Exclusive Interview With Mr. Luo Xukai, Executive Board Member Of SAP

In the first quarter of 2021, German software giant SAP delivered a better than expected report card.

At noon on April 22, Beijing time, SAP announced the first quarter financial report of fiscal year 2021. According to the financial report, according to the international financial reporting standards (IFRSs), the company achieved a total revenue of 6.348 billion euro in the first quarter of 2021, and the market expectation was 6.323 billion euro, which exceeded the market expectation; Total revenue increased by 2% year on year under non IFRS.

SAP realized operating profit (IFRS) of 960 million euro in the first quarter, a year-on-year decrease of 21%, and non IFRS operating profit of 1.741 billion euro, a year-on-year increase of 17%. SAP said the decline in operating profit was due to equity incentive fees and restructuring of SAP cloud delivery infrastructure.

SAP's after tax profit in the first quarter was 1.07 billion euro, far exceeding the market expectation of 684 million euro, which was 32% higher than that of 811 million euro in the same period of last year; Operating cash flow increased by 3% to 3.09 billion euro and free cash flow increased by 10% to 2.85 billion euro.

"In the first quarter of this year, we got the highest order entry in history. The current cloud undelivered business of S / 4hana grew by 43%, and the software licensing business under non IFRS grew by 11%, which is our fastest growth rate in the past five years." After the release of the financial report, Scott Russell, a member of SAP's global executive board, said in an exclusive interview with 21st century economic report that "China's performance is very strong, whether it is software licensing or cloud business, China has achieved rapid growth."

Speed up new cloud services

Cloud business is a bright spot in SAP's financial report“ We had the highest order intake in history in the first quarter, including both software licensing and cloud business. " Luo said.

According to the financial report, SAP's outstanding cloud business revenue in the first quarter was 7.628 billion euro, with a year-on-year growth of 19% under the non IFRS fixed exchange rate. Among them, the revenue of cloud business was 2.145 billion euro, with a year-on-year growth of 13% under non IFRS fixed exchange rate, software license and support income of 3.283 billion euro, and 1% year-on-year growth under non IFRS fixed exchange rate.

It should be noted that SAP achieved rapid growth of cloud products in the first quarter, including quartrics, personnel management, procurement, customer experience, business technology platform, and "rise with SAP" to promote customer cloud transformation.

Among them, the cloud undelivered business of S / 4hana, the flagship product of sap, was 1.036 billion euro in the first quarter, with a year-on-year growth of 43%. According to reports, S / 4hana increased more than 400 customers in this quarter, the total utilization rate of more than 16400 enterprises, and the number of customers increased by more than 16% year on year. In the first quarter, more than half of S / 4hana customers were brand new.

"Due to the bright start of 2021, we have adjusted and improved our business expectations for the whole year of this year under the strong business performance, which also reflects the business strategy that sap is firmly implementing," Luo Xukai pointed out. "This strategy is to help customers transform in the cloud and make them become more agile and flexible intelligent enterprises."

At the same time, Luo Xukai also said that a large number of new orders were added to sap cloud business in the first quarter of this year, which will be delivered in the next few quarters and included in SAP's revenue“ Therefore, our revenue is very strong, and there is a strong growth potential in the future. "

Optimistic about China's performance

What is China's performance behind the strong performance? Luo Xukai gave full affirmation.

"The performance in China is very strong, with double-digit growth in software licensing, triple-digit growth in cloud business, and robust performance in core business s / 4hana." Luo Xukai said, "compared with the world, the growth rate of China business is more significant. China is a very important strategic market for SAP, and it is the growth engine to promote the overall business development of SAP."

At the same time, Luo Xukai stressed that he was optimistic about the future development of China's business, which was based on factors such as the rapid recovery of China's post epidemic economy and the continuous increase of new infrastructure in China“ From a global perspective, China's economic recovery and growth are very fast. China is also continuing to implement new infrastructure, which brings huge development opportunities to many industries, including cloud computing, big data, Internet of things, machine learning and robotics. Sap has leading innovation in these fields, and is particularly willing to help Chinese enterprises transform into smart enterprises. "

Under the wave of digital economy, especially in the context of the new crown pneumonia epidemic sweeping the world in 2020, enterprise digitization and cloud has become an inevitable development trend.

Luo Xukai pointed out that in the process of enterprises starting remote office, whether the enterprise supply chain has enough vitality and toughness has become the key factor to determine the future development of enterprises. At the same time, how to have the centripetal force and cohesion of enterprise staff under the remote office challenges the current enterprise operation methodology“ Driven by enterprise demand, digital transformation is speeding up, and the results achieved in the past decade may be completed within a year. "

Under these enterprise pain points, the cloud becomes a solution worth considering. Luo Xukai believes that the cloud platform first provides flexibility, but also integrates various technological innovations including artificial intelligence, machine learning, robots, etc.

"The most important thing is that the cloud provides a convenience, and cloud enterprises can remove many redundant and complex problems in the operation process." Luo Xukai pointed out that this is the reason why SAP launched the "rise with SAP" product on January 27 this year, which attracted extensive attention from Chinese customers.

Luo Xukai introduced, for example, as a R & D and manufacturing enterprise of planetary gear reducer and control system, Weili transmission chose rise with SAP s / 4hana cloud (private cloud version) to provide flexible, convenient and low investment cloud services to connect supply, marketing, storage, human and property, and improve operation efficiency. Power transmission also adopts SAP successfactors (HR cloud) to reserve and cultivate talents to support the rapid and sustainable development of the enterprise.

China's innovation goes global

Power drive is just a microcosm of SAP China customers, and it is also a microcosm behind the business growth of SAP China.

At the same time, it is also the side of innovation and development of Chinese enterprises. Luo Xukai pointed out that in the process of contact with Chinese customers, we can clearly detect its innovation and its attempt to transform“ Chinese enterprises are increasingly able to integrate innovation genes into their businesses. Chinese enterprises have their own unique innovations in fields such as clean energy technology, artificial intelligence, intelligent manufacturing, and communication industry. "

Even this kind of innovation has begun to move away from home and go global. Luo Xukai introduced that sap and wechat platform have established cooperation for joint innovation. By integrating human capital management cloud into wechat platform, enterprise customer employees can directly use SAP related software on wechat platform“ In the future, we hope to promote such cooperative innovation mode to the whole world. "

Facing the future development of China's innovation, Luo Xukai also gave his own suggestions. First of all, Luo Xukai suggested that Chinese enterprises should pay attention to the circular economy of sustainable development and embed sustainable development as the core demand in product and solution design, so as to avoid low efficiency, waste and cost increase.

At the same time, Luo Xukai believes that Chinese enterprises can adopt new innovative products as much as possible to achieve extensive cooperation, so as to create a more flexible, efficient and resilient supply chain.

During the interview, Luo Xukai repeatedly expressed his full affirmation of the Chinese market. He pointed out that SAP regards itself as a partner of enterprises and government in China, and SAP's business in China is also continuously expanding its market share. With the newly launched rise with SAP, customers are also moving important business processes to the cloud. At the same time, sap is also excited by the rapid development of China and its strong ability to adapt to changes.

"SAP's long-term commitment to China, coupled with the speed of China's economic recovery and development, gives us full confidence in the future development of SAP's China business." Luo said.

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