The upturn in performance supports its previous claim that its massive $140.8 million loss in 2017 represented a critical reinvestment in its technology to prepare for the future.
SAP Australia and New Zealand managing director Damien Bueno told The Australian Financial Review its local cloud division grew by 45 per cent in 2018, making it SAP’s leading market globally for cloud adoption.
“Australian appetite for innovation and improving business process by taking advantage of more agile forms of delivery is evident in our results and also in SAP’s dominant position as a player in the cloud marketplace,” he said.
“We can assume on these results that we’re winning market share at a rate higher than the overall market.”
Mr Bueno became local MD in July 2018, and said SAP’s local cloud-based revenue had become “materially larger” than its traditional on-premise software.
The local growth comes as the company revealed last week it recorded a 45 per cent jump in global cloud revenue for the first quarter of 2019, hitting €1.5 billion for the first time in a quarter.
While he acknowledged the cloud ERP software market had become more crowded, with US company Workday winning clients like Telstra, Qantas, Toll, Lendlease and the Commonwealth Bank of Australia in recent years, Mr Bueno said he was confident SAP was competing well.
“It’s called a competitive environment for a reason … but when I think about competition we’ve announced a major win with Coles … and we have major organisations like Woolworths and the NSW government,” he said.
“So three of the largest employers in the country are all backing SAP on human-capital management and I think that speaks volumes for our capacity to compete.”
SAP, which is valued at $US140.7 billion, was considered a late mover to the cloud and was caught by surprise by how quickly customers jumped ship from legacy desktop software to online alternatives.
As early movers such as Salesforce thrived, SAP was forced to make a series of profit forecast cuts in 2014 and 2015, as it made the large investments needed in cloud-based infrastructure to try and regain ground.
“Fortune favours the brave. We made the necessary investments in 2016 and 2017.”
— Damien Bueno, SAP ANZ managing director
With the transition to the cloud largely complete, Mr Bueno said SAP’s new frontier was in customer-experience software.
“Most of SAP historically has been about automating processes and managing transactions and events for customers. But the experience and sentiment of why a customer did something is really important,” he said.
“The cost of losing a customer nationally to a business is $1.3 trillion. It’s about five times more expensive to lose a customer than recruit one.
“So companies need to understand why customers are not engaging … that understanding of why presents the opportunity to intervene and respond.”
Mr Bueno’s comments stack up with those of MyWave co-founder Geraldine McBride, who is a former president and chief executive of SAP in North America.
She founded her company in the belief that “the last mile of railroad track”, the customer experience, had not yet been solved by SAP, Oracle or Salesforce.
“A lot of my vision for MyWave was partly about what I thought SAP should think about doing next,” she told The Australian Financial Review.
Mr Bueno said the investment shift to customer experience was all about enabling the “intelligent enterprise”, whereby customer data is visible and usable across a business, rather than being siloed in individual systems or teams.
In November the company spent $US8 billion to acquire customer and employee survey company Qualtrics, which it is positioning as the flagship product in its push into customer experience.
Mr Bueno was bullish about the company’s ability to sell Qualtrics to its existing customers in Australia and New Zealand, as well as converting some existing Qualtrics users to SAP’s other services such as human resource management product SuccessFactors and procurement and supply chain management software Ariba.
He said getting Qualtrics in front of local customers was one of his top priorities for 2019.
“Fortune favours the brave. We made the necessary investments in 2016 and 2017 and now with the Qualtrics acquisition we will be looking at how to integrate their team in Australia and present customer with the new opportunity,” he said.