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SAP has been clear about its cloud aspirations — projecting a doubling of cloud revenue in 2012, reaching $2 billion in category revenue by 2015, and growing its cloud market share thirty-fold over the next five years.

As a strategy, SAP has been clear that the cloud is important. In a nod to transparency, they are among the first major software companies to break out cloud computing revenue (IBM, Microsoft, and Oracle don’t), demonstrating that SAP’s cloud moves transcend marketing and that leadership wholly expects to be held accountable for SAP’s progress in the cloud.

Numbers to date confirm that SAP is delivering. Revenue from its cloud offerings in all of 2011 was $18 million (0.15% of total revenue). SAP reported $38 million in cloud revenue for Q1 of this year, making short work of its first goal of doubling cloud revenue in 2012. And the numbers continue to trend positive for SAP with Q2 cloud revenue coming in at $62 million, and Q3 cloud revenue topping $102 million.

McDermott and Snabe remain bullish on the cloud. According to industry analysts, they have good reason:

  • According to IDC, global revenue from subscription software grew 23% to $48.3 billion last year, and is expected to increase at an average 18% a year from 2012 through 2016.
  • Gartner reports software as a Service (SaaS) and cloud-based business application services will grow from $13.4 billion in 2011 to $32.2 billion in 2016, a five-year CAGR of 19.1%.
  • Forrester predicts that the overall cloud computing market will grow from $40.7 billion in 2011 to more than $241 billion in 2020.

SAP’s $3.4 billion SuccessFactors acquisition is paying off. The leading provider of cloud-based HR solutions notched an impressive Q3 — on a stand-alone basis, SuccessFactors’ 12 month new and upsell subscription billings grew 92%. In Q2 SuccessFactors’ 12 month new and upsell subscription billings grew 112%. In Q3 this growth came in at plus 69%.

With $444 million in revenue in 2011, recently acquired Ariba is the undisputed leader in cloud-based collaborative commerce applications and the second-largest cloud vendor by revenue.

Its $4.3 billion acquisition of Ariba establishes SAP as the leading business network — and we can expect the network effect to jolt SAP’s cloud revenue up a stratum or two as SAP assimilates Ariba’s products and introduces the new offerings to its 190,000+ global customers.

Today, SAP offers 20 solutions and suites in the cloud, designed to optimize a company’s most critical assets — people, finances, customers and suppliers.

SAP has 17 million people using its cloud, 15 million on SuccessFactors and the other 2 million spread across its growing on-demand offerings, which includes SAP Business ByDesign, SAP BusinessObjects BI OnDemand, SAP Sourcing OnDemand, SAP Carbon Impact OnDemand, SAP Sales OnDemand, SAP E-Invoicing for Compliance OnDemand, SAP Information Interchange OnDemand, SAP Travel OnDemand, and the SuccessFactors Business Execution Suite, among others.

Moving forward, HANA will contribute significantly to SAP’s progress in the cloud. As the cloud-computing paradigm shift plays out, HANA is positioned to play a pivotal role, driving deeper cost savings from cloud services; increasing the cloud’s analytic and BI capabilities by orders of magnitude; wringing latency from cloud-based services; and infusing cloud services with reach and flexibility.

More immediately, at SAP TechEd in Las Vegas, SAP unveiled its plans for SAP HANA Cloud, a next-generation cloud platform based on breakthrough in-memory technology. In tandem with this, SAP announced the first offerings based on SAP HANA Cloud — SAP NetWeaver Cloud, an open standards-based application service, and SAP HANA One, a deployment of SAP HANA certified for production use on the Amazon Web Services (AWS) Cloud.

SAP has kept its cloud momentum going over the past few months with a steady stream of new, cloud-based offerings.

Launched this week at SAPPHIRE NOW + SAP TechEd in Madrid, the new SAP® 360 Customer Solution is powered by HANA and will include the SAP® Customer OnDemand solution. Not surprisingly, Gartner ranks CRM as the most popular net-new cloud solution deployed in 2012 at 49%.

Also at SAPPHIRE NOW in Madrid SAP announced the generally availability of SAP® Financials OnDemand, a real-time, insight-driven financial management solution designed for the cloud.

Earlier this month SAP announced two new cloud-based sustainability solutions, SAP® Product Stewardship Network allows manufacturers to collaborate with suppliers and collect detailed information about the substances that make up their products. SAP® EHS Regulatory Documentation OnDemand is a content service to manage the often painstaking and expensive process of creating regulatory documentation.

In late October, SAP introduced two new cloud-based collaboration offerings — the SAP® Jam social software platform and the SAP® Social OnDemand solution. SAP Jam enables today’s workers to drive rapid business results by integrating social capabilities into their applications and daily business processes, eliminating social silos. SAP Social OnDemand transforms social media conversations into rich business insights that help marketing and customer service organizations better engage with customers to increase brand loyalty, manage reputational risks and capitalize on opportunities.