SAP said on Monday that net profit rose in the third quarter as its cloud computing activities grew, enabling it to confirm its annual forecast. Quarterly net profit rose to 762 million euros, up 23 percent from a year earlier at SAP, a leader in supplying software systems for industrial sites and business management, AFP reports.
Per share, this came to 0.64 euros, better than the 0.58 euros expected on average by analysts polled by Dow Jones Newswires. Despite these numbers, the revenue was off a bit. “However, the rise in revenue was less robust, with a 2.0-percent increase to 4.05 billion euros, as the dollar and the yen devalued versus the euro, said the Walldorf, Germany-based company.” SAP’s cloud revenue tripled to 191 million euros, but still a smaller percentage of their overall revenue.
SAP could be in the same cloud computing boat as IBM, struggling to increase their cloud computing revenue while their traditional business declines. The game is afoot to grow SAP’s cloud-based business before the demand diminishes for legacy systems.
In the case of SAP, I doubt the decline will be as drastic since they don’t rely as much on hardware sales as IBM. But, with the increased use of SaaS providers, such as Salesforce.com, and other cloud-based systems displacing traditional enterprise applications providers, SAP could find that the cloud is both an advantage and a disadvantage.