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SAP New Zealand revenues dip as cloud overtakes software licences


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SAP New Zealand reported lower revenues and profits for the year to 31 December 2020 as cloud revenues displaced traditional software licensing.

Total revenue for the period was $143.2 million, down from $158.1 million while before tax profit fell to $14.8 million from $20.2 million.

After tax, SAP New Zealand earned $9.8 million, down from $13.7 million.

Cloud revenues hit $35 million, up from $31.5 million in 2019, while software licensing revenues almost halved, from $28 million to $14.9 million.

The balance of SAP’s local revenue came from services, which declined from $45.8 million in 2019 to $42.1 million in 2020.

However, to put those changes in context, 2019 was a bumper year locally for SAP with revenues lifting from $123 million in 2018 to $158.1 million in 2019.

IDC global research revealed SAP’s cloud revenues over the next four years were expected to be split relatively equally between cloud and on-premises, indicating that hybrid set-ups will still feature prominently in customers’ infrastructure.

However, cloud computing would form at least 68 per cent of SAP’s total ecosystem revenue until 2024. Much of that is heavily dependent on partners helping to drive cloud and S4/HANA migrations. 

The local changes could, therefore, be interpreted as putting SAP New Zealand ahead of that curve.

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“Our cloud business has again grown significantly over the previous year, demonstrating that New Zealand is a strong driver of the accelerated cloud strategy SAP announced in Q3 2020,” said SAP New Zealand managing director Phil Cameron. 

“New Zealand customers have been among the first globally to utilise the new SAP S/4HANA Cloud, private edition, launched as part of the RISE with SAP offering, evidencing the fast adoption of cloud in this market.

“Despite the challenges of the past year, we continue to focus on doing more to help New Zealand businesses run in the cloud and are confident we can continue our strong momentum. Achieving the benefits of flexible and agile access to secure critical business information, from wherever people are working, remains a priority for New Zealand organisations,” he added.

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