cloud technologies, many analysts feel like SAP has lagged behind the competition. Perhaps SAP wanted to make a grand entrance in to the SaaS market? Steve Lucas is SAP’s president of platform solutions. In an interview provided to the Wall Street Journal, Lucas mentions, “It’s very, very clear that a cloud offering as a subscription is what customers want.”
SAP’s move to the cloud marks an important shift in this company’s future. SAP has made its mint in selling enterprise resource planning software. Think about companies like Coca Cola who utilize supply chain solutions in order to make sure they are meeting fulfillment requirements. These operations are all powered by SAP. When you factor in the cloud delivery method, it becomes easy to see how and why organizations would be more willing to consider SAP for their inventory management and financial data.
SAP’s business software is the lifeblood of many of the world’s largest organizations. This important step into SaaS will prove to be profitable if current trends hold steady. Last year, SAP’s revenues grew just 3% on traditional software sales. Reported revenues from cloud related and online sales rose 53%. This new profit vertical is the future of SAP. SAP’s Lucas went on to say, “It’s still going to take time for this shift to happen.”
SAP will be able to hit a broader market by delivering Software as a Service. Small to medium firms that may have thought SAP’s solutions were not for them are now faced with the realization that the cloud version of SAP’s popular software may be the right fit. Being able to leverage SAP’s popular business suite to operations of all size will definitely help SAP’s bottom line as well as increase international brand awareness of the German software creator.