The cloud is finally really hurting SAP

 SAP reported first-quarter sales and earnings that missed analysts’ estimates as cloud computing alternatives growing in popularity.  Germany-based SAP’s stock fell 1.2 percent on this news.

The big hurt is that sales of new software licenses, an indicator of future revenue, fell 5.2 percent to 623 million euros. Compare this with the 656.1 million-euro average estimates.  Cloud subscriptions rose 32 percent to 221 million euros, compared with the average estimate of 211.6 million euros. Net income rose about 3 percent to 534 million euros.
“SAP isn’t the only enterprise computing company being stung by the shift to cloud services. International Business Machines Corp. said yesterday first-quarter sales fell almost 4 percent as the transition to online software means customers are less reliant on buying servers and mainframe capacity.”
While I’ve made assertions that traditional enterprise software companies, such as SAP, IBM, and Oracle, will certainly get hurt by the rising use of cloud alternatives, we’ve not seen the impact on the companies in terms of diminishing quarter-on-quarter growth.  Now, the patterns are beginning to emerge.
SAP, and other traditional enterprise software players are pushing cloud alternatives as well, and this may actually only slow down the negative affect on sales.  I’m sure many hoped that cloud computing would never take off as a technology trend.  For them, it’s too late.