Cloud and HANA Grow, Software Slows At SAP In Q3

October 28, 2013 Timothy Prickett Morgan

The shift from software licensing for internal use to renting software on a cloud continues apace at application software giant SAP. In its third quarter, SAP’s software license sales were down and its cloud sales were up, and cloud revenues rose fast enough to more than offset license declines.

In the period ending in September, SAP had €975 million in software license revenues, down 5 percent, but cloud subscriptions and support more than tripled to €191 million. SAP now has cloud revenues in excess of a €1 billion annual run rate, and has 33 million seats on its cloud. That is well above the peak seat counts for IBM’s mainframes and AS/400s, which peaked at 25 million and 22 million in the late 1990s, by the way.

With cloud software, the support is built into the price and not broken out separately, and this is commonplace in the software business today. SAP’s revenues support for licensed software grew by 4 percent to €2.18 billion. Add in other professional services, and SAP’s combined sales in the quarter were €4.05 billion, up 2 percent, and thanks to cost cutting and lower tax rates, profits after taxes were up 23 percent to €762 million.

The much-praised HANA in-memory database posted 79 percent growth in the quarter, to €149 million, and now has over 2,100 customers. There are over 450 customers in the world running SAP’s Business Suite ERP software atop the HANA software; about half of these are new customers and half are existing Business Suite customers.

To help make it easier for customers to use HANA, SAP will offer HANA instances on its HANA Marketplace cloud, with slices available for 128 GB, 256 GB, 512 GB, and 1 TB instances, complete with SAP-certified infrastructure and tech support. This cloudy HANA is in private beta testing now. SAP is also committed to putting all of its cloud application onto infrastructure that has HANA on the back-end.

At some point, we might even see HANA deployed on Power Systems iron. But thus far, it has been restricted to very precise configurations of servers based on Intel‘s Xeon E7 processors.