SAP does not expect big money from the cloud - just yet

'Server-hugging mentality' still holds sway outside US

Business software maker SAP is drawing up plans to make money from cloud-based services, however it does not appear to be in any hurry.

While many analysts claim that cloud-based services are the future of business software SAP seems to believe no one outside of the US will start making serious money from the cloud for years yet.

Speaking to the Morgan Stanley investor conference in Barcelona today, SAP co-chief executive Jim Hagemann-Snabe said that SAP was debating moving more of its business to the cloud. However, he said that such a change in strategy would only have a small impact on his company’s target of growing sales to more than €20bn.

In fact the move to the cloud will not generate significant sales until 2017, Hagemann-Snabe said.
"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," he said.

"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."

Clive Longbottom, founder and service director of Quocirca told Computing that while SAP might be wrong about cloud being a mostly US phenomenon, it was true that there is resistance from IT managers about placing SAP software onto a cloud environment.

At the moment, IT managers are too dependent on their SAP servers to want to place them in the cloud and worry about them falling over, he said.

“We are seeing some virtualisation of SAP software but it is usually across a few servers, it is not something people want to put in the cloud yet,” Longbottom said.

The fact that SAP is not expecting to make huge amounts off the cloud until 2017 is probably because the company knows that it will take a few years before companies lose the “server hugger” mentality in Europe.

However, it would be a big mistake if SAP believed that it would take a few years before the more conservative Europeans follow the US, Longbottom warned.

“While traditionally the Europeans had been 18 months behind the US, that adoption time had compacted over recent years to just six months. The Nordic countries were often even ahead of the US,” he said.