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Capital Markets DayLeading Customers’ Digital Transformation

Capital Markets DayLeading Customers’ Digital Transformation 13
Capital Markets Day Leading Customers’ Digital Transformation February 4, 2016 – New YorkAgenda Welcome 09:30 am Stefan Gruber, Head of Investor Relations Strategy and Vision 09:30 – 10:00 am Bill McDermott, CEO Driving Effectiveness and Efficiency of our Business Models 10:00 – 10:25 am Luka Mucic, CFO 10:25 – 10:55 am The Path into the Digital Economy Bernd Leukert, Executive Board Member 10:55 – 11:20 am Break Customer Perspective 11:20 – 12:00 pm Rob Enslin, Executive Board Member Jaan Saar, Head of Process and IT, SWISS PROPERTY John Hinshaw, Executive Vice President Chief Customer Officer, Hewlett Packard Enterprise Business Networks 12:00 – 12:20 pm Steve Singh, Global Managing Board Member QA 12:20 – 1:00 pm Bill McDermott, Luka Mucic, Rob Enslin, Bernd Leukert, Steve Singh 01:00 – 2:00 pm Lunch ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 2 2Safe Harbor Statement Any statements contained in this document that are not historical facts are forwardlooking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forwardlooking statements. SAP undertakes no obligation to publicly update or revise any forwardlooking statements. All forwardlooking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20F filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forwardlooking statements, which speak only as of their dates. ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 3 3Strategy and Vision Bill McDermott CEOSAP is helping the world run better and improve people’s lives © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 5 5SAP success story since 2010 Cloud subscriptions and Operating Total support revenue profit revenue €bn €bn €bn 20.8 2.3 2.3 6.3 4.0 12.5 Explosive +58 +66 growth 0.1 2010 2015 2010 2015 2010 2015 95m 300,000 nearly 10,000 cloud users customers SAP HANA customers All numbers NonIFRS © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 6 6© © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 7 7SAP Framework for Digital Businesses to Run Simple Supplier Workforce Collaboration Engagement Business Networks Digital Core Customer Assets Experience Internet of Things Omnichannel SAP HANA PLATFORM © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 8 8Live system strategy powered by SAP S/4HANA Why do we talk about simple revolution No preaggregation of transactional data only data inserts Dramatic reduction of data updates (no processing risks) Data entry transaction can run in parallel without database locking Higher transactional performance (25x) Lower data footprint (12.5x+, 54 tera to 3.5 tera) Dramatically simplified application code (no totals, full use of HANA SQLs single database) Both scale out and scale up is possible Faster reporting directly on transactional system (50x+) Less data storage on disk (1/10) Nearly no database indices needed, that means less dba work Faster data backup/restore (10x) © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 9 9SAP Framework for Digital Businesses to Run Simple Supplier Workforce Collaboration Engagement Business Networks Digital Core Customer Assets Experience Internet of Things Omnichannel SAP HANA PLATFORM © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 10 10Rapidly expanding cloud business increases share of predictable revenue, with an everincreasing focus on cloud margins Share of more predictable revenue Gross margins 2015 2020 2015 2020 ambition ambition 73 20 40 +7pp 25 €2628 bn +15pp €20.8 bn 70 75 60 66 Share of more predictable revenue is expected to increase to 7075 by 2020 Cloud subscriptions support Support + Cloud subs – share of total revenue All other revenue © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 11 11Future is driven by disruptive technologies Emerging disruptions Next gen SAP innovations  Internet of things  Intelligent applications  Machine learning artificial intelligence  Cybersecurity  Digital fabric  Healthcare  Industry automation 4.0  New incubations © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 12 12SAP has never been stronger Customers Employees Stakeholders  User group  Employee engagement,  27 value engagement soaring 10year high 81 growth in 2015  SAP digital: Direct to  1st gender equality – Most sustainable consumers in 32 countries EDGE certified IT company software company Helping the world run better and improve people’s lives. © © 2 © 01 20 6 S 15 A S PA S PE S or an E or an SAS PA af Pf af iliate filiate com com pany pa. A ny. A ll rilgh l rits gh rts es rerv eserv ed.ed. Customer 13 13Driving Effectiveness and Efficiency of our Business Models Luka Mucic CFO01 Outpacing the market in 2015 Outlook 2016 and beyondBeating 2015 outlook – raising 2017 midterm ambition 2020 ambition 2017 ambition 2016 guidance Cloud sub. 2015 €7.5 €8bn Cloud sub. Upper end 201520 €3.8 €4.0bn Cloud sub. CAGR of 28 Upper end 201517 Cloud sub. €2.95 €3.05bn CAGR of 32 Total revenue €2.30bn Upper end of 33 €26 €28bn Total revenue Cloud software Cloud software €23 €23.5bn Operating profit €17.23bn 6 8 €8 €9bn Operating profit Operating profit Operating profit €6.7 €7.0bn Support + cloud subs – €6.35bn €6.4 €6.7bn share of total revenue Support + cloud subs – 70 to 75 share of total revenue 63 to 65 All numbers nonIFRS All numbers nonIFRS and at constant currency ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . .All 2015 figures in this presentation are preliminary and unaudited Customer 16 1602 Building a larger, more predictable businessSAP’s fast growing cloud business changes the revenue mix Driving a higher share of more predictable revenue All numbers nonIFRS 2020 2017 2013 2015 ambition ambition 71 83 96 89 Cloud subscriptions €23 and support €16.9bn €20.8bn€2628bn 23.5bn revenue Cloud subscriptions and support revenue 11 4 29 All other revenue 17  +7pp  +18pp 2025 40 3537 46 Support revenue cloud €23 subscriptions €16.9bn€20.8bn€2628bn 23.5bn and support revenue 6365 7075 54 60 Support + cloud subs  +6pp All other revenue  +1015pp ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 18 1803 Unique combination of cloud and core – What are the main driversSAP is unique in combining a rapidly expanding cloud business and a growing core Cloud Supplier Workforce Collaboration Broadest and highly Engagement Business Networks synergistic cloud portfolio Core SAP S/4HANA is the “nucleus” for running a live Digital Core business €7.2bn (+18 yoy) FY 2015 software license and cloud Customer subscription order entry Assets Experience Internet of Things (1/3 from cloud) Omnichannel SAP HANA PLATFORM (Software License Order Entry + Cloud TCV Order Entry) ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 20 2004 Growing coreSAP S/4HANA innovation cycle creates tremendous growth opportunities Solid software license revenue  SAP S/4HANA innovation cycle reinvigorates the core – Adoption soars: 2,700 customers, more than doubling the number of customers in Q4 – Catalyzes growth across SAP’s broader innovation portfolio and strategic industries  Certain solution areas – e.g. HCM, Procurement, CEC, TE – are rapidly shifting to the cloud  SAP S/4HANA is now also available as a cloud subscription option  Difficult macro environment and continued volatility in emerging markets  As a result SAP’s 2016 outlook implies flattish license performance SAP expects to continue to significantly outperform the competition with software license Customer Engagement Commerce ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 22 22Growing €10 billion+ support base: “solid as a rock” Resilient software support revenue Illustrative example: Factors influencing growth rate: 1,605 1,512  Very high renewal rates (97) 1,404 1,285 832 Support 1,150  Positive feedback from customers on cloud conversion options – 697 547 382 1,000 200 SAP seen as flexible  Strategic customers buy more and more software – qualify for PSLE (Product Support for Large Enterprises) Software  Net new customers almost exclusively select SAP Enterprise Support Y0 Y1 Y2 Y3 Y4 Y5  Support renewal rate net of above factors 96, blended Example: Pool of customers buying €1.0bn in software licenses; support fee across entire support customer base 20 Deals signed at each year end Assumptions: License purchases decline by 5 p.a. Net support renewal rate of 96 Blended support fee 20 p.a.  Support business grows even if new license sales decline ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 23 2305 Fast cloud momentum at scaleBroadest cloud portfolio in the market drives fast, profitable growth at scale Fast growth in cloud subscriptions and Cloud subscriptions support revenue support revenue • Upscaling SaaS offerings  Innovation leader with broadest portfolio of • Further international expansion of Concur bestinclass cloud offerings • HEC expansion (IaaS) including strong ecosystem €7.5 –  Extremely synergistic to SAP S/4HANA, providing • S/4 cloud edition €8.0bn (public private) tremendous cross and upsell opportunities • Cloud for Analytics • HCP (PaaS) • IoT Lead indicators for future strong cloud • SaaS offerings (LoB, CEC, HR) momentum • Business network €3.8 – • Early HEC traction €4.0bn  New cloud bookings with tremendous momentum  Combination of deferred and backlog – impressive €2.3bn strength in unbilled and billed committed future cloud subscriptions and support revenue 2015 2017 2020 ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 25 25Cloud gross margins on track towards long term ambition • Business network gross margin 75 FY2015 Business • Public cloud SaaS gross margins 70 FY2015 FY15 network 75 80 • Private cloud gross margins still negative in FY 2015 long term gross but expected to break even in 2016 margin 2020 • Speeding up investments in cloud infrastructure to ambition 71 29 deliver on the massive cloud bookings and backlog €2628bn • Migrating acquired cloud offerings onto HANA – Public massive benefits for customers – significant long term cloud FY15 80 savings 70 • Expects stable to slightly improving cloud gross margin Private cloud in 2016 40 FY15 negative Cloud subscriptions and support revenue All other revenue Long term cloud subscriptions and support gross margin potential in mature state (excluding cloudrelated professional services) Cloud gross margin of business network segment ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 26 26As the renewal base in SAP’s cloud business grows, cloud profitability ramps Share of new vs. anniversary and renewal bookings • As the renewal base ramps to 80 in mature state, cloud commission expenses relative to 40 20 revenue should halve • Combined with further cloud gross margin 80 improvement  Highly profitable cloud business in long 60 term fast growth mature phase state New upsell cloud bookings Existing bookings/renewals ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 27 2706 Driving absolute operating profit and operating cash flow growthExpanding absolute operating profit which drives operating cash flow  Revenue mix shift means that managing to a blended  Operating cash flow expected to show a positive trend group margin would discriminate against our fast in 2016 – following operating profit evolution and growth businesses helped by lower restructuring related cash outflows  SAP is improving effectiveness and efficiency in each and every business  all contribute to absolute Operating profit operating profit growth  Private cloud will contribute to our operating profit in 69 CAGR the long term albeit at a lower gross margin 35 €89bn CAGR  Continued transformation of our services business – €6.77bn €6.3bn shift towards a stronger focus on customer outcome which drives higher adoption and renewals  Expected 2016 hiring similar to 2015 to fuel our innovation engine 2015 2017 2020 Targeting accelerated operating profit expansion in 2018 and beyond ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 29 2907 ConclusionConclusion  Powerful combination of a rapidly expanding cloud business and a growing core  Pushing relentlessly towards a larger, stickier, more predictable business  Successful transformation of SAP: shifted investments from noncore activities to strategic growth areas  SAP is on a strong path for the future – we have tremendous confidence in 2016 and beyond ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 31 31The Path into the Digital Economy Bernd Leukert Executive Board Member© 2015 SAP SE or an SAP affiliate company. All rights reserved. 33Driving the Digital Transformation Customer Experience Supplier Collaboration OmniChannel Business Networks Asset Workforce Internet of Things Engagement © 2015 SAP SE or an SAP affiliate company. All rights reserved. 34© 2015 SAP SE or an SAP affiliate company. All rights reserved. 351 Customer Interface © 2015 SAP SE or an SAP affiliate company. All rights reserved. 362 Differentiation Hybris as a service Business Services SAP HANA Cloud Platform SAP HANA Platform Vora © 2015 SAP SE or an SAP affiliate company. All rights reserved. 373 Outcome Orientation … Hybris as a service IoT Platform IoTServices Business Services SAP HANA Cloud Platform SAP HANA Platform Vora Hadoop © 2015 SAP SE or an SAP affiliate company. All rights reserved. 384 Digital Core … Hybris as a service IoT Platform IoTServices Business Services SAP S/4HANA SAP HANA Cloud Platform SAP HANA Platform Vora Hadoop © 2015 SAP SE or an SAP affiliate company. All rights reserved. 395 Digital Business Management … Cloud for Analytics Hybris as a service IoT Platform IoTServices Business Services SAP S/4HANA SAP HANA Cloud Platform SAP HANA Platform Vora Hadoop © 2015 SAP SE or an SAP affiliate company. All rights reserved. 40DEMO Digital Boardroom © 2015 SAP SE or an SAP affiliate company. All rights reserved. 411 2 3 4 5 A Modular Suite … Cloud for Analytics Hybris as a service IoT Platform IoTServices Business Services SAP S/4HANA SAP HANA Cloud Platform SAP HANA Platform Vora Hadoop © 2015 SAP SE or an SAP affiliate company. All rights reserved. 42Digital Business Framework Customer Experience Supplier Collaboration OmniChannel Business Networks HANA CLOUD PLATFORM Assets Workforce Internet of Things Engagement SAP HANA Platform © 2015 SAP SE or an SAP affiliate company. All rights reserved. 43Customer Perspective Rob Enslin Executive Board MemberGerman User Group DSAG and SAP engage strongly to maximize the value of SAP’s solutions for the 55,000+ DSAG members in Austria, Switzerland and in Germany. We are in a continuous dialogue with SAP on all aspects of SAP S/4HANA, including the license structure. In our intensive discussions with SAP, we place the prospect and needs of our members. For example, as far as the new pricing model for SAP S/4HANA is concerned, SAP has listened to us and has made the investment attractive. That is one important aspect to help the SAP customers – our members, to decide in favor of SAP S/4HANA. ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 45 45ANZ User Group Today SAUG welcomes the new pricing model and discount structure that is being offered by SAP in relation to the SAP S4/HANA suite of products. SAUG believes that SAP S4/HANA is the strategic platform of the future for all existing and prospective SAP customers and any initiatives that SAP can take to enhance adoption rates, is a step in the right direction. ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 46 46Swedish User Group For some time, we have presented our requirements as to what a preferred license structure should look like. The latest SAP S/4HANA pricing now includes, in principle, all the requirements we have previously proposed. ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 47 47Japan User Group I value this new license model highly because I see it is based on good intention for existing SAP users. I would like to share it broadly with our members. Yasushi Suzuka, Chairman, Japan User Group ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 48 48UKI User Group We've had good dialogue with SAP over the SAP S/4HANA license model and are pleased that SAP will be clarifying the situation for our members and users worldwide. Regardless of whether you see SAP S/4HANA as a upgrade or a new platform, it is clear SAP has recognized that existing customers paying maintenance have made significant financial contributions to the development of the platform, which will reduce financial barriers to adoption. Based on our recent member surveys, customers have stated they are keen to adopt innovations from SAP. Philip Adams, Chairman, UKI User Group ©© 20 20 16 15 S A SP A P S E S or an E or an SA SP A af P af filfiate iliate c c om om pa pa ny ny . A . A ll lrli gh righ tsts res res erv erv ed ed . . Customer 49 49Customer Perspective Rob Enslin Executive Board Member Jaan Saar Head of Process and IT SWISS PROPERTY Customer Perspective Rob Enslin Executive Board Member John Hinshaw Executive Vice President Chief Customer Officer Hewlett Packard EnterpriseCustomer Perspective Rob Enslin Executive Board Member Jaan Saar Head of Process and IT SWISS PROPERTY John Hinshaw Executive Vice President Chief Customer Officer Hewlett Packard EnterpriseBusiness Network Steve Singh Global Managing Board MemberThe Business Network Group © 2016 SAP SE or an SAP affiliate company. All rights reserved. Internal 55Focus built momentum throughout 2015 All three solutions exceeded bookings forecast 10,000 employees across BNG, nearly 20 growth • Significant bookings growth • 1T in network commerce • Placed 1.9M workers acceleration postacquisition • Launched Ariba SpotBuy with • 100+ new customer go lives • 5,000 new customers eBay • 736M hours of work • Total users exceeded 32M • Recorded largest ACV processed = 92M workdays booking quarter © 2016 SAP SE or an SAP affiliate company. All rights reserved. Internal 56FOCUS © 2016 SAP SE or an SAP affiliate company. All rights reserved. Internal 57More than Between Only 80 2550 34 of spending of travel booking of Global Workforce is outside of is contingent or takes place offline. corporate tools. temporary. Each market represents multibillion dollar opportunity in early stages. © 2016 SAP SE or an SAP affiliate company. All rights reserved. Internal 58Services mashup © 2016 SAP SE or an SAP affiliate company. All rights reserved. Internal 59Innovations that work for the customer Total Workforce Management © 2016 SAP SE or an SAP affiliate company. All rights reserved. Internal 60INFINITE POSSIBILITIES © 2016 SAP SE or an SAP affiliate company. All rights reserved. Internal 61Capital Markets Day Q ACapital Markets Day Leading Customers’ Digital Transformation February 4, 2016 – New York
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