SAP, the maker of expensive esoteric business software which no one really understand wants to deliver its product onto the cloud.
This means you can be completely baffled by the product, without having to store it on your local servers.
Luka Mucic told the Euro am Sonntag business weekly that contract cloud work becomes profitable over time and in the long term; they can definitely become more profitable than classic licence sales.
SAP said last week its push to deliver cloud-based products via the internet would “dampen profitability” until at least 2018, even if it attempts to blow dry its profitability with a hair-dryer or makes it stand in the sun for a few hours.
This is because unlike the packaged software SAP has been selling for decades, for which clients pay a immediate licence fee, cloud-based software is generally paid for by subscription over time, but most of the costs for the software provider are upfront.
Mucic said contracts were loss making for the first year of operation.
SAP agreed in September to buy cloud-based travel and expenses software maker Concur for $7.3 billion in cash, its biggest takeover ever, but about what you can expect to pay for a single SAP business consultant.
Mucic said SAP might add another, smaller tranche, perhaps as soon as the first half of this year, but added that otherwise the company had no need for further capital. He did not say why SAP needed the money.
