SAP Expects Cloud to Drive Its Revenue By 2017

by CXOtoday News Desk    Jan 22, 2014

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Enterprise software maker SAP is betting on Cloud computing to grow its revenues in the coming years. SAP plans to increase its total revenue to at least $30 billion in 2017, expecting nearly 10% of its revenues to come from its cloud business. The company will therefore invest more in cloud computing platforms to keep up with a fast-growing market, reads a recent Reuters report.

Rajesh Kumar, Head of Marketing, SAP India tells CXOtoday that globally SAP has been driving innovations around big data analytics, cloud and mobility and has introduced industry specific data analytics solutions over the past few years and is equally bullish on the Indian market in terms of driving innovation with a greater focus on Cloud and Hana in-memory platform.

In recent months, some of SAP’s global customers, which include Coca-Cola, McDonald’s and Vodafone, to name a few and also Indian customers such as NEC India, Hungama Digital and Luminous India, among others have moved to cloud computing. “There are no upfront costs for program licenses, dedicated hardware or installation, offering a much lower business risk,” says Piyush Sinha, GM, Corporate Planning and business management, NEC India adding that Cloud acted as the real differentiator for the company.

Read: SAP awards companies using cloud, mobility, analytics

The Reuters report also confirms that both large and small companies that are moving to SAP cloud solutions are paying smaller license fees over a longer period of time. For SAP, that means income from such services will be spread over more years in smaller chunks but will be easier to predict, it says.

“The pay-per-use pricing model of cloud solution will be a driving factor for company’s future performance due to its cost structure and for its shorter time to market,” says Kumar. He adds that SAP is forming alliances with local system integrators to develop industry specific solutions around its emerging technologies.

In the coming quarters SAP will continue to come up with innovative offerings for specific verticals such as banking, insurance, telecom, utility, automobile, retail and the government and is also in the process of supporting startup companies to scale their business through the adoption and development of new applications on SAP HANA, informs Kumar.

SAP entered the cloud business two years ago after spending $3.4 billion on SuccessFactors and $4. 3 billion on Ariba. Some in the industry believe that SAP may also look out for some strategic acquisition in this space in the coming months.

Meanwhile the cloud services market grew by close to 20% last year, and is estimated to reach over $131 billion by 2017, predicts Gartner suggesting that to remain competitive, companies must come up with innovative cloud offerings to woo customers.