Franck Cohen, President of EMEA, SAP yesterday announced a major shake-up of the UK and EMEA management.
The company announced preliminary results on January 12th, it issued a complete set of financials today.
Speaking with CBR Cohen gave details on its 2014 European performance and his plans for 2015.
"SAP Europe had its best ever quarter in Q4. It managed to grow on a double digit basis with cloud business growth of 80%. Cloud subscriptions grew 59% for the last quarter."
"Of that the UK had a spectacular Q4 showing cloud revenue growth at far above EMEA average. It showed outstanding performance in the cloud. The UK is the clear leader in cloud and we continue to grab market share," said Cohen
"Looking at EMEA, the main growth engines are in our strategic industries. These are financial services, public sector, telco and retail. The focus is on serving these customers through the cloud."
"In strategic industries we have grown 30% on average. One part of the equation is to gain market share. Net new name accounts revenue has grown 30% on average. New name revenue represents more than 20% of software revenue last year."
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SAP reported that cloud growth in Europe outpaced that of the US.
Cohen said: "The reason for the spectacular growth in Europe was that it was starting from a lower base. Most of the acquisitions we made were in the US to their starting point was much higher. Companies are using SAP for development in the cloud much faster in Europe and in Asia but what that is telling us is that when we expose SAP cloud solutions to companies outside the US they are embracing it."
"If I look at adoption in Europe and what is significant is that when I began 2014 and looked at the European market my idea was that cloud revenue growth was going to come from northern Europe not south. But the results were counter intuitive. The Middle East has delivered more cloud revenue than France."
"I think what that means is that in cloud terms there is no longer a differentiation between emerging and mature markets."
Overall the revenue from northern Europe is higher but cloud adoption and cloud growth faster is faster in the South than in the North.
Shifting contract terms for the Cloud Delivery Model – see next page
New contract terms for Cloud Delivery Model
As it shifts to the cloud, Cohen says data and data centre location are of prime importance to its European customers – especially those in regulated industries.
"Our European customers are asking us to have our data centres in Europe and even in specific territories. Primarily this is for security reasons as they are not comfortable with the idea of the data centre being elsewhere. Our European customers are including physical location of our data centres and of the data itself into the contract terms. And they are including terms that they will be supported by people physically located in Europe," he says.
"We’re currently planning and delivering in Europe data centres from which we will be supporting our customers. And it is the same in Russia. We are one of the only [enterprise software companies] to build data centres in Moscow."
Cohen highlights that clearly SAP is not an infrastructure player, it is an enterprise software company.
"We’ve developed a partnership with IBM to use its data centres and signed a contract with HP to use its infrastructure. And no doubt we will do the same with AWS and Google.
We’re building our own data centres for customers that want to deal directly with SAP. But it is not a business for us to have our own data centres."
The cloud delivery model will consist of a variety from everything in terms of hosting in SAP owned and operated data centres where everything is done by SAP to services being delivered by partners. This includes partners with cloud platforms, third party data centre developers and hosting firms. "The infrastructure will develop in response to the need and we can definitely rely on partner infrastructure."
"We want to differentiate from US companies and serve water proof services," he says.
Competition in the cloud
"The situation is like this, we have a very comprehensive suite covering everything from travel expenses, procurement through Ariba, HR with Success Factors and each of these is in our cloud suite – which without doubt is the largest on the market. Now the objective is to move the core ERP business model into the cloud. The new S4 HANA is the ERP HANA for the cloud."
Looking at the competitive landscape Cohen sees most coming from the US.
He says the main competition is coming from the US and those companies still have to prove that they can compete ‘at the level of granularity that we have in Europe’s regulated and legacy markets. I’m sure competitors are investing a lot in Europe, either in new markets or with more people in the field.’
"Customers recognise that it is not easy to have a combination of public, private and hybrid cloud and to run them in real time. So relying on multiple data centres in multiple locations makes it even more complex. Customers know they can rely on us to manage this physical complexity and this data complexity. This move to the cloud is a natural continuity."
2015 and beyond
Asked how he will be judged in terms of success Cohen says: "I want to proof that we can grow cloud and the core business at the same time. I don’t accept that in order to grow cloud it is necessary to cannibalise the core business. Customers want solutions and that requires a combination of both. I want to prove that in Europe."
