As reported a ton on Friday, “The co-CEO of business software maker SAP says its push into cloud computing is starting to make money — and predicted it would reach profits that rival or exceed those of its traditional business.”
The SAP clouds contributed about $36.72 million (USD) to first-quarter earnings. Based in Germany, “SAP AG, whose software helps companies manage personnel, sales and customer relations, said Friday its overall net profit rose 17 percent to 520 million euros in the quarter. Revenues grew 7 percent to 3.6 billion euros.”
However, when growth is attributed to a “push into cloud computing,” you have to look at just what they mean by “cloud.”
“SAP bolstered its cloud computing business by buying Ariba, Inc. last year. In size, it is still dwarfed by the traditional business, but SAP says it is on track to account for 900 million euros in sales over the year. It expects that [number] to more than double to 2 billion euros a year by 2015.”
To call Ariba a cloud provider is a bit of a stretch, if you ask me. However, cloud computing is so broadly and vaguely defined that you can pretty much position anything as a cloud these days. SAP seems to be playing this game, as are most of the larger technology companies. They understand that the value comes from earnings that link directly to the emerging cloud computing space.