As Christian Klein’s turnaround adventure continues, SAP’s Q2 growth rate of 34% for cloud overall and 100% for S/4HANA Cloud ERP catapults SAP into a stunning new role as one of the fastest growing cloud providers .
Yes, you heard that right: SAP is definitely growing faster in the cloud than Salesforce, ServiceNow, and Workday, and will likely outpace Microsoft and Amazon as well.
We’ll be able to work out those details with more certainty in the next 10 days as Microsoft, Amazon, and ServiceNow report their Q2 results, but my guess is that when the numbers are all in, SAP will be third warmest cloud. vendor in the world, behind only Google Cloud and Oracle, which will benefit from the inclusion of significant revenue from its Cerner acquisition.
One of the key drivers behind SAP’s outstanding overall performance was its S/4HANA Cloud ERP product, whose revenue rose 84% in Q2 to $481 million. Aside from that stellar Q2 number, future prospects for S/4HANA Cloud look very good as its current cloud backlog figure for Q2 increased by a stunning 100% to $2.3 billion.
Of course, at a time when currency exchange rates are playing havoc with the results of US-based tech firms, it is certainly true that the numbers for Germany-based SAP are benefiting from the opposite effect. For example, IBM earlier this week posted cloud growth of 18% but the corresponding constant-currency figure was 24%.
For SAP, its cloud growth rate of 34% would be 24% in constant currency. But such are the fates of life in a global economy, and this currency exchange perspective should not be interpreted in any way to diminish the remarkable success of SAP and CEO Klein.
Let me mention some of the things that Klein has achieved in just two years as the sole CEO of SAP:
- He stabilized the company during a time of great turmoil: He was named sole CEO in early 2020 as the pandemic was just beginning to wreak havoc on the global economy, resulting in the departure of wildly popular co-CEO Jennifer Morgan. I suspect that some leaders are unable to stabilize and unify the company the way Klein has, especially when faced with severe disruption from the outside as well as from within.
- He fought off — for now, at least — very ambitious competition from Oracle, Salesforce, and Workday as those competitors sought to poach SAP customers at a time of turmoil within SAP. The growth numbers I laid out above certainly prove that.
- He turned S/4HANA Cloud from a problem child into a high-growth dynamo.
- He turned SAP into a platform company, with the Business Technology Platform now at an annualized revenue run rate of more than $1.5 billion and a growth rate of 40%.
- He led the launch and rapid growth of the RISE go-to-market program, which became an indispensable part of the overall SAP brand in just 18 months.
- He hired Julia White to be Chief Marketing and Solutions Officer, giving the company much-needed world-class leadership in those areas.
- He is promoting Scott Russell to lead global customer success, which includes sales and go-to-market. Russell has been a major force in reinvigorating the company’s growth, image and attractiveness as a destination for great talent.
- He put together a high-performing company with high-performing growth rates that combined to close the yaps of the ankle-biting “experts” who, just two years earlier, had -cries about how he is unfit and/or unqualified to lead SAP .
I’ll have more details next week about SAP’s strategy and customers and direction from the Q2 earnings call, but I think it’s very important for the world to see that Christian Klein has encouraged SAP to be one of fastest growing major cloud provider in the world.
And the backlog numbers indicate that SAP is just getting started.
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