Thread regarding SAP layoffs

SAP/Cloud services in the mist

Astute Article by FT on SAP/Cloud services in the Mist

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In mythology, people who walk into fog often fail to reappear. As German tech company SAP pushes further into the cloud, top employees are disappearing. The latest was Robert Enslin, head of cloud activities.

His departure earlier in April did not stop the company from upgrading earnings expectations at Wednesday’s first-quarter results. Investor Elliott voiced its approval, but with shares at all-time highs any disappointment will vaporise the activist’s encouragement.

Mr Enslin was in charge of integrating disparate SAP products into a single seamless cloud offering. His departure, along with a number of high-profile programmers, suggests the process has been troublesome.

SAP chief executive Bill McDermott has expanded SAP’s cloud business via takeovers. Since 2015, SAP has spent $44bn. Of that, $36bn was in the US. At the end of last year SAP bought engagement expert Qualtrics for a pricey 20 times trailing sales, or $8bn.

Mr McDermott’s ambition is to compete with SAP’s US counterparts such as Microsoft, Oracle and Salesforce in customer relationship management — online tool kits for salespeople. The Qualtrics acquisition will help, but Salesforce has a considerable lead. The German group needs to integrate its cloud acquisitions flawlessly to remain in the race.

New, organic cloud bookings at SAP slowed to 25 per cent last year from 30 per cent in 2017. Reported sales in the group’s legacy licence business were flat. But after stripping out flattering adjustments, that figure actually declined 6 per cent, according to broker ODDO. Margins were flattered by the same distortions. This is because SAP is chivvying legacy customers towards its own customer relationship management system, with punitive charges for those who continue to use other suppliers.

Cloud services, once a slow burn, are now hot property. SAP is playing catch up. Its margin targets are also liable to disappear into the mist.

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Post ID: @OP+YTLvePG

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“Since 2015, SAP has spent $44bn. Of that, $36bn was in the US.”

Sand most of our product managers sit in Germany!

No wonder integration is issue.

Post ID: @hgj+YTLvePG

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