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SAP makes inroads in cloud market with 103 percent growth in bookings


German software-maker SAP have said cloud computing yielded strong returns for 2015 and promised a bright future as the company released a preliminary take on its 2015 finances.

New cloud bookings — which the company bills as “the key measure for SAP’s sales success” in the area — grew by 103 percent for the full year.

“We decisively beat our full-year guidance for cloud and software revenue,” said Bill McDermott, the company’s chief executive.

“SAP gained significant share against core and best-of-breed competitors.”

He added that the figures give “us tremendous confidence in our business in 2016 and beyond”.

Overall, the company saw an 18 percent jump in revenues for 2015, for a gross of €20.8 billion. However, earnings before interest and taxes fell by 2 percent to €4.25 billion.

The company said the drop could be attributed to the tightened margins as the company shifts its primary focus to its cloud offerings. It said it expected 2016 profits to come in at between €6.4 billion and €6.7 billion, depending on the accounting methods used.

Over the last few years, the company has been revamping its flagship Business Suite to refocus the business towards delivering cloud-based software and applications rather than on-premise ERP solutions.

The company cautioned the figures are preliminary. An official release of the company’s annual data is set for January 22.

The preliminary results follow strong third-quarter results reported in October last year, which was also fuelled by growth in cloud revenues and its SAP HANA database offering. At the time, the software company reported cloud subscriptions and support revenue grew 116 percent year on year to €600 million, while new cloud bookings, the key measure for SAP’s sales success in the cloud, doubled in the third quarter to €216 million.

The ongoing focus on cloud by SAP forms part of the company’s five-year outlook, which was outlined early last year. SAP believes its cloud computing business will equal the software unit in size by 2018, and will eventually help the company deliver better profits in 2020.

In fact, SAP revealed that the Australian and New Zealand market are leading the charge in cloud adoption, with ANZ managing director John Ruthven previously telling ZDNet the two countries are “punching above their weight”.

“They push the envelope in terms of taking on new technologies and really driving trend. When you boil that down to cloud, if you look at one of the sectors many would regard as conservative regarding technology, the public sector has one of the big proponents of cloud, and one of our big customers in terms of cloud solutions,” he said.

Part of the company’s transformation has however seen SAP axe over 2,000 positions globally, which Ruthven said was part of SAP’s strategy to remain flexible. He added that there were plans to increase company headcount by the end of 2015 above the initial amount the company started with at the beginning of the year.

“We’re very optimistic around the transition of the company and the part we play. We have a very innovative customer base in Australia; we are well positioned and we’ll continue to do well,” he said.

“At a leadership level, we are very focused on the simple equation of ‘having highly engaged teams or employees drive superior outcomes’ and getting that right.”

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