SAP’s focus on delivering more AI services to ease customers’ cloud ERP transition seems to be paying off. In the first quarter of this year, the company saw its revenue increase.
In the first quarter, SAP saw its revenue increase to 8.04 billion euros, eight percent more than in the same quarter in 2023. Cloud services revenue rose to 3.93 billion euros in the quarter, and software revenue rose to 3.03 billion euros. The cloud and ERP giant also reported a cloud backlog of 14.2 billion euros, 27 percent higher than in the first quarter of 2023.
Business AI drives implementation
SAP is ramping up its AI business significantly. CEO Christian Klein indicated in January that the company will invest more than a billion euros in AI over the next two years.
In February, the creation of the SAP Business AI unit was announced. This division deals with product development, research, and implementation within SAP. In doing so, the business unit will work closely with other business units and regional teams to further integrate AI into the complete product portfolio.
Read more: SAP establishes Business AI division
The arrival of the Business AI division should, of course, ensure that companies benefit faster from the developed AI solutions. Products that should help with this include the (generative) virtual assistant Joule, which allows customers to gain insights from the data in their large (SAP) databases. SAP also recently added GenAI functionality to its SAP Datasphere Platform.
Furthermore, SAP’s AI push is taking shape with investments in AI/LLM developers such as Anthropic and Cohere, among others. The push is not entirely without consequences, however. In January of this year, SAP announced 8,000 job cuts. AI costs money, and several companies free up that money in part by cutting jobs elsewhere, we wrote earlier.
Reaction Christain Klein
Commenting on the quarterly figures, CEO Christian Klein says he is satisfied and expects this year’s (financial) goals to be realized. Above all, he expects to attract new mid-market customers.
SAP expects to achieve sales of between 17 and 17.3 billion euros for all of 2024. This would be between 24 and 27 percent higher than the results for 2023. Starting in 2025, the company plans to improve these sales further.
Also read: SAP cuts 8,000 jobs