SAP CLoud Results Image by Gerd Altmann from Pixabay SAP has revealed its Q4 and full-year 2021 results and also revealed that it has acquired a majority interest in working capital management firm Taulia. The full-year results show a shift that indicates the SAP cloud strategy is starting to gain steam. While total revenue growth was a slow 2% to €27.842 billion, cloud revenue soared by 17% to €9.418 bn.  Importantly the current cloud backlog stands at €9.448 bn, up 26%.

S/4HANA is starting to see huge traction, boosted by SAP RISE and the early case studies. Other firms appear to be making decisions after the postponements earlier in the pandemic. The backlog for S/4HANA was up 84% to €1.707bn and revenue up 46$ to €1090. It is still early days, and there are many complex implementations to complete.

S/4HANA added 1,300 customers in Q4 alone, with 18,800 committed and 13,100 live by the end of the quarter. Perhaps surprisingly, SAP claims that 50% of S/4HANA customers are net new. However, it did not reveal the nature or location of these customers.

Christian Klein, CEO SAP
Christian Klein, CEO SAP

Christian Klein, CEO, commented: The magnitude of our cloud strength is evident. More and more companies are choosing SAP to help them transform their businesses, build resilient supply chains and become sustainable enterprises as they move to the cloud.

“This momentum is reflected in the tremendous success of “RISE with SAP”, our signature cloud offering, as well as excellent growth across our entire portfolio. Our growth acceleration points to even greater potential ahead”.

Working Capital Management

SAP also announced the purchase of a majority stake in SAP partner Taulia. The deal sees JPMorgan retaining its stake in the firm that offers three solutions in the cash conversion solution.

  • Payables Solutions: These include supply chain finance and dynamic discounting
  • Receivable solutions: Seller led, they enable businesses to receive early payment of invoices
  • Inventory solutions: These provide short term funding to purchase inventory and overcome cash flow issues.

SAP CFO Luka Mucic commented: “Taulia strengthens our portfolio and adds value to a point that is key to every company: financial flexibility and stability. With that, they contribute to making supply chains more resilient.

“By combining the deep working capital management expertise of Taulia with SAP’s broad CFO solution portfolio and the integration into our core business software and Business Network solutions, we are well positioned to become a leader in working capital management. We will offer these capabilities at scale to help businesses improve their financial position and seize growth opportunities.”

Taulia will complement the solutions offered within SAP Ariba. It is already SAP Gold certified for SAP ECC ERP and SAP S/4HANA. Like Qualtrics, Taulia will remain an independent company and continue to offer its solutions for a wide variety of competing ERP solutions.

Though 80% of Taulia customers use SAP, one wonders what emphasis they will show on other vendors like Infor and Oracle. Cédric Bru will remain CEO of Taulia. SAP CFO Luka Mucic will become Chairman of the Board.

Cédric Bru, Taulia CEO, said: “I am delighted by our combination with SAP and its ecosystem to serve more businesses and contribute to SAP’s vision. Cash is the oxygen businesses need to breathe during challenging economic cycles and growth sprints. Coming together with SAP will help accelerate Taulia’s mission of helping businesses thrive by unlocking liquidity trapped in supply chains.”

Sustainability is still a hot topic.

SAP also continues to drive the sustainability agenda, both for its clients and within the organisation itself.  Already this year it launched SAP Cloud for Sustainable Enterprises. The suite of solutions enables organisations to manage sustainability performance.

It is also on track to reduce carbon emissions to net-zero by 2030, 20 years ahead of originally planned. It reduced its carbon emissions by 25kt in 2021 to 110kt. Its updated hybrid working model and the travel restrictions continue to contribute to this. As those restrictions lift, the question is whether SAP can maintain the reduction?

Enterprise Times what does this mean

Klein is overseeing what now seems an inevitable transformation of SAP into a cloud company. It has taken longer than many would have hoped for, but the initiatives such as RISE have made a difference.

Importantly it has not relied on just ERP to deliver on its promise of the intelligent enterprise. The acquisition of Taulia is a forward-thinking acquisition as companies continually face cash flow challenges in an era of volatility that requires agility. This is also the second investment in a significant software vendor this year following its minority investment in Contract Intelligence and CLM, Icertis

Two other things of note, one positive and one potentially concerning, were two metrics SAP revealed. Its customer Net Promoter Score (NPS) increased by 6 points to 10 during 2021. Customers are getting happier. However, the employee engagement index dropped by 3 points to 83%, still high but at the lower end of its intended range. SAP will want to increase this as its retention rate is also falling. In 2021 it was 92.8%, down 2.5% from 2020.

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