SAP, promising transformation, kicks off its cloud computing push

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Christian Klein, the Chief Executive Officer of software group SAP, has launched a campaign to encourage customers to move operations to the cloud, a change that has attracted short-term annoyance to investors but one that he hopes will pay off over time.

Mr Klein, 40, in sole charge at SAP since April, has adopted a subscription-based service version that creates predictable revenue rather than the lumpy up-front cash flows from software licences.

SAP – the leading supplier of “mission-critical” apps that 400,000 companies use to run finance, personnel, logistics and e-commerce – has traditionally run applications in on-premise servers powered by its proprietary database.

Now it’s encouraging a version of its most recent S/4 HANA information engine that is hosted on distant cloud servers, offering improved connectivity with its own apps and – if customers choose – these of its rivals.

Ahead of the launch event, called “Rise with SAP”, Klein pitched the notion of a deeper transformation that would empower clients like industrial group Siemens to redesign business processes from end to end.

“It’s much more than just a technical migration,” Klein told waiting reporters in a briefing.

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As an additional teaser, SAP is offering improved business process intelligence functionality to crunch data and analyse whether companies are configuring operations at the most effective way.

SAP said it was taking over Berlin-based technology start-up Signavio, adding a “cloud-native” dimension to its ability to help clients “understand, improve, transform and manage their business processes at scale”.

Terms were not disclosed for the deal, expected to close early 2021 subject to regulatory approvals. Bloomberg, which first reported the deal, cited sources as saying it valued Signavio at about 1 billion euros (approximately $1.2 billion).

Klein abandoned his medium-term profit targets last fall when he declared SAP’s cloud venture, cautioning that its business would take longer than expected to recover from the global COVID-19 pandemic.

That announcement, which came with a third-quarter earnings miss, ignited the largest drop in SAP shares in a production, inducing SAP to shed its mantle as Europe’s most valuable tech business.

Management upheaval has become 2021 with top customer care executive Adaire Fox-Martin departing earlier this month after SAP reported preliminary 2020 results before schedule.

The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Douglas Busvine. Editing by Edmund Blair and Jane Merriman.

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