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It's a matter of when, not if, customers move to the cloud, SAP tells investors

That's news to some as analysts claim on-prem will be here for the foreseeable

SAP is telling investors that customers' migration to the cloud is only a matter of when – not if – despite evidence to the contrary from users, analysts, and other third parties.

During a call with investors, Scott Russell, SAP executive board member for customer success, said the company's large customer base, which includes many companies running their business on its ERP systems for decades, had "already made the decision to move to the cloud."

In October 2020, SAP promised investors it would accelerate users' cloud adoption following a reset of its forecasts and a 23 percent fall in its valuation. The following January, it launched RISE with SAP, a commercial offer that promises to lift and shift customers to its cloud with bundled SIs, hyperscalers and consultancy deals – the German software giant fronting it all with "one hand to shake."

Following the company's results for calendar Q1, released today, Russell told investors it was a matter of how and when, not if SAP's customers would move to the cloud.

"What is really clear is their journey will differ," he said. "With the move with Rise, when we announced that it wasn't just a target architecture of being in the cloud, but it was helping customers on a transformation journey that fit their landscape. Some will have a longer period of time and leveraging their on-premises architecture; others go straight to a greenfield in the cloud using our public addition."

The message contradicts the views of customers talking to The Register and analyst Gartner.

"SAP should listen because not all the big customers will move to the public cloud because they don't have the kind of standardization that SAP tends to offer there," said Sebastian Westphal, board member for DSAG, the powerful German-speaking SAP user group.

Christian Hestermann, Gartner senior director and analyst, told The Register earlier this month that while it was hard to rule out all customers eventually moving to the cloud, many companies with complex environments struggled to see the benefit in the transition.

"The idea that everybody will be moving there, more sooner than later: that is certainly wrong," he said.

At the same time, Bernd Engist, CTO of third-party software vendor Avantra, agreed that some SAP users, especially in the manufacturing sector, would be almost certain never to move to the public cloud.

"Some clients will never move to the public cloud for data protection reasons," he said.

Speaking to El Reg, DSAG also raised concerns about replicating on-prem customizations in the cloud, which requires ABAP Cloud, based in SAP Business Technology Platform (BTP), the cloud replacement for application runtime environment NetWeaver.

Westphal said users were concerned they would pay ongoing subscriptions for services in the cloud which replicate customization they had already created on-prem.

But SAP CEO Christian Klein told investors BTP would help boost SAP's cloud revenue.

"Our own services organisation [and] an ecosystem of over 500,000 SAP consultants out there: they are [helping] to move from NetWeaver to BTP," he said. "We are not only lifting and shifting ERP and supply chains to the cloud, we also transforming those and reducing complexity. When the whole application logic sits on BTP [it is] the easiest thing to build all of these industry… extensions on the platform which drives consumption, adoption... [and] with that, more and more cloud revenue. The BTP is one of the biggest growth assets we have in the years to come."

In its first quarter results, SAP posted 10 percent revenue growth compared with a year earlier to reach €7.44 billion. Operating profit fell 45 percent to €803 million, owing partly to the increase in share-based compensation. ®

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