HITS

SAP will invest heavily in artificial intelligence as we enter the business artificial intelligence (AI) era, according to Christian Klein, the company’s CEO. “2023 was a great year for SAP,” he said Jan. 24 during a press conference that was webcast. For the year ending Dec. 31, “we met or exceeded the outlook on all key metrics,” Klein noted.

SAP now has significant business momentum and is “stronger and more relevant than ever,” according to Klein. SAP is “very relevant, especially in business AI,” he said.

But there is “no time to rest” in the technology industry and SAP’s job is to think ahead, he said.

SAP is committed to the opportunities provided by generative AI, according to Klein. The technology “can provide solutions” to many current challenges that SAP customers are facing now, he pointed out.

“We are sitting on very mission critical business data, where 30,000 customers already gave us the consent to use their data to infuse more intelligence on how to better predict sales and optimize inventory,” he said. SAP is “optimizing the whole supply chain” for its customers, he added.

SAP’s ‘Transformation’ Plan

As part of a “transformation program” that was announced by SAP on Jan. 24 also, Klein said the company will invest almost $1 billion in AI by the end of 2025.

In 2024, SAP will “further increase its focus on key strategic growth areas, in particular” business AI, the company said in a separate transformation plan news release.

About 2 billion euros is, meanwhile, being allocated for a new restructuring plan in 2024, Klein said.

However, to “ensure that SAP’s skill set, and resources continue to meet future business needs, SAP plans to execute” the company-wide restructuring program. Most of the approximately 8,000 affected positions at the company are expected to be covered by voluntary leave programs and internal re-skilling measures, according to the company.

Cloud Boosts Q4 Results

In Q4, SAP’s “cloud momentum further accelerated with sequential growth rate increases in both current cloud backlog and cloud revenue,” the company said in its earnings news release. The current cloud backlog increased 25% from Q4 the prior year to 13.75 billion euros and was up 27% at constant currencies, its fastest pace ever, according to SAP.

The SAP S/4HANA current cloud backlog, meanwhile, grew 58% to 5.05 billion euros and was up 61% at constant currencies.

Cloud revenue jumped 20% to 3.70 billion euros and was up 25% at constant currencies, “mainly driven by the growth of SAP’s combined” Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) portfolio, which it said grew 22% and 28% at constant currencies. SAP S/4HANA Cloud revenue soared 55% to 1.03 billion euros and was up 61% at constant currencies, SAP said.

Cloud and software revenue, meanwhile, increased 6% to 7.39 billion euros and grew 10% at constant currencies. Total revenue grew 5% to 8.47 billion euros and was up 9% at constant currencies.

Cloud gross profit jumped 25% to 2.66 billion euros, driven by a strong increase in cloud gross margins, SAP added.