SAP Cloud ERP Suite

Business Data Cloud, the missing link

What holds an ERP system together? In a recent analyst interview, SAP CEO Christian Klein once again emphasized the importance of the Business Data Cloud. In his opinion, it is the data and data structures that make up the added value and performance of an ERP system.

From the very beginning, the central data server has been at the heart of the SAP ERP architecture. The familiar three-tier client/server model of SAP R/3 clearly illustrates this approach. With cloud computing and the diversification of the ERP application—composable ERP—this singular view of data management has changed. To continue to orchestrate the data structures of an ERP system, SAP developed the Business Data Cloud together with Databricks.

Agility, flexibility, and SAP orchestration

Modern ERP architectures must fulfil different requirements than those of a black box "R/3". For SAP, the key components are cloud and AI. The SAP orchestration that CEO Christian Klein launched four years ago is showing clear signs of success, as he himself stared at the presentation of the company's Q1 results: "The first quarter shows once again that our formula for success is working. The current cloud backlog grew by 29 percent at constant currency, and revenue grew at a double-digit rate. With 86 percent of revenue coming from more predictable sources, SAP's business model remains resilient in uncertain times. Our AI-powered portfolio enables companies in more than 130 countries to overcome supply chain disruptions and realize efficiency gains quickly and flexibly.

On-prem, private, and public cloud

Recent figures from the Investment Report of the German SAP User Group (DSAG) show that customers are not the only ones moving to the public cloud. On the contrary, many SAP customers still prefer cloud-ready on-prem installations, or private cloud architectures.

With the term "Cloud ERP Suite," SAP is attempting to bring together private and public cloud in terms of balance sheet numbers and operations, and CEO Christian Klein hinted at an analyst meeting that a transition from private to public cloud might be possible in the future with the help of the SAP Business Data Cloud (BDC).

The semantic layers of the BDC can transparently represent the existing data structures and thus provide agility and transparency for a possible cloud conversion. From SAP's point of view, the goal is of course the public cloud, as this offers a significantly higher contribution margin. And SAP seems to be on the right track, as evidenced by CFO Dominik Asam's words: "With the first quarter, we have made a solid start to the year in an extremely volatile environment—with strong revenue growth and excellent operating income growth. These results demonstrate our cost discipline and the focused execution of our strategy. While we are encouraged by this momentum, we are mindful of the broader environment and will remain vigilant for the remainder of the year to continue to protect both earnings and cash flow.