Cloud Myth Busting: Myth #5: business in the cloud is not proven
Welcome to the 5th in a series of blogs to dispel myths about SAP and the Cloud. Today we will debunk the myth that there are still no proof points for real business in the cloud.
What is the origin of this myth?
When people think of cloud business, most of them have large consumer web companies like Google or Amazon.com in mind. However, commerce and business on the web goes way beyond end-consumer business, even though it is heavily influenced by it.
Characteristics of a proven cloud business:
- Company Profitability:
- Profitable B2B companies on the web are rare. B2B cloud companies often report low to negative margins. After more than one decade of mixed financial results for cloud businesses and a burst dot.com bubble, many investors recognized that accounting for the cloud economy is different.
- The economy of scale in the cloud, especially while business is growing, works against profitability and caught many promising Start Up´s unprepared. Simply, because in a subscription world, the revenue comes after deal closing (not with closing), often over a long term period. Company´s expenses need to be in synch with the available Cash Flow, not the booked revenue.
- Furthermore, there are few successful companies which have been able to transfer their business partly or fully from on premise to the cloud. SAP is one such example.
- Customer reach, vision and concept dominate the value of cloud business:
- How do you create transparent customer value using cloud services? There are not many positive ROI studies of businesses that moved into the cloud. Often companies find it hard to measure value, because you can´t directly compare cloud subscription with software licenses. Reason being more and fundamentally different, services.
- More important is the fact that most vendors only offer a either/or deployment scenario, cloud or on premise, which immediately moves the “value” needle in direction of a single option. Not an objective framework.
The cloud is providing proven B2B businesses and added business value TODAY:
Before we look at some figures, it is important to understand that SAP´s customers have the choice of deployment. SAP drive a cloud first approachm but it is still the customers choice how fast (if) they adopt the cloud. There is no need for customers to rip and replace existing environments unless there is a good business case.
The cloud option for our clients is driven by demand and individual requirements.Custopmers should adopt cloud based on their business requirementsheir, not because of vendor and industry hype.
This sets the scene for the collection of facts we have put together for you in today´s myth busting exercise. When you look at the world´s broadest cloud portfolio (SAP), you can find many proof points for a successful Enterprise business in the cloud:
- The entire cloud portfolio has attracted 6.000+ customers at a cloud revenue run rate of € 1B+
- More than 33 million end users subscribed to SAP´s cloud services, forming the Industry’s largest cloud base
- The company with the world´s largest cloud deployment has more than 2 million user connected to their SAP Cloud, generating significant business benefits from its cloud deployment
- In Q3/2013 SAP runs again on a three digit growth rate in cloud business.SAP Investor relations; Q3 Earnings Call
- Example of SAP Cloud for Supplier – ARIBA, our industry leading end-to-end procurement solution: It has become THE customer choice in the fast-growing segment of inter-enterprise cloud-based business networks. Like EBAY and AMAZON as an end-consumer selling/buying platform, the Ariba Network is the preferred network for enterprises. In the past 12 months only, 1.2 million businesses from 186 countries have executed over $600 billion of fully automated business transactions (purchases, sales, and invoices) on the Ariba Network. And a new company joins the Ariba Network every 2 minutes (Source: www.ariba.com )
SAP´s cloud portfolio has been defined by the needs of the Line of Business to support the business. Cloud solutions need to be built for business – the needs of business owners. The deployment model “cloud” is an enabler, only a limited business value itself. The business value is created by best in class solutions with Integration to existing business.
At SAP we are proud that we run our cloud built for Business. We have been the leading provider for Enterprise business software for 4 decades – and we are on our way to become the Leader in Enterprise cloud business services. We help our customers and partners to gain competitive advantages and realize business benefits in the cloud.
Interested to read more? Here is our cloud fact book. Next time we will talk about Myth #6: Cloud is for small companies.
Looking forward having you onboard next time again.
Cloud Myth Busting: facts and figures of SAP ́s cloud business
- Myth #0: SAP is not a cloud company
- Myth #1: SAP is not a cloud player
- Myth #2: SAP software is hard to use
- Myth #3: You have to stay on premise – or move to the cloud
- Myth #4: Cloud Myth Busting: Myth #4: Running mission-critical systems in the cloud is not secure
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