I tend to not pay too much attention to quarterly earnings – whether they are good or bad. But my friend Dennis Howlett says “SAP’s Q2 results are stunning by any standards” and I decided to apply my own “is this an inflexion point?” standard.
Earlier in the year, I wrote What might SAP learn from Apple
Apple gets about two-thirds of its revenue from iOS devices, a platform that didn’t exist four years ago. In contrast, SAP revenues from HANA, BYD, even SuccessFactors will likely not even be 10% by end of 2012
Does this quarter change that trajectory? The quarterly results were mixed. Growing HANA and mobile, still sluggish cloud revenues. If you drill into HANA, SAP has been managing expectations about its “birth date” and why the volumes are still so embryonic. When you look at SAP’s mobile store, which should be growing by leaps and bounds in line with Apple and Google stores, it is surprisingly anemic – a quick search showed 102 solutions, many with zero customer downloads. Clouds – SuccessFactors at prior levels, not growing explosively or even offsetting BYD’s underachievement.
The other area where Dennis is excited is supposedly ‘the ratio of services to software declines.” I certainly don’t see it. Multi-year SAP hosting and application management contracts which cost 5, 10, 20X the implementation project show little signs of improvement. With HANA, I see SIs salivating to continue the traditional implementation gravy train.
So, kudos to SAP for a nice quarter especially with the background of the doom and gloom of Euroland. But, defying gravity? I don’t see it. It is still heavily dependent on traditional products and still surrounded by a traditional services ecosystem.
(Read this and other articles @ Deal Architect)