SAP sees cloud, support revenue overtaking software in 2018

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.

By 2017,  SAP expects its  cloud subscriptions and support revenue to be close to its software license revenue, and to exceed software license revenue in the next year, the company said Friday while announcing its financial results for 2015.

The growing cloud and services focus shift of the company is expected to have an impact in 2017 itself when cloud subscriptions and support revenue and software support revenue are expected to account for up to 65 percent of revenue in 2017.

The company has also raised its forecast for 2017 to reflect both the current exchange rate environment and  business momentum. It now expects revenue in 2017 to increase to up to €23.5 billion, as against a guidance of up to €22 billion of revenue last year.  It did not change the upper end of its guidance for operating profit.

The company has also not revised its revenue target of up to €28 billion of revenue in 2020. In the quarter ended Dec. 31, the company reported profit of €1.2 billion on revenue of €6.3 billion.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?