SAP might be able to boast of strong cloud growth and an increasing move to a subscription-based user base but its third quarter results will be lost for many in the channel as the focus shifts to the decision by the vendor to wind down its Business By Design offering for SMEs.
The vendor will support existing customers and keep it as an option for customers but is reducing the effort it puts into development, with reports in Germany indicating that the customer base for Business By Design had not been high enough to support the ambitions to reach 10,000 customers and revenues of $1bn.
Business By Design will become part of the HANA cloud platform and as a result the firm has argued that it will continue to invest in the technology as it adds functionality to that technology.
On the cloud front the vendor hit a revenue run rate of €1bn and saw its software and cloud revenue increase by 13% and its services business improve year-on-year by 12%, but saw its traditional software business drop by 5%.
“SAP had a very strong performance in the third quarter, considering the mixed macroeconomic environment and the strong currency headwinds. Our ongoing focus on operating discipline while successfully scaling our cloud business is paying off. We continued our double-digit growth momentum and increased our Non-IFRS operating margin by 180 basis points at constant currencies,” said Werner Brandt, CFO of SAP.