Cloud growth good but SAP should do more, says one analyst

In this SAP news roundup, one analyst says SAP has to do more to truly become a cloud company despite strong growth, and SAP launches a new effort to help SMBs.

Despite SAP's gains across its cloud portfolio, at least one analyst says the German software maker has a way to go before it truly becomes a "cloud provider."

On Thursday, SAP announced financial results for the second quarter of 2014, reporting a 32% revenue increase from its cloud-based applications to $327 million in revenue. Overall IFRS profit was up 2% over the same quarter last year, but was not as large as analysts had expected, and core on-premise software licensing was down 2%.

SAP's cloud applications total subscribers now exceed 38 million, the most of any enterprise cloud vendor in the industry today, according to SAP.

The numbers point to "encouraging growth" for SAP's cloud efforts, but there is still much more to be done if SAP wants to become the cloud company SAP says it is, according to one analyst.

"The leadership team is committed to driving a wider transformation but I still have some concerns that it is underestimating the level of change involved. I still see sales teams pushing clients to buy software they don't need, and I still read SAP spokespeople distancing themselves from failed customer projects," said Forrester analyst Duncan Jones, echoing similar criticisms he's made in the past.

"That's more important evidence to me than the self-congratulatory statements in earnings releases. SAP is on the right track but has a lot of work to do," Jones said.

SAP also claimed healthy growth of its SAP HANA database technologies, including a bump of 200 more customers running the SAP Business Suite on HANA, compared with last quarter.

"I also see a lot of interest in SAP HANA. I can't comment on it from a technical point of view, but from a licensing [point of view] there are two ways to buy it -- as a percentage of the value of the applications you're running on it, which is a very good way to license it, or standalone based on memory volume, which is an unacceptably dangerous way to buy it," Jones said.

"My advice to clients is to avoid the latter model at all costs, unless you can build in some secure safeguards against exponential cost increases as your memory needs grow."

SAP launches new division to help SMBs

Over the years, SAP has continued to drill down into the small and medium-sized business (SMB) market, offering new applications and programs aimed at helping big enterprises' smaller cousins.

As a continuation of that effort, SAP announced on Thursday that it's launching the SMB Solutions Group, a new division aimed at providing SMBs with a one-stop entity that can help address their problems and come up with software and other strategies more specific to their size of organization. The new 500-person group will also provide a means to help accelerate adoption of SMB-specific products, such as the SAP Business One ERP software application that runs on the SAP HANA platform.

"With this customer-centric approach, the group will develop the single focus and dedicated approach necessary to help its customers and partners run simple," SAP said in a statement.

The new division will first tackle a comprehensive look at SAP's portfolio for SMBs as it looks to expand on its cloud-based applications that run on the SAP HANA platform, according to SAP.

Bluelock now SAP-certified

Indiana-based Bluelock, a cloud and hosting services company, recently announced that it's now an SAP-certified provider of services for SAP applications.

Next Steps

Interested in moving to the cloud? SAP announces new deployment options for the HANA Cloud Platform

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Dig deeper on SAP trends, strategy and ERP market share

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