Germany’s SAP may speed up shift to the cloud

November 24, 2013 Leave a comment

Germany’s SAP may speed up shift to the cloud

8:55am EST

By Paul Sandle

BARCELONA (Reuters) – German business software group SAP may speed up a shift towards providing its products over the internet in order to tap demand for so-called cloud services and take advantage of Germany’s reputation for data privacy, it said on Friday. SAP and rivals such as IBM and Oracle are dashing to meet surging demand for cloud computing, which allows clients to reduce costs by ditching bulky local servers for network-based software and storage in remote data centers.With the cloud services market forecast to grow 18.5 percent this year to $131 billion worldwide, according to research firm Gartner, competition is fierce and software firms face a challenge to adapt.

“We have a situation now where we see the move to the cloud, particularly in certain markets like North America, happening even faster, and this is a great opportunity for us to revisit whether we should accelerate the move to the cloud,” SAP co-chief executive Jim Hagemann-Snabe said at a Morgan Stanley investor conference on Friday.

He said accelerating the shift could make it a little harder for SAP to meet its 2015 sales target of 20 billion euros ($26.9 billion), but could be beneficial over the medium term.

“This would have impact on the 2015 level, I don’t expect enormous impact but it would have some impact because you are delaying some revenues. However in a (2017) time frame you would have more than that back, so I think it would be the right thing for the company if we had the opportunity,” he said.

In the first nine months of the year, SAP generated 547 million euros in cloud subscriptions and support revenues.

It has a target for revenue of 750 million euros from this field for this year, while aiming for 2 billion euros by 2015.

As well as IBM and Oracle, SAP faces competition from smaller rivals like Salesforce.com Inc and Workday Inc, and the group spent $7.7 billion last year to buy Internet-based computing companies Ariba and SuccessFactors.

Questions about the security of data stored in cloud, and often on servers in many countries, have intensified this year after accusations about spying by authorities from the United States and other countries.

Hagemann-Snabe said the fact SAP was based in Germany, which has some of the most stringent data protection laws, was “absolutely” an advantage in winning new business in Europe and countries such as China.

“I think we have the benefit of being global in the sense that we actually have data centers in all regions,” he said.

“With the investments that Germany, in particular (German Chancellor) Merkel, have done in the relationship (with China), SAP is actually a preferred vendor, so we see an opportunity to use this situation to accelerate our business.”

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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