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SAP Forecasts 7X Cloud Growth, Previews Next-Gen ERP

21/01/2015 by Sharon Shahzad


SAP CEO Bill McDermott predicts fast growth through 2020, previews S4 Hana, a new suite of "simplified" ERP software.

SAP expects its cloud business to reach 7.5 to 8.0 billion Euros ($8.6 billion to $9.2 billion) by 2020, and it will do so with the help of a next-generation ERP suite called S4 Hana, announced CEO Bill McDermott in an earnings call on Tuesday.

"We expect to grow our cloud business 7X," said McDermott, noting the starting point of 1.1 billion Euros ($1.3 billion) in 2014. "Whether you call it sevenfold or seven times, it's a lot. And we see the organic growth implied in this projection as being totally unmatched for a company of our size and scale in the industry."

Indeed, the higher end of that target would put SAP just shy of the $10 billion in revenue Salesforce has long said it will reach by the end of the decade. Some financial analysts now say Salesforce may hit that run rate by 2019. McDermott did not say whether additional acquisitions would be required to reach these ambitious targets. SAP most recently paid $8.3 billion to acquire cloud-based travel-expense-management firm Concur, and it paid $4.3 billion to acquire the cloud-based Ariba business network.

S4 Hana is based on SAP's in-memory database, app-development, and cloud platform, which has been the cornerstone of the company's strategy since 2010.

"Only SAP can deliver the promise of the perfect integrated, real-time, Hana-enabled enterprise, and that's why we really believe we're on to something big with S4 Hana," said McDermott. "The 'S' is for simple, the '4' is for fourth generation, and the suite running on Hana."

S4 Hana is clearly a bundled collection of modernized and cloud-based apps SAP has refactored and introduced in recent quarters. He said Hana would simplify the apps and ensure low total cost of ownership while the user interfaces will be "Fiori-ized," a reference to the vendor's most modern and mobile-friendly applications. More details on S4 are to be revealed during a formal announcement in New York on Feb. 3.

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