All right. Good afternoon, everyone, and welcome to our financial analyst conference. It's a great feeling to be back at SAP Sapphire in Orlando. Welcome to the Sunshine State. I hope you're enjoying the program so far. We had a comprehensive program for the analyst, and it's great to be back together as a community. We have a great lineup for you today and a great agenda. Welcome also to those who are online joining from around the world. It's a pleasure to have you. We are glad you're here. We have a great agenda for you today. We first welcome our CEO, Christian, onto the stage to give you some insights on our vision and strategy. We'll have Thomas, the Head of Product Engineering, joining us virtually today, and covering really the latest innovations from SAP.
We'll then have Scott Russell, the Head of Customer Success, from SAP. He will provide some insights about the cloud momentum, RISE with SAP and share some customer use cases. Last but not least, we will have our CFO, Luka, giving you an update on our financials and some insights on the outlook. It's a great lineup. We are really excited to give you that update today. After that, we'll have a short break, and we'll have the entire executive board from SAP on stage to answer your questions. Now let's do the safe harbor. It's a tradition. During this presentation, we'll make forward-looking statements, which are predictions, projections, or other statements about future events.
These statements are based on current expectations, forecasts, and assumptions that are subject to risk and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding these risks and uncertainties may be found in our filings with the Securities and Exchange Commission, including but not limited to the Risk Factors section of SAP's annual report on Form 20-F for 2021. Unless otherwise stated, all financial numbers mentioned here are non-IFRS. Growth rates and percentage point changes are non-IFRS year over year at constant currency. The non-IFRS financial measures we provide should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with IFRS. With that, I'd like to ask Christian onto the stage. Welcome, Christian. I'm sure you're having already a fantastic Sapphire so far. Please take it away.
Thank you, Anthony. I have to say, somehow you do the safe harbor statement faster than Stefan Gruber, so I have to say that's good. We can have more time to talk about our vision and strategy. Yeah, a very warm welcome also, again, from my side to all of you who's joining us virtually. I can tell you miss something here because , also, of course, a very warm welcome to all of you here in Orlando. You know, as I said it yesterday in the keynote , virtual events are good from time to time, but it feels so good also now to be back and to feel the energy.
We started on Sunday with our partner reception, and to get the community back again together to get feedback about, the great progress we are moving in the ecosystem. Today, the customer meetings and talking about these massive transformations ahead when you can do this live, that's of course also, a big advantage also for the year ahead. Now, talking about the vision of SAP. Yesterday in the keynote, I explained it in a bit more detail. Today, I wanna be very crisp. For me, when we are defining our vision, our strategy, it was very important from day one on during my tenure as CEO that we do it from a customer perspective. So much has happened in the last two years.
Of course, while the world has become more complex, the supply chains have become more disrupted, the pace of change has even more accelerated when you look at retail, when you look into the oil and gas, when you look into the automotive industry. Of course, also there is a big push also on sustainability. The good piece is, in all of these battlegrounds, in all of these challenges, SAP, has a great, big why to win because when you talk about business transformation, you're talking about mission-critical business processes the customers are wanting today with us. Now it's on us, yeah, to enable this change. Again, I come to that when we speak about RISE with SAP, this cannot only be done with a technical migration. There, you need to understand the industries.
You need to understand where's the industry going and how to redesign certain business processes like quote to cash to enable this new business model. Supply chain resilience. I talked about that we are creating the LinkedIn of the B2B world, and that's not an understatement. When you look at Catena-X and what we are doing there in connecting the whole automotive industry to do track and trace, to do real-time demand and supply checks across the whole supply chain, not only with your direct suppliers. That's a big game changer, including of course, the manufacturers, the logistics providers, which are also playing a big role in the supply chains of our customers. It's sustainability.
There, when I'm talking to the CEOs, the conversation always comes to the point where I said, "Oh, Christian, I mean, we have to act, but we cannot measure." Just last week, not sharing now the name, I just had a big customer from the U.S., and he said, "Hey, I have my ESG data in so many different databases, not standardized, and then somehow we aggregate it to come up with a number where I cannot really trust on, and where I don't have really the insights to really understand where can I actually run my company in the future more sustainable." This is where we are now developing new data sources.
We're gonna release very soon a green ledger in the ERP so that you can do carbon accounting, and as we do today, the financial accounting, so that every asset in your company has an ESG dimension. In our universal journal, in our ERP, down on the transactional level, in Concur, in SuccessFactors, we are providing the social data, yeah, across the whole hire to retire process. With the business network, we are bringing it together end to end. Because again, oftentimes the carbon, for example, accounts for 30%, which is then in your own enterprise.
70% of the carbon footprint of an automotive sits outside of the enterprise in the supply chain, and this is where we can use our network to really give our customers also end-to-end the full and sustainability. We go in and enable our customers to make conscious decisions. How do I source which supplier? What is the trade-off between cost, price, quality and sustainability or circular economy? We are bringing in partners like EcoVadis, who also do certification on certain other ESG dimensions. We are creating a very, very strong foundation. If we move on. Now, when we are then coming to our portfolio, I would say when you look at the total addressable market, SAP has no lack of market, no lack of potential for future growth.
I mean, we are playing, yeah, in many, many markets, and we are the number one by far in enterprise resource planning, 29% market share. What we are doing with RISE, and when you look at our net new customer share of 60%, there is no doubt that we're gonna further expand our market share going forward. In procurement, we are back, I would say, stronger than ever. While others acquire to somehow sustain their growth and somehow it still doesn't work out, we did our homework. We have now one procurement platform. Yes, there is Ariba. Yes, there is S/4HANA. But what really matters for our customers is procure to pay. Direct, indirect procurement on the fly, one user experience, great mobile experience, and then intelligent sourcing connected to the network.
How can we make sure that we also make sure that when you are sourcing, that you, for example, don't have any human rights violations, yeah, in your supply chain. That's seamlessly connected to the procurement side of the house. Of course, downstream, when we come to the payment side of the house, we are of course automating a lot, yeah, with machine learning, with RPA. It comes across as one platform, which is very, very important when we also come later about the cross-sell effect, when we are starting with ERP and then go over to procurement. Supply chain, spot on. Demand supply checks, very important.
When we talk about supply chain disruptions, yeah, and when we are talking about move to commerce, what you need to make sure is for seamless consumer experience. Demand supply becomes more relevant than ever. We are the market leader for that, and now we are also making our strides on the manufacturing side, where we are moving more and more customers to the manufacturing cloud. Plus, when we then also integrate with Siemens, with Teamcenter, to really also make the shop floor integration work to the ERP. Again, you see how I always relate back to the ERP. The ERP is of course our starting base, but now we are expanding more and more in the cloud, also with RISE, into the other territories where our customers have strong needs as well.
It's good that you don't need to play always this best of breed, but that you can also show them how this needs to work together in an Intelligent Enterprise. Because the supply chain cannot be decoupled from the procurement side from the house and from the ERP side of the house. The human capital side of the house, same here. I mean, hire to retire. When I look at Employee Central, we have in the meantime so many large customers and win backs, with customers running with over 100,000 users our Employee Central solution. When you start with the Employee Central and you own the master data for the employee, then you can talk about, you know, also the compensation side of the house.
Those of you who maybe remember that we also acquired CallidusCloud a few years ago, we have the world's leading compensation management system. When you are talking about a business model change, sometimes you need to also then compensate on subscription and pay as you go to have a compliant P&L. Again, here we talk again, the integration back to the ERP is very important. We also, and Scott will talk about that. I'm not offering this anymore product by product, but again, here we are also talking about very, very important capabilities for the transformation of a company also in the human capital management space. Fieldglass, Employee Central, total workforce management, do the reskilling in the right way, having the transparency also into, for your contingent workers is something which we underutilized in the past, from my perspective.
Now we are pushing it really, really strongly. Not only Fieldglass, but a combination to operate your own and your contingent workers to really manage your workforce. That's the name of the game here. The data management side of the house is actually usually we should even move this more up. It's so key. The data is our asset. The material flow is SAP. In 90% of the companies worldwide, we are owning the material from the commerce side of the house into the manufacturing, into the supply chain, back to the finance to do actually, you know, the accounting in the P&L of a customer. That's us. In the cloud, we have now the data model sitting on the BTP. Why is this so important? It's not anymore the monolith.
What it is is we have modular, and the partners can come. We have Saueressig and I serve as a team here, and they connect to that. Because also a contract needs to have master data, which is harmonized. When I say, this is now seamlessly integrated as the leading contract management provider in the market, seamlessly integrated to our order, to our data assets, then we are winning big time. We have customer relationship management. Commerce. CPQ. It's so important when you talk about the business model change, you need to have the flexibility on the go-to-market side to sell everything as a service. Then you need the connection into the back end because somehow you need to also get an order out. Sometimes you also need to get the billing done. Not sometimes, you have to.
This is where we are leading. This is where we are wanting Apple, this is where we are wanting Samsung. We have now a public cloud solution where we can also go after Zuora against , the public cloud, who can immediately go to a greenfield approach together with our S/4HANA Cloud solution. That again, ties the front office to the back office. The customer data platform, what yesterday Julia showed, this is where we did our homework. We have data privacy capabilities in our portfolio, which are very strong. Now when you do the customer 360, you can have a 360, not only including what is happening in marketing and sales, the leads, the prospects, what you have from a potential customer. Now you can link it. Is this prospect already a customer?
What is the supply chain data of this customer? How are the financials looking, the revenue looking for this customer? We have this 360 combined with data privacy is a unique capability because data protection and data privacy is a big topic these days with everything else, what is going on in our world. Next slide, please. I wanted to have a customer, yeah, to show you also the power of SAP and what does it mean, yeah, to connect, yeah, such a customer like the BMW Group. Luka, I guess you agree, it's one of our, you know, best customers because we are co-innovating a lot. It starts with the commerce side, where BMW and others, you know, they need hyper-personalization.
When you're gonna configure a car, you wanna have a very personalized experience, yeah? It's not anymore about only the color of a car. Yeah, you can, you know, put so much services around the car when it comes to the navigation system, when it comes to other services, especially when you are driving now an electric car like we do, Luka, you and myself. Y ou need to configure a car in a complete new way. Again, when you are then talking about the head of supply chain, too, of BMW, he says, "Oh, now you need to give me this translation," what I talked earlier about. "How do I can get this materials then back into the design and to the manufacturing process of BMW?
How can I still produce at mass scale?" This is what we are translating, then into the supply chain. Then, of course, with S/4HANA Finance, we are allowing BMW to not only outsource to shared service centers, but really also automate at scale. The BTP is there, to move them back to the standard. We always have this discussion, "Oh, do you host such customers or do you want them at scale?" We want them at scale. Customers like BMW, it needs time until they are fully standardized on each and every business process. Analytics Cloud, they are big.
Like Red Bull and others, what they are doing is actually with SAP Analytics Cloud. You can maybe remember I showed here some years back in a different role, the value driver tree and say, how can we c onnect the planning, the financial plan, the guidance we put out there to the workforce plan, to the sales plan, and to the supply chain plan. This is what BMW does with our planning foundation. What we did on the product side, we connected, yeah, so that the planning, the value drivers are connected. When you have higher attrition, when you have inflation, what does it mean for your P&L? How does your personnel expenses move? Are you still in the guidance, yes or no? Can we do certain predictions? Can we simulate it? BMW does it, connect it end to end.
Financial to all of the other functions inside BMW. Great customer. Then growth. I guess, Luka, it's fair to say, yeah, when we launched RISE with SAP, we of course also had our own models. Now that I'm seeing here this revenue curve, I have to say, I'm so happy. I could not be more proud about our own transformation. Because when you are launching something with RISE with SAP, you have to understand that's not only a technical lift and shift. Maybe in the first step, because sometimes customers just wanna go to the cloud because of cybersecurity reasons, because they don't wanna run their own operations anymore. When they come to us and not to a hyperscaler, they wanna do more.
That also is on us then with great assets like Signavio, yeah, to also make this change happen, and to show them the value of offerings like RISE, and this is what worked out so well. Then when you see that suddenly 70% of the RISE customers are also using the platform, and you see suddenly the consumption coming, and then you see customers, partners coming, like Icertis, who connect to that, then you see how all the things I just talked about are coming together in this revenue line item. We have 25% growth. Nominal was, it was 31%. When we came out with our guidance, we guided for 21%, a CAGR of 21%. You see, we are very confident about our ability to grow.
Now the question I'm sometimes getting from customers is, "Hey, how do you actually judge the macroeconomics you use? So what is going on with your pipeline?" I have to say, the cloud side, when now inflation is increasing, and I think it will even further go up because we have a huge problem, especially in EMEA, around energy, and the pricing there and the sourcing there. For us, this is actually another strong argument to move to the cloud, to change CapEx to OpEx, to also find new commercial models where like pay as you go, like commit to consume, where we give the customers the flexibility also commercially, yeah, to tailor t he commercials according to their outcomes and to their transformation.
When you look at that our revenue stream up is becoming more and more predictable, and it will continue in this way, and even more important, that the customers are happy, then actually this gives really a sound picture. Also for the rest of the year, I'm very confident. Of course, yeah, when you are now talking about business model transformation, customers are now coming to us. What can we do around cash flow optimization? What can you do to offset a little bit the margin pressure what we have? We have great technology for that, which we can then make happen via RISE with SAP. If we then move on, I talked about RISE.
For me it's very important, and that's part of our own transformation, that we sit on the table, like this morning, and that we are talking first about what is happening in this industry, that we come in with Signavio and explain them how to change certain business models. How are the best practices in their industry? That we lead the game, that we, like in the morning, we also explained an oil and gas customer how to move to renewables, how to best sell and also deliver hydrogen. What kind of processes do we see? What are the best practices in oil and gas for that? Then we come in the next step to the cloud migration.
This is of course where we see a lot of customers moving plain vanilla immediately to the standard 100% because we have in our RISE customer base, we have customers with a few hundred users. They can go greenfield. Others, it takes a time. It's a journey where we still gonna support them to further and further standardize, build the extensions on the platform, and then move to a 100% modular application landscape in the cloud. Then let's not forget, when we are talking about RISE, and we start with S/4HANA, with supply chain, sometimes also with HR or commerce, but when you talk especially around supply chain, immediately you are coming back, "Hey, what are actually your SLAs?
What are your performance, your stability SLAs?" Then when you go with a hyperscaler separate to SAP, you get an SLA for your application landscape, you get an SLA for the platform, and you get an SLA from the hyperscaler. It's not what you want. In case you're facing downtimes, you wanna have, an end-to-end accountability, and this is what you are getting from SAP together with the hyperscalers, or end-to-end SAP if customers choose to run in the SAP cloud. Then of course, when you have a right to sit at the table and when we are playing out our strengths on the business side, on understanding the industries, and I would make a claim that we understand these industries much better than any other hyperscaler or other player out there, then you can infuse , your new innovations.
We talk about the Industry Cloud. We are talking about customer loyalty, like last week with an airline or with certain retailers. We talk about returns claims management, or in the utilities sector around intelligent asset management for new ways, you know, of, you know, to supplying the energy to the end consumer. We talk about the network, and we talk about, of course, sustainability, about the green ledger. Next page. S/4HANA. I mean, I have seen a few ERP cycles, and I have to say I've never seen such a strong increase in revenue, but also customer adoption. Let's face it, behind the 71% are in the meantime close to 5,000 customers, of which 80% are already live. Again, it's not only a lift and shift.
60% are net new. Because we are entering the discussion with a business model transformation, and sometimes customers come either with a line of business landscape, a best of suite, and see that they cannot continue because it doesn't scale. It's a lot of complexity to stitch it together, or localization becomes an issue. This is where a lot of net new customers are joining us. Localization is a key differentiator. And then, of course, the conversion ratio, which Luka is watching very closely. That we are not only making our way to the cloud commercially, but that we sell value, especially now with the inflation. We need to make sure that we have good pricing, and we have a strong focus on that.
We are using telemetry data to measure the adoption, and then once the adoption is there and the customer sees the value, I mean, then you can also come at the point of the renewal and say, "Hey, what about, you know, the price? Now that you see the value, now that we have delivered on our promise." For us, this conversion ratio is very, very important. The cross-sell part. That's also when Scott talks later on about the go-to-market side of the house. For me, it's very important that we not have this line of business sellers. I wanna have our account executives coming in, selling our holistic roadmap, and then we can of course go in and address the different buying centers. For me, it's very important that RISE is. Of course, the platform is the basis.
S/4HANA, of course we are SAP, but then, hey, here we talk. You really wanna connect and run your enterprise end-to-end. Let's talk about human experience. Let's talk about intelligent spend management in a modular way. Next page, please. Why do we believe we have even further upside, and why, I guess, Luka, when we look at our pipeline, we can still sleep well during night? I would say we are not only, you know, happy and satisfied with the portfolio as it is today. We don't wanna play everywhere, but we picked our bets. The bets are sustainability, I explained it, because we feel we have a wide to come up with the data sources what our customers need to really also act on sustainability.
The Industry Cloud is a huge partner play, and when you would have been at our partner reception, they are all building on SAP Business Technology Platform. Yes. They all get certified now on BTP. They all get enabled. It's a transformation for them as well. When you used to modify ERPs on SAP NetWeaver in our old world, and you have to move it over, it takes time. You maybe also have heard that our ecosystem, once we launched RISE with SAP, said, "Huh, let's see how this plays out." I can tell you the big ones, you have seen yesterday Julia White with Accenture, but also our midsize partners, they are all on that now. Because they also see that they are winning.
Now that we have the strong API layer, now that we have the data model, and now that they can see they can resell this IP, what they built on BTP, to the whole industry of SAP. Now that our field is also selling partner apps as like it would be our own apps, then you know that you have really also a strong ecosystem play. In the meantime, the ecosystem, when we talk about bookings, it's actually growing faster than our direct sales. Then the Business Process Intelligence, Luka and team did a great job there with Signavio. It was a very smart acquisition to give us also the credibility when it comes to RISE and the business model and the business process transformation.
The network is an asset which we underutilize and which we are now engineering together to really build this largest B2B network in the world. With Taulia, I mean, we didn't see at the point of the acquisition the inflation coming and the rising price pressure, but of course, cash flow optimization, financing, when you have billions of transactions, it's I feel a very natural connection. Then the sovereign cloud, yeah. That's why we are very confident on our absolute gross-profit target in the sovereign cloud. We have to accommodate for that. But again, they are profitable. They will further accelerate our growth, and they will also deliver very positive absolute gross-profit for our P&L. If we move on. Yeah, I talked about that. I mean, we will see later on.
I said this is a very prominent example, but we won't stop here. We are very, very focused on screening our portfolio and say, "where can we partner, and where do we have to build?" When you see partners like BlackLine just in the morning, it's a very strong connection, and we need to push this even more. There we are on a, as I also mentioned, on a very good track, that we're also positioning these partner solutions now much more than in the past. When it comes about the future innovation, when you think about, what comes in five years ahead, of course, we are talking to customers, but also we are talking to analysts, to investors.
We have the Sapphire Ventures arm to really see, okay, what is happening in the field of crypto? We will now offer our first, crypto capability with a partner, BitPay, in the next month. We of course looking into the metaverse. We don't wanna say how we wanna play in the metaverse end-to-end, but there's a few scenarios in commerce and learning where we definitely wanna have a play. We announced a partnership with Apple when it comes to the digital, you know, twin, on the manufacturing side of the house. How can we also there drive further automation, together with Apple? These are the types of partnerships which we are going to expand and will also drive big innovation as part of our portfolio.
If we then go to the next page. Luka will give you full insights into our outlook for the operating profit. Also there, we always said it. We gave you our promise that we are doing now this transformation full steam, that we strongly feel that the strategy is the right one for the long-term success of SAP. We gave you this promise. This means Luka, myself, the whole executive board, that we were gonna deliver this double-digit profit. Yes, we will, because you know, our revenue base now has a much higher recurring revenue share. The cloud growth is coming. What we also see is, of course, that we are doing our homework in the cost base with regard to the next gen cloud delivery. This is hard work, but we gonna get it done.
Of course, we are pulling off further triggers to drive automation, to drive further scale, especially when it comes to our G&A functions inside the company. What also helps when you talk about profit is, of course, that you have an easier sell when it comes to cross-selling certain assets. This is where we're gonna leverage now also the platform and the integration work, what we have done to really sell now much more into our installed base with existing solutions, what we have. With that, we come to the revenue side of the house. This is, you know, when you look at, you know, the CAGR, it stood when we came out, it was a CAGR of 21%, 24%. We are very confident, and we are ahead of plan, for sure.
When I look into the remainder of the year, I would say despite that there are, of course, some macroeconomic concerns, but this is always the time when SAP actually did best. We have technology to overcome these challenges for our customers. The cloud has the benefit of switching from CapEx to OpEx, that's another strong argument. Then, of course, the portfolio. It's relevant. The customers are not scaling back their IT investments, at least not on the SAP side. This is why we are very confident that we are going to hit or even overachieve the EUR 22 billion. Then, of course, the rest will follow subsequently. With that, again, thanks again for coming here to Orlando. Now I would say I heard that Thomas is here virtually.
Thomas, I hope you're doing well. It's not a secret anymore. Did you have COVID or do you still have COVID? He is here now to give you an update on the product side of the house. Over to you, Thomas.
Thank you very much, Christian, and also warm welcome from my side. As you mentioned, I caught COVID, but actually I tested negatively today, so I recovered from COVID. All good news from that front. Even if I'm not able to participate in person with you in Orlando, I'm very pleased actually to join you at least remotely to talk a little bit about how we actually turn this into product truth and a reality. Christian talked about the fast-changing market forces, the geopolitical pressures, climate issues, sustainability, and our vision and strategy. From a product perspective, for sure, we wanna translate these challenges into products and fundamentally solutions and business outcomes for our customers, which means we need to build solutions that meet the critical business and customer needs.
As a former CIO, I have a lot of empathy from a customer perspective, what it means actually to drive business transformation, to embrace new technology, to fundamentally help the business to succeed. Here one aspect is for sure, agility. Christian talked about modularity as a key aspect, and we drive our entire portfolio in a highly modular approach that basically our customers can reduce the time to value significantly because they can take our SaaS solutions and implement the innovations with the respective speed and for sure have the built-in integration, which we delivered in the last years as well. I come to that point as well. Which means for sure, the key aspect is agility, but also the continuous innovation. That's the advantage of the cloud, that we have a continuous feature delivery for our product.
It's not just one big release a year, but actually we can deploy this confidence every single day. This gives us the opportunity to adjust also our backlog way more agile. For that, we focus on this customer outcome and the customer success to increase automation for our customers, to increase the productivity, and as Christian mentioned, to be able to enable new business models, rapidly. All of that is built cloud natively on the business technology platform. If you think about our new solutions like subscription billing, digital manufacturing cloud, our sustainability apps, all are built on the business technology platform as a foundation. With that, for sure, our customers can focus on the key business challenges. Not anymore on technical upgrades and the likes, because for sure we wanna help them to succeed in this environment.
Because we truly believe the new normal is not just about work from home, it's actually about the continuous crisis management. We come out from COVID and the war now in Ukraine, and we will see more and more crises. For our customers, for enterprises, it's so important to become resilient. Resiliency we learned in the last couple of years, even more in this global economy, you need to be networked businesses. That's what we bring together with our SAP Business Network, is a centralized global directory of intelligent enterprises, trading partners, as Christian mentioned, logistic partners, carriers, to really ensure the commerce and the flow. That is very essential.
Here we talk about 639 million B2B transactions, which we had last year, which is basically 1.7 million daily transaction and more than EUR 10 billion of daily commerce through our business network. That's a 23% increase purely last year where we brought together all aspects. It's just a starting point. Christian talked about Catena-X. We evolved into industry-specific networks with our pioneers and partners like Siemens, Bosch, BMW, Volkswagen, Fraunhofer. We basically can establish a true end-to-end visibility and transparency from the OEM to the raw material. That is actually essential if you think about collaborative quality management to avoid actually callbacks forecast. Or if you think about sustainability, because to measure the carbon footprint, you need to have this end-to-end visibility. Here, Christian mentioned it, trust is essential because we need data sharing to ensure that.
That's where our customers trust in our network to enable that. I think that's an important aspect. I wanna give you a quick glimpse into that. There we connected our supply chain planning, our integrated business plan, together with the business network, which means you get an immediate action based on an issue, leveraging external sources which we integrate, that the logistics planner actually can take direct action. So not only the automatic information he receives for each of the component, which perhaps is stuck in the port in Shanghai, but actually what does that mean for all the current production orders or even sales and customer orders? With that information, with our integration, we directly can correlate the financial outcome and the sales impact, and what does that mean? That for sure, we don't stop with that.
We give actually intelligent recommendation based on our AI, which we embed in our products, leveraging the alternative suppliers, alternative ways how to produce the good to be able to, in time, ship it to the customer. That's where again, the integration back to the network is coming, leveraging partnerships like EcoVadis for sustainability information. Again, in the recommendation, for sure it's about the profit. You need to see what does it take to leverage an alternative supplier with a different route from a cost perspective, but also from a sustainability angle. That's exactly what we all brought together with the integration of our portfolio. Sustainability is something which we consider in a holistic fashion.
We actually wanna go away from hybrid dashboards because sustainability, you need to have a true effort, and that means we need to embed it into all of the business processes. Here we take all of the ESG dimensions. The environmental ones are for sure key with carbon or methane or others. Also if you think about the societal and governance aspect, like ethical sourcing to avoid child labor, diversity and inclusion in HR. There you directly see again the strengths of our portfolio and how this is coming together. A key aspect, you cannot do that alone. We leverage partners like BearingPoint, BCG, McKinsey, and many, many more to bring that together. I fundamentally believe we do not inherit the Earth from our ancestors, but actually we borrow it from our children.
Now in order to have this macro and this trends which we support from the networks, from a sustainability perspective, from a supply chain resiliency, and all the key cross processes which we enable. As an example, the [order] to cash, design to operate or total workforce management. Actually for us it's clear the whole needs to be greater than the sum of the parts. With that, for sure, we need to bring our portfolio together. That's what we do in our cross priorities, localization, user experience, AI, operational excellence, and integration. If we go quickly to localization, to give you some sense of where we are, because we all see the rising regulations around the globe and even more so in this geopolitical situation.
Last year alone, we delivered more than 1,211 legal changes to our customers to stay compliant, to be able to make business. We by far have for sure the highest level of localization across the portfolio, more than 565 local versions. If you purely think about HR and our SuccessFactors product, we support more than 102 different local versions. Fundamentally, we wanna help our companies, our customers to grow globally, to be successful locally. I think that is becoming more and more important. Fundamentally, you can argue this is regulatory relief as a service. If you think about user experience, SAP has a holistic approach for user experience.
We not just think about the ethics and design, but also think about accessibility, performance, and fundamentally to get the job done. We wanna provide equal opportunity to everybody. That's the reason why, for instance, accessibility is so important for us that everybody can leverage our products. Expectations are clear: effortless, intuitive, and for sure, also to be able to get the workforce more quickly productive. We are now setting new standards for enterprise software. This is not just talk. We already delivered. Last year at SAP TechEd, our new visual theme, Horizon, Fiori Next, which is already live with S/4HANA Cloud and also embedded in our new mobile experience, SAP Mobile Start, where the entire Intelligent Enterprise is coming together at the fingertips. Christian mentioned it.
We have new strategic partnerships with Apple in our digital supply chain portfolio to revolutionize how people work, for instance, in the warehouse with augmented reality and mixed reality, which is also giving us a good edge to have a holistic view on that. Fundamentally, if you think about user experience, another topic which is absolutely critical is AI, because that also helps how employees and end users are guided through the system. For sure, let's be clear, we wanna ensure that the end users of our software, that they can concentrate on high-value tasks, on business critical situations. With that, we wanna avoid manual repetitive tasks with our AI cases which we deliver.
From our end, we embed natively in our applications, artificial intelligence cases, and more than 120 cases are live for our customers to fundamentally drive the future, which for sure is autonomous for all these core standardized, repetitive, tasks. We also see the success from a customer perspective. Think about Switzerland's national rail company. We achieved an automation rate of 99%, which for sure is reducing the pressure and the work on the shared service centers on that front. Or if you think about the city of Hamburg, which is basically managing all the corona aid funds with, our solutions, and based on our document information extraction service, they can actually process the more than 900,000 application documents which they receive a month automatically and are able, actually, to pass them through, in time for people in need.
Another aspect, and Christian mentioned it, is operational excellence. We know that customer trust is the foundation for everything what we do, because we know we run the most business critical processes and operate the most business critical data. That's the reason why our next generation cloud delivery and those operations harmonization is so essential. Here we leverage all of our assets at scale with all of the entities which we also acquired in the past, and this gives us scale. We modernize our infrastructure, but with that and the scale, we also reduce the TCO and improve the resiliency. We increased the SLAs last year already to 99.7% on an application level, and the actuals are actually by far higher than 99.9%. Quite frankly, most of our products have actually five 9s in the SLAs.
What is also super important is our cybersecurity program. This is zero trust policy, multilayered approaches, which is absolutely critical, especially in these times. But also if you think about from a customer perspective, our portfolio, I think GDPR, and Christian mentioned this, is absolutely essential, which means also the authorization. I heard from a lot of customers who took our data and have put it the data into a data lake and analyzed it somewhere else. The problem with that is you need to ensure that the same authorizations which you have in the operational systems are also there, which means you have double and three times the effort to ensure the security. If you need to delete data, if a customer calls and says, "Hey, I wanna get my data deleted," you need to track all of where you put the data.
That's the reason why this integrated approach which we have with our SAP Business Technology Platform, that goes from our SAP Analytics Cloud to the SAP Data Warehouse Cloud, and SAP HANA Cloud, have all of this lined up in a seamless fashion, gives us for sure an edge in this regard. We talked quite some time about integration, and I have to say I'm so pleased about the progress which we see because the whole is certainly greater than the sum of the parts. If you think about the end-to-end business processes which we now can enable in this regard, and Christian mentioned about it. But also think about scenarios like the cross analytics and planning between all of the assets which is now available with our product portfolio. Cross workflows across our application portfolio.
We delivered last year alone 450 integrations, and for sure we will not stop here, we will continue. This is actually the foundation where you see that our customers can run that. We also embrace Qualtrics and experience management, which is a very essential aspect. If you think about our newly launched SAP Service Cloud product, which we also launched here at SAP Sapphire, which is natively integrated with experience management. Because if you think about, for instance, a call center, we all know that one call, which is not, if not well perceived by the customer, can turn the entire brand and loyalty downside. Which means we need to get the sentiment of the customer natively integrated now in our portfolio to help our customers succeed. What is also important, we wanna be an open system.
It's absolutely clear we need to be open. That's the reason why we focus on our API first strategy, and we already delivered more than 3,000 APIs on the SAP Business Technology Platform for extensibility, but also for our partners to extend our industry standard domain model, which is leveraged across the areas. I think that is a very important aspect, as well. For sure, this also simplifies the cross-selling opportunity as Christian laid out and will for sure increase the stickiness because you have these pre-built integrations across our portfolio. The foundation of all of that is the SAP Business Technology Platform. It ties together everything what we do. It's business centric, unified and open. Also it's the foundation for all the integration extensibility what I explained.
It's also essential because it's the vehicle that our customers can develop differentiating capabilities on the side in a clean way to keep the core clean, and we can continuously receive the innovation and upgrades as well. Also here, some amazing statistics from some customers that actually they could reduce the TCO by 40%, leveraging the Business Technology Platform in HANA Cloud, and also could increase the project speed, which also led to reduced cost by factor of five compared to other project this customer did. Here again, I think you hear that Sapphire continuously about the partners, about the ecosystem, how important that is. It's the center stage of our portfolio to leverage partners. We're also pleased that already more than 4,000 partners are engaged with Business Technology Platform.
We have more than 750 partner apps already built on the Business Technology Platform in our ecosystem of 23,000 partners. I think it's always good, also to really show the significance of our partners, and with that, actually talk about Icertis. Christian mentioned it as one of the great examples, how we bring together the best of the worlds in the industry. As an industry leader for contract lifecycle management, Icertis, and for sure SAP, because there you can really connect the contracts from commerce to procurement, HR and finance all together. I'm very proud about this partnership, and I'm very pleased to have Monish Darda, the Co-founder and CTO at Icertis, here in Orlando today, and I wanna give him a warm welcome.
Monish, I would like to ask you on stage to talk with me a little bit about our partnership.
Thank you so much. Thank you Thomas, so much. Thomas, I was hoping to see you today here, but I think this has worked out very well. You've tested negative, so no symptoms, nothing, and you're giving company to all the great people who have joined us digitally. So thank you. Thank you for having me. I really appreciate that.
Absolutely. Monish, tell us a little bit about Icertis. What should we know about Icertis?
You know, and I'll tell this, not the people in the room, but people who are joining us virtually. We have these pedicabs going around the convention center, and they'll tell you a contract joke if you have a ride in them. One of the jokes they tell, which I loved, was, "How many contracts does it take to screw a light bulb?" The answer is one, but if you don't read it well, it will screw you. That's actually very interesting because contracts are the foundation of the relationship, any relationship in an enterprise. Every dollar, every euro in and out of the enterprise actually has a contract behind it, right?
Which means that if you know what the intent of the relationship is, you can have a contract management system like ours actually correctly memorialize it and then make sure the intent of that relationship is fully realized. What we do is we get large companies like Microsoft, like Sanofi, like Daimler together and make sure that these contract flows, these workflows, are actually connected across the enterprise. You look at, you know, starting with the buy side, the sell side, the corporate contracts, the NDAs, the human capital, all of the people contracts, all of that coming together in a connected workflow, making sure that all of these come together. When they come together, when all of these systems are connected, it's the contracts that actually bind them, because that's the data that flows.
Christian actually mentioned the importance of data. We have maybe the largest repository of curated contracts on the planet, right? If you think about how the contract actually takes care of the, of the business process and how money flows in and out of the enterprise, you layer it with all that data, and you put artificial intelligence on top, we call that contract intelligence. We make sure that that intent is fully realized. We make sure that that intent from the transactions where, partners like SAP can give us that data of the transaction. We can say, "Hey, here's the transaction that comes together. Here's the intent that is realized." Also, as part of that process, we give insight into terms of how that business decision is being made. The insight into the contract repository is very, very critical.
Some of the largest customers we have, I think that's how they're using it. They're taking that data, contract data, which is new data into enterprise. The contract object is a new object in the enterprise architecture. It's been in the last five years. They now infuse it into their contracting, into their business processes, so that they can actually run their business very well. It's essentially the Intelligent, Sustainable Enterprise with contract intelligence.
No, thank you so much for this update. Also, I mean, we talked and we worked and collaborated already together since 2020 with our SAP Ariba solution, our SAP Customer Experience solutions. Tell us a little bit what excites you most about this partnership with SAP and also what customers actually can expect from this. I mean, as you mentioned, integration from transaction to the contract and vice versa to really drive new business processes. Tell us a little bit about what can customers expect from this.
Yes. First of all, actually, I want to thank you and congratulate you for 50 years of SAP. Actually, join me in applause. I think that's fantastic. You know, it is fantastic. It's fantastic for us. We could not even 1/4 of that journey. Saueressig and my co-founder and my CEO is here. He knows, it's very hard, especially quarter-over-quarter, year-over-year, through the pandemic, through wars, through all kind of things. Kind of going and making sure that you have a stable base is fantastic. Then have that base complemented by partners is even better. We went through negotiations when we put together the SAP and Icertis contract, and we did this with fairness, openness, respect, teamwork, and execution. Those are our values as well, and it was such a smooth experience.
We've learned a lot from this partnership over the years. What is also important is that, you know, this partnership kind of has the cornerstone of two very interesting things. The first thing is that if you think about it, 50 years of SAP. That was the first system of record in the enterprise, in my mind. SAP was the first one. It was followed by HCM, PeopleSoft. It was followed by SCM, which SAP owns most of it now. And then Salesforce, CRM, and of course, SAP also has customer success and customer experience. It was the fifth system of record, which was CLM. Two systems of record coming together, and that can create magic in the enterprise. I think that's how I see this partnership. That's how I'm excited about this partnership.
Because Saueressig and I know that, you know, if we can put this together and if we can execute, and if we can do this right, we have that enterprise data, we have the rules of business that is memorialized in the contract, we can actually get our customers to make sure that that intent of that relationship is fully realized. I think that's a great journey I'm really, really excited about. What does that mean for our customers? If you take Ariba and you make sure that you are doing procurement, you click a button, you get your contract ready, you make sure that the contract is now not just the execution.
What happens to the contract on the transaction side, you make sure that you are now checking whether all of these transactions confirm to what was meant in the contract, whether it is volume discounts, whether it is making sure that you're doing the right things from your obligations perspective, making sure that you have all of your clauses for sustainability, for ethical sourcing right into your contracts, and that you're abiding by what you've obligated to do with your customers. It's all in there, and it all takes place starting with the contract. I think that's where I'm really excited because it goes end-to-end. It doesn't stop at Ariba.
It goes to S/4HANA, it goes into SuccessFactors, and it continues because at the end of the day, even the people from an enterprise perspective, you're really looking at how this data flows across the enterprise and how it all comes together. Layered with AI, I think this is a partnership that really. I'm so excited about this. There's so many opportunities here that it is quite incredible. I'm looking forward to it.
No, thank you so much, Monish. Also thanks for coming over here to Orlando and enjoy the further time in SAP Sapphire. I think we got a great glimpse into the partnership and for sure the potential it will bring if we bring together best of both worlds together. Thank you very much, Monish. Also a big round of applause again.
Thank you so much. Thank you, Saueressig , and see you soon.
I think what you see, we really mean it seriously with our partnerships and the ecosystem approach. If we bring also partners here on stage, in this event, and I think that's really important for us. Also, quite frankly, it's important because it's important for our portfolio rationalization. Because at SAP, we focus on our core differentiated right to win areas, and we leverage strong partnerships actually to succeed and also enable these truly differentiated new possibilities, leveraging also our partners. If you think about innovations and also the various areas in our portfolio, it's actually hard to talk about all of them because it's quite frankly, a firework of innovations which we see across all of the areas. With a clear focus on how we wanna actually differentiate in each segment and then for sure, also the innovations we deliver.
I most probably could talk hours and hours purely about that one slide, about what we do in customer experience, taking CRM further than just the front office. If you think about commerce and recommerce, if you think about return processes, and also the shipment in time, you see it's getting across the front and the back office. If you think about SAP S/4HANA, the enabler for new business models, sustainability embedded across, and AI with the deliveries we do also with regards to our digital supply chain, digital factories and Industry 4.0, really a core essential area. Then Christian talked about Intelligent Spend and the Business Network, where quite frankly, the opportunities are just endlessly what we do and the leverage thereof, of AI, like in Concur Verify.
Now, intelligent audit components, material track and trace is just an enormous opportunity. Last but certainly not least, Human Experience Management, which is centering around the employees. Not just the employee, but quite frankly, new concepts like the whole self model, that we don't only think about the skills, but also capabilities, but also beliefs of people and experiences which we bring together also in dynamic teams. New concepts that if we talk about an opportunity marketplace, that we combine learning with an AI behind what this person need to succeed, leveraging fellowships, different role, rotations in the company, positionings, bringing that all together and ensuring that the experience in the entire employee journey is flawlessly by embedding Qualtrics again as part of our, portfolio itself.
That's where we really focus in each of the areas with a continuous innovation delivery across the entire portfolio. Having said that, in closing, I want to reiterate that actually with the broad and deep integrated portfolio, we truly deliver the intelligent sustainable enterprises to re-enable a true business transformation. Leveraging SAP Signavio to analyze the processes, but also with our business technology platform to embrace and change the differentiated areas of the processes. Fundamentally, with that, really ensure that the whole is greater than the sum of the parts. With apps, which we have, and applications which are networked directly natively integrated in our largest B2B business network, which we operate, embedding sustainability in all of our applications across to really ensure that all of the ESG dimensions are addressed. We are making significant progress.
We are delivering, and ultimately, we are solving our customers' most pressing problems, what also Christian and I talked about. We are certainly not resting. Quite frankly, the proof Christian mentioned, and we're very proud about it, is the increase of the customer satisfaction, which is clearly a signal that we do the right thing. I truly believe technology is the foundation for a better world, and innovation is the road to success. With that, I wanna thank you for the attention and actually wanna hand it over back to Orlando and wanna welcome Scott Russell on stage, our Head of Customer Success, talking with you about how we can make our customers successful and how we deliver the business outcomes to our customers. With that, Scott, over to you.
Thank you, Thomas. Hopefully you can hear me. Thank you, Thomas. Good afternoon, everybody. All right, we're back in the room again. Hopefully, I can get your attention for the next 15, 20 minutes. If I can't get your attention, I've got a great special guest who's gonna give you some insights about how they run their business on SAP and the partnership with us. I need this. What I'm gonna talk about today is our cloud momentum. I want to talk about the reality of what is happening in the market right here, right now. I'm gonna talk about SAP as a growth company. I remember a conversation I had with a number of you 18 months ago when I took on this role, and there were open questions about SAP's ability to grow.
I guess I could understand because up until that point, the growth story wasn't quite reflecting what we were intending. The reality is we are growing faster or at worst, in line with our competition. Look at the revenue growth, and please understand this. This is not just RISE. You saw the slide from Christian. Clearly, RISE has been a showcase of growth, but the growth is across every part of our portfolio. The Business Technology Platform growing at extended pace, both with RISE and independently, as Thomas mentioned. Every one of our cloud categories in 2021 were growing double-digit pace. The reality is the cloud growth of SAP is not one-dimensional, it's multi-dimensional. It's allowing the vision that we had when we launched the Intelligent Enterprise in 2019, we're bringing it to a reality. It's happening at customers today.
Why are we so confident of our future? Because the reality is we feel like we're just scratching the surface. The potential is so much greater, and I'll talk a little bit about the potential that is in front of us. Part of that potential is the differentiation of SAP. I often get asked by customers and sometimes by analysts, "Hey, SAP, well, you're strong in ERP," or, "Where are you on the CRM market," or, "Where are you at in HCM?" The reality is we consider ourselves in a category of one. We are a category of one. We are the only organization that can fulfill the promise of transformation. Other companies, other cloud companies, they will be able to transform a part. They will be able to do a piece of the puzzle. It is only SAP that can do that end-to-end.
More so, we're the organization that is focused on the journey, not just the destination. You will hear about many in the technology industry talking about a so-called nirvana of when you get there, when you come to us, this is what it looks like. They offer no guidance or insights in the journey. SAP's history, our legacy, our foundation was helping customers on the journey to be able to run business processes at scale and innovate to help their businesses run better. We are doing that today, right now in the cloud. You look then a little bit further about the journeys, and you heard a little bit from Christian earlier about the different journeys that our customers are on. I wanna give you a little bit more color as to how that actually works.
Let me give you a few data points first. Number one, our business sees enormous potential in our ability to be able to cross-sell and upsell. 45% of our cloud customers, we've got multiple cloud solutions. Already today, they're not just acquiring one solution from SAP. To achieve the outcomes, to achieve the transformation, they are already acquiring multiple cloud solutions. Not because they're trying to say, "Hey, I want different pieces of SAP." They're trying to solve a business problem. They're transforming their business to solve a challenge, and that requires multiple pieces of SAP technology coming together in harmony. Data, workflows, processes, all integrated to achieve that outcome. And even more so, 20% of those customers have more than four solutions. There's two ways you can look at this data.
You can say, "That's already a significant progression," which it is. I would argue that the upside potential for us as an organization to be able to get penetration, greater share of wallet, increase the ratio from 2 to 5 to 1 to 3 to 1 or even more so the upsell and cross-sell opportunity is immense. It doesn't happen the same way. It is very rare for a customer to come to us and say, "We wanna buy it all in one go." Why? 'Cause they can't consume it that way. What they will do is embark on a journey, whether they're doing cloud ignition through transformation, through extension, and differentiation. A real example is Microsoft.
Several years ago, Microsoft came to us, and they needed to transform. They needed to be able to improve and evolve the way they manage device digital supply chain. They leveraged IBP, Integrated Business Planning, to be able to plan how they can run their devices, how they can manage the supply chain more effectively. That quickly then translated into, well, if I'm now able to fulfill that supply chain plan, I've then gotta have a workforce plan to administer it. They then went and said, "Okay, we've now got that in place. We now need to quickly move to how do we enable our workforce to fulfill what we promised through our supply chain." SuccessFactors, Employee Central.
They said, "Well, there's analytics and insights that we're trying to get that cover across multiple areas through planning and analytics," which means the workforce, the supply chain data, the financial data, they wanna be able to get a single view, a single lens of that information in one go. Next phase of transformation. Today, they're embarking on RISE with SAP, continuing to roll out and transform their financial and other operations singly with our, with our organization. The message is the transformation is not about trying to compete head to head with these different products.
Yes, we have competition out there, but the natural extension, the advantage we have of the data flows, the process flows, the workflows, and the automatic out-of-the-box integration that our technology provides makes it so much easier to go on a journey with SAP than try to run a best-of-breed head-to-head competition on each of these. It makes no sense. Here's the difference that we do. I no longer compete the way that our competition. They want us to compete in only the CRM category or only in the analytics category or only in the planning. We don't compete that way. We compete by starting with the outcome in mind, and then what are the capabilities we need to deliver to that outcome, and then hold ourselves accountable for the journey to achieve that outcome. Category of one, it is amazing the opportunity that this has created.
Christian presented a little bit earlier about the total addressable market. I am very confident of our cloud growth and the trajectory that we're on, and I'm confident not only because of the capabilities that Thomas just described in terms of the technology, the innovation that we've built, the progress that we've made to be able to have best-in-class capabilities orchestrated together to solve real critical business problems for our customers in the cloud. There's two things that are happening in our business that are making a huge difference in our confidence, in our growth, which is why not only Christian, can you and Luka sleep at night on the pipeline, I can sleep at night on the pipeline as well. Trust me, that's the thing that I look at every morning. I definitely look at the pipeline. Two things that are happening.
The first is that the total addressable market continues to expand. I've been in this industry for a significant period of time. I remember the most difficult competition that I used to have was not with our competitor. It was the opportunity cost of doing something else. If you were competing for a retailer, it would be to go and open a new store, to expand to a new line, to go and do other things with their capital and their operating expense to be able to do things to drive their business. We are in a unique place as an industry, in that no one questions digital transformation. No one questions the willingness and the need to be able to drive transformation through use of technology to help them either withstand disruption or take advantage of opportunity. Hence, that increase.
Even more so, we're able to penetrate and then get bigger share of the addressable market itself. We've got the best of both worlds. We've got a bigger addressable market that keeps on growing, but we're also getting greater penetration of the market that's already there. The opportunity for SAP to be able to grow in the future is not just the brilliance of our technology and the continued expansion. There are market dynamics that are giving us opportunity. What we are obviously trying to do is to seize upon that opportunity. I wanna highlight partnerships being a true differentiator and something that you've seen relatively recently, but it is an important part of our strategy.
The opportunity in partnering with Icertis has expanded our value proposition to our customers when it comes to contract lifecycle management and the ability to be able to memorialize those agreements. The reality is, as broad as our category of one is and the capabilities that we have, we don't do everything. I guess in the past, we were guilty of maybe trying to build everything 'cause we love engineering stuff, and we're pretty damn good at it. We're now looking to our partners to be able to help extend, expand, and meet the end, often in last mile capability, often to be able to get to that last reach.
You'll see whether it be through Industry Cloud or in business partnerships or in new innovations, supply chain with the NGT and the insurance industry co-innovation that we built together, constant examples, and you will see that having more and more because it allows us to be able to better meet the transformation needs of our customers. We don't force them to isolate to what we have. We give them an end-to-end outcome, and we facilitate that not only through SAP technology but through our partners. RISE. I sometimes get asked this question. You saw the growth that we have been doing on the order bookings. You've seen the growth in terms of net new customers. There's a few things to bear in mind. First of all, RISE is 15, 16 months old now. We have had huge expansion of the mid-market of net new customers.
We saw that in the early part of the journey. I often got asked the question, "Hey, Scott, is RISE relevant for large enterprise? That's where you're strong, SAP. Haven't seen so many of the customers." Well, big companies now take a bit of time to evaluate and make sure that RISE actually does fit their business. Here's the good news. You can see on the list recent wins. Leaders of industry, of their respective industries, are choosing RISE with SAP because they're doing it for two reasons, innovation and scale.
They need to be able to scale their business and trying to do that themselves through their own environment, the ability to be able to scale and standardize their operations, standardize their processes, clean core of operation, the ability to have the agility to upgrade, to always get the latest patches. All of those capabilities give them scale. But it also provides a platform of innovation. The BTP is that enabling platform, so they can expand and grow and innovate with SAP, with our partners on a platform that leverages the data layer, the process layer, and the integration layers, all in a way that is easy to use and consume. I mentioned before, the cloud journeys are different. Each one of these companies are on a different cloud journey. Some have already gone to S/4HANA, but they're wanting to go to the cloud properties of SAP.
Some are at a very old version of ECC, and they're trying to consolidate 10, sometimes 100 instances of SAP into a consolidated single platform. They've got all sorts of different backgrounds, but the outcome that they're trying to get to is the same, but their journey through there is different. RISE gives that flexibility. It gives a best-in-class cloud service that we know how to do because we do it with all of our other business applications, but it gives it in a way with RISE that understands that mission-critical systems that have been heavily customized to their unique requirements needs to have a tailored journey to get there, and we build the capabilities and the expertise and the industry knowledge that we have to achieve that. Then last but not least is the journey of transformation means that we change our engagement model.
I've been on record, I've spoken to many of you before about the transformation of our business from going from a product out to a customer in. To do that, it requires us to be focused on value for our customers' lifetime value. How do we measure that? We measure that through the outcomes. Is the outcome what they signed up to? I.e., did we deliver upon the promise? Was it done at the speed, i.e., velocity that they expected? Time to value is critical. Was the experience of engagement of working with SAP and our ecosystem enabling that positive experience to do that? If we get all three right, the cross-sell and up-sell will take care of itself because it's a natural movement rather than a forced one.
What you'll see from SAP as we go forward is the demand is already there. I'm not doing hard selling of this. What we're doing is managing the journeys and helping engage through that rather than trying to force companies to go down this road because they're already signed up. They're just saying, "Hey, understand where we are and help us through that change." Which then leads me to the customer journey. We've talked a lot inside of SAP about customer lifetime value. I guess the point that I would make is that seamless journey from discovery, selection, deployment, deriving outcomes all the way through to extending those capabilities, that leads to up-sell, cross-sell. That leads to a greater share of wallet. That leads to incremental value for SAP, but it's centered on their success equaling our success.
By doing that, it gives us other opportunities for efficiency. One of the things that I look at is how do I then be able to bring the scale of SAP in the hands of the customers without requiring feet on the street. Other industries have done this exceptionally well. The use of digital hub, the ability to be able to provide service engagement, information together with the marketing team of Julia, to be able to inform, guide, and share with customers through a journey that is a low cost to serve. When you've got an ability to be able to manage this operation in a life cycle, whether you're the biggest company on the planet or the smallest, I sort of showcased two of those this morning. You know, the pizza shop and Google. It's a nice distinction between.
Now they both have transformation journeys, and we are relevant in both cases, and it's centered on customer lifetime value, but the way we serve them may be done in different ways. Hopefully that makes a bit of sense about why we're confident of our growth, why we believe it's a sustained growth, why we feel our relevancy for our customers is higher than it's ever been before. Don't take my word for it. I'd like to welcome on stage in a moment a leader that I've had the opportunity to work with over the past 15 months, Penelope Prett, who is the CIO for Accenture. She's the leader or the CIO, IT operations, business applications.
In Penelope, it's a leader that is absolutely driven and focused around how to enable Accenture to drive scale and efficiency for hundreds of thousands of employees working on tens of thousands of customers around the world, 120+ countries, not only in a professional services context, but increasingly leveraging different businesses, assets, IP, technology as a part of their portfolio to achieve their business goals. She's had a 25-year career at Accenture, and she's one of the most dynamic leaders that I've had the privilege to work with. Penelope, please join me on stage and share your story.
Good to see you again, Scott.
Welcome. Great to see you. Grab a seat.
Thank you.
Okay. I think I set you up pretty well, right?
You did very well. Thank you for that.
Penelope, let me give you the easy at-bat to start off with. Tell us a little bit about Accenture. How's it going? How's business moving at the moment?
Well, I think you actually did a pretty good job of that, Scott, right? Our growth is excellent. We are diversifying our business. We are acquiring companies to add capabilities to what we can bring to our customers, truly delivering on the promise of human ingenuity and technology. As a CIO, my responsibility is not just to think about how to keep the water stable and everything up and running, as you said, but what is the next thing that I'm going to do to materially power that growth? When I think about that, right, and we think about things that we already do with SAP, such as close our company books for a global Fortune 500 in a handful of days, how do you top that?
That's what brought us to the RISE and SOAR dialog, right?
It did. A little bit about RISE What were the opportunities that you saw? I know in the discussions that we had, you evaluated, you looked at this. What were the opportunities, but also the areas that you felt that Accenture would either focus on or benefit from?
I think you hit a lot of them when you spoke, Scott, but when I think about what I wanna bring to Accenture to enable it for the next wave of whatever's coming, I think about three core capabilities I really have to watch as a CIO. Number one, we have to be flexible. If nothing else, the last two years have taught all of us in this room that there are things you cannot plan for, but you have to be prepared to handle. Having an IT landscape that is flexible, that can adapt to what's changing in market as we see new places we wanna penetrate, new sources of revenue we'd like to go after. Being able to serve that is absolutely critical to me successfully serving Accenture as my company. Number two, being fast, right? Very agile, but fast.
Like you said, first market mover means something in today's world, and I have to be able to provide capabilities and insights at the speed at which my business wishes to grow. Perhaps the third and most important thing is we all live in a time of a war on talent, right? You're all experiencing this the same as I am. Making sure that you can provide very vibrant and delightful career experiences for the people who join your organizations and let them do things that get them up every day and keep them engaged with and bound to your enterprise. That's an incredibly important part of being successful in today's world.
You know, when we talked, I mean, when we looked at the RISE journey for Accenture, all of those capabilities, the flexibility, the scale, the relevance, they all were all that came up. What's the next part of the vision? I think you were really leading us in your expectations, but when you think about the future for Accenture and the role that SAP plays as a partner and as a technology foundation for your business, what's the next expectations in the journey?
Well, I think there are two very important things that we have to do together, and they are joined as a journey, but they are separate things when we think about what we want out of them. The first one is the whole RISE premise, which you and I are working together. If you think about that concept, when I talked about the need for flexibility, agility, and a workforce that is bound to me and enjoys what they do every day, you really have to think about how to shape your IT landscape to get there. I think we all accept that the cloud is here to stay at this point, that compressed transformation is the order of the day, and that companies who lean into that and embrace it create a competitive advantage for themselves.
When I think about what I wanna do with the shop, I wanna partner with someone who's going to be able to take over a lot of the services that I currently provide so that I can consume those services as an end-to-end product, right? Seamlessly for my organization, maintaining the same level of high performance. That’s going to allow me to take the talent component that is so precious to me and focus it on how to capture the next wave of value for my company, pairing more closely with my business partners, examining the market to see what's happening out there and which direction we should be going. That’s kind of the value of how we look at the RISE side of the equation. You and I have to take it further, Scott, and we have to SOAR off of RISE.
What do we mean by that? This is an opportunity to reinvent ourselves as a business, right? By using BTP and the SOAR journey to examine every aspect of how we operate our business, to be limited in the art of the possible only by our own ability to think creatively, we go through a process where we unleash the idea machine from our people, and we start to think about how we can structurally change our business in this process of moving to a SaaS version of SAP in ways that can unlock even greater performance than we've already get out there, right? I think about the two as separately, but they're part of an entire journey. Once we get through this initial planning part with you, there's a world to explore. What are you going to put in your landscape, right?
What are we going to integrate on our end? There's also a very vibrant ecosystem about this. You mentioned Icertis, right? There's a very vibrant ecosystem out there that together we can look to tap to bring in additional capabilities to bolster what we each do very well.
The possibilities here are limitless, Scott.
Yeah, the way you describe it, that standard SaaS template, being able to then use the standardization. As you talk, I always think about that innovation agenda that drives the flexibility that you require. There's many companies that have been or trying to go through the journey. In fact, at this event, as you know, Penelope, there's literally thousands of companies that are evaluating their journey, their ability to transform. This isn't the start for you because you've been on this journey for some time. Are there recommendations that you would have, advice to your peers that as they're about to embark on this, not only with RISE, but on the journey with SAP, that you would suggest as they look to their transformation of their business?
Well, the first piece that I usually share when I talk to other CIOs who are contemplating similar things, is we talk about the need to simply move, right? Technology is changing so fast. The velocity can be intimidating, and it's very easy to sit there and consider and never actually move. The first and most important thing in this brave new world we live in with this rotational velocity of technology, markets changing all the time, is that you have to be willing to move, to experiment, to discover. Number two, you really wanna get with a partner like SAP that can help you create an environment where that innovation and experimentation is enabled.
We talked about the need for flexibility and agility, Scott, but think about it, right? If I am consuming capabilities from you and we put them into a pattern, put them into a configuration, we look and see what's going on. Do we like the outcome? Yes. No. Yes. No. No, not this one? Okay. Break them apart and try again. If I were to do that from an ownership mentality instead of a consuming mentality in the partnership with SAP, I have to procure infrastructure. I have to set up environments. I have to go get different skill sets. I have to do this. I have to do that. It limits the velocity and the range of things we can jointly consider to drive Accenture's business. There's all kinds of opportunity up in here, but the first and most important step is that you have to move.
The other thing that I usually talk about when I talk to other CIOs, we live in a time of revolutionary change, right? Simple organic evolution is not enough. You are watching companies that in the past grew more slowly leapfrog because they were willing to embrace brand-new technology sets and brand-new ways of thinking going into and coming out of the pandemic. SAP's broad range of capabilities enable us to do just about anything we want to do with our business.
It is being bold in that creative process and finding ways to have that dialogue with your business about the upward end of the art of the possible and how that can unlock value for your business that feeds into that market growth. It's limited only by how fast we can go and how broad we can think. Be bold in how you think about it.
Christian, I'm gonna ask Penelope to join me every time I'm gonna meet a customer from now on, that's for sure. In all seriousness, I mean, what you describe is what you're actually doing in the business, and I don't underestimate the reality is that boldness to move. I love the way you describe it, not to own, but to consume and then always be trying to innovate and change in a different way. That is enabled through the cloud. That's enabled through the technology and allows you the power of your people, the capability you have to do the things that are most impactful for you rather than operating what you've previously done. Penelope, thank you so much.
You're obviously, as a company, a wonderful partner, but as a leader, you've been instrumental in the way SAP thinks about our technology roadmap, and I think I can speak on behalf of Thomas when I say that we welcome the ongoing insights that you provide to us, because we know that if we can solve it for you, any other major company, particularly in the professional services, but in other industries, will benefit from the path that you're blazing with us. Thank you so much, and thank you for joining us today.
I appreciate it, Scott, and I love what we're doing together, and I'm happy to talk about it anytime.
Thank you so much, Penelope.
Thank you, Scott. Appreciate it.
Okay. With that, my dear friend and colleague, Luka Mucic, is about to join us on stage.
Thank you very much. Yeah, good afternoon. Thank you very much, Scott. It's great to see all of you, here at Sapphire. Now, for me, as you all know, it is actually going to be my last Sapphire as the CFO of SAP. It remains an absolute privilege to serve this great company, and it's a great honor to continue to interact with all of you, our investors and analysts. I will miss both a lot. The one thing that I can promise to you is a blazing finish in the last 11 months in my current role, hopefully starting with this stage performance right here today.
Now, what I want to do with you this afternoon is give you the financial lens of our cloud transformation journey, where we are at the moment, what we have already accomplished, but also what is very important, what is yet to come. Now, where do we stand at present? You all will remember the pivotal moment of October 2020, where we refined and refreshed and reset our strategy and our midterm ambitions. There were five key objectives that we had in mind back then. We clearly wanted to double down on making the promise, the long-held promise of having a modular, integrated, Intelligent Enterprise suite in the cloud a reality. We wanted to do that by focusing on true organic innovation and investing appropriately into it.
Wanted to make sure that in the process, we streamline our portfolio, focusing on the key vital categories in the market where we have a strong right to win and then really double down on giving this all that we have. Very importantly, we wanted to move our core ERP business to the cloud at great speed. Very importantly, we decided to invest into the growth and into the key ingredients for outsized returns, also on the profitability front for two years, 2021 and 2022, to then yield the outsized returns as of 2023. Now, since then, I will argue that we have executed remarkably well, at least in some categories, ahead of plan, quarter after quarter. You have seen that in the cloud, our top line momentum is clearly coming through. 2021 was already strong on the current cloud backlog.
You saw the acceleration of revenue growth as we went through the year. 2022 clearly will further accelerate, and we have an opportunity to do more of the same also in 2023 and beyond. S/4HANA is clearly leading that growth, but it's also reinvigorating growth with RISE with SAP across the entire portfolio. We were also always clear that in 2022, our total revenue, and in particular, the operating profit performance, would still be dampened by the investments in also by the headwinds of the cloud transformation. We are now very close to inflection point in 2023. I will talk about that in a minute. As we moved into 2022, we continued to execute on the operational front like clockwork, I would say. Our cloud growth has continued to accelerate.
We were always clear about, in particular, Q1 being a tough compare on the bottom line due to the strong software license result in Q1 last year, as well as the fact that we were still fully in the pandemic. Actually, without the impact of the war in Ukraine, we would have executed ahead of our own internal planning in Q1 as well. Now, the war in Ukraine has led us and many other businesses to make difficult but right decisions. As you know, we will withdraw our direct presence in Russia, and that has an impact. It had already an impact in Q1.
It will have an impact on the bottom line of up to approximately EUR 350 million for the full year, with a significant portion of that coming through in Q2, as I flagged on our Q1 earnings call. That should give you a lot of confidence in the underlying fundamentals and our commitment to the business transformation to yield the returns as of 2023, we have guided for a reiteration of the profit outlook that we have given at the beginning of the year. Our cloud business will continue to accelerate, and we will definitely look at double-digit growth in 2023 on the bottom line.
Now, the reiteration of the guidance, I just want to reflect this as well, is also including the assumption of a moderate gain on sale of a smaller divestiture that we are planning. This will likely come through in Q4 of this year. Now, with this, I want to come to the 2025 ambition. You all know this picture, therefore, I don't want to spend too many words on it, but just reiterate that we are now entering the sustainable accelerated growth phase of our cloud transformation. The second leg, if you want. We will see already in 2023 a return to double-digit profit growth, and this will be closely followed latest by 2024, with a double-digit growth on the total revenue side as well.
This acceleration is actually a mechanical consequence of the cloud transformation, of the headwind, of the on-premise upfront software revenues dissipating because the size is shrinking, and at the same time, a faster growth in high-margin product revenues versus lower-margin services growth. I want to drill into some of those aspects now, starting on the revenue on the top line. First of all, our target number one for 2025 is to propel total revenue growth to more than EUR 36 billion by 2025. There are two key pillars of that growth that will define our success. One is obviously continued rapid growth in the cloud.
The second one is the continued resilience that we expect for on-premise support business, which in combination will drive the predictable revenue share significantly, materially up come 2025. Let me talk a little bit about the ingredients of this, starting with the cloud. I'm not sure whether you recognize this, but actually in 2022 we are reaching already a very important inflection point. For the first time in 2022, our cloud revenues will be the single biggest source of revenues in our P&L. They will exceed our software support revenues already this year. By 2025, the cloud business will have become the dominant source of revenues. More than 60% of our total revenues will come from the cloud, more than twice our combined on-premise software and support revenue.
Now, when you look at the components, obviously during the COVID pandemic, our Intelligent Spend group assets were really affected by the pandemic, in particular Concur. This has already started to turn around in the second half of 2021, and now the Intelligent Spend assets are already back to healthy double-digit growth. We fully expect that this will continue and that they will continue to catch up. Our other SaaS PaaS assets have been healthy from a growth perspective throughout the entire pandemic. Now, based on also the success and the hyper growth of S/4HANA and the reinvigoration of the cross-sell opportunities that Christian and Scott talked about, it's actually at a best-in-class growth at scale.
Compare this to growth rates of other scale cloud application vendors in the market. I don't think that you will find anyone who's growing in this space faster than we do in our SaaS PaaS portfolio outside of Intelligent Spend. Finally, there is one part of our cloud business that we consciously de-emphasize. That's our infrastructure as a service business. But that's good from a margin perspective, and actually not an inhibitor to continued very strong growth in the cloud. On the on-premise side of the house, of course we expect that the rise of RISE with SAP will continue to lead to accelerating declines in our on-premise license business.
The good news about that is that already very soon, starting next year, it will have a size that will not represent a headwind anymore, that will inhibit us from increasing the profitability in the company. Software support, however, will remain extremely resilient. Yes, it will start to decline, but not because we face any churn to the competition or to retirement of our solutions. The churn that we are seeing is actually the very healthy one that comes at currently 2.5x plus in many cases of conversion factors from software support to cloud. Services, a word about that, is back to growth. You have seen that in 2022, and we expected that it will continue to grow at a healthy rate.
For a service business, our services margins certainly are best in class and leading in the market. However, it will certainly not keep pace with the fast growth in our product business, the combination of cloud as well as software support. What will this mean for the total revenue composition by 2025? A lot of good things. Our cloud share will be materially up. Our higher margin product revenue share, relative to the lower margin services revenue share, will be materially up. Through that combination, our CAGR, despite the fact that we are increasing scale of growth on a total revenue front, will actually move up while the predictability of our revenues will go up as well.
Now let me move a little bit closer into the cloud business and double-click on it even further, based on my favorite T-shirt theme that I introduced last year at the virtual Sapphire conference. You see here for the first time a little bit of a look into the crystal ball of how we see our cloud business unfolding over the course of the next couple of years. A couple of important remarks about this. We unfortunately had to upgrade our T-shirt sizes so we had to introduce a 3 XL size, which means a cloud solution that drives for more than EUR 5 billion in cloud revenues. Our S/4HANA cloud solution will be the first of our cloud solutions that will reach this 3 XL T-shirt size by 2025.
Importantly, we kept the promise that it would wear an XL T-shirt size of more than EUR 1 billion already when we come back here to Sapphire this year. That has been achieved. Come next year, I predict that it will be the single biggest cloud solution in our portfolio already in 2023. Almost all of the other solution areas that we have will need a bigger T-shirt size as well. Spend management actually will be pretty close to having to wear a 3XL T-shirt size by 2025 too, but I think they will not quite get there. They might fall a little bit short of that. Human capital management will be an XXL T-shirt size of more than EUR 2.5 billion. Customer relationship management will move up to an XL T-shirt size.
I can't share the T-shirt size for Qualtrics because they have not themselves officially given a 2025 ambition. It's safe to assume that they will run out of their current size as well and will need a certain upgrade. The most important aspect that I want to stress here as well, piggybacking on what Thomas shared, but also Christian shared, is the importance of the business technology platform as a central part of our strategy. This business will therefore be a very important growth engine for SAP. It will be a very sizable XXL business come 2025 as well. The one area that we will keep on a slim fit diet is our infrastructure as a service business.
It will continue to stay around the EUR 1 billion mark as it is today, as we're not looking to grow it anymore. Before I move to the bottom line, I wanna give you a quick heads-up that we are also planning, as I indicated to some of you separately already, a change and adjustment of our disclosures as of Q2. Because we've had this combined SaaS, PaaS versus infrastructure as a service disclosure for quite a long time, but our strategy has continued to evolve, and therefore we believe that it's now important to give you visibility in some of the core areas of our strategy, in particular our platform as a service business, we will evolve the disclosures. Internally at SAP, we run our business now across five key solution areas.
Four are the Intelligent Enterprise suite application areas, S/4HANA, Intelligent Spend, Human Experience Management, and Customer Experience Management. Then we have the business technology platform solution areas, and we want to align our external disclosures to this way of representing our portfolio as well. We will, going forward, split out SaaS, PaaS, and infrastructure as a service separately, and we will provide you both with the revenues as well as the gross profits and the gross margins for all of those cloud service models separately. Of course, the separate breakout of S/4HANA from a revenue and CCB perspective will continue as well.
The one thing that we will probably not carry through beyond the end of this year is to just continuously update the S/4HANA customer counts because we will comfortably exceed the 20,000 customer mark by the end of this year. I think there is no question that the upgrade cycle for S/4HANA itself is well underway. Now it's about the volumes, and now it's about the quality of the penetration and the breadth of the penetration, and you will get that through the revenue contribution of S/4HANA that we will continue to disclose.
This will start as of Q2, and I think it will give you a very valuable view on how we progress on our strategy to be a platform provider and to be also a platform for the ecosystem and to build a lot of value-adding applications on. With that, I wanna quickly come to the operating profit line, where clearly our mission is to achieve more than EUR 11.5 billion by 2025 in absolute terms. That's what we are driving for. This represents a 13% CAGR between 2022 and 2025. On our path, the double-digit growth will actually accelerate year-over-year. What are the levers that we are going to pull in order to achieve this?
One is, one that I covered already, that's the revenue mix, which will turn from a headwind to a tailwind, because software licenses will become so small, that they are not a true headwind anymore, while at the same time, our product revenues will continuously exceed our services revenue growth, and within cloud, the infrastructure as a service mix will be reduced. More importantly and very significantly, we will be driving a significant expansion of cloud gross profit, and we also see opportunities for additional operating leverage. To quickly cover the operating leverage, as we are approaching 2025, we will see our aggregate OpEx expense ratios start to come down again.
In sales and marketing, after a significant consolidation and reduction over a period of three years now, we are currently investing in additional capacity because we see the tremendous opportunities in the market and drive for a really outsized order entry growth. However, after 2023, our sales and marketing ratio will start to trend down again as a function of the significantly increasing renewal share of our cloud revenue profile because the commission rates that we have to pay on that renewal part are actually much lower than the part for net new business. On the R&D front, we obviously saw a spike of investment. I covered that in line with our organic innovation strategy and in particular, a significant investment in the integration of our different assets as part of the Intelligent Enterprise suite.
This is now largely completed. Not only do we expect that we will not further exceed the roughly 17% of revenues that we are planning as an R&D ratio for 2022, we actually believe that over time, we have scope to slightly reduce it without harming, of course, the continuous need to invest in innovation. Finally, as Christian has said, of course, our ambition remains to also gain further efficiencies on the G&A front, even though we are already pretty efficient in this space with around 4% of revenues, as you have seen in Q1, as well. Now, let me cover the really most important piece of achieving the profit ambition, and that's the cloud gross profit.
As the cloud will become the dominant revenue stream by 2025, as we have discussed, this is of course key. When you take a look at our ambition, it actually implies to drive for more than EUR 17.6 billion in cloud gross profit. That's 2.7x the amount of gross profit in the cloud that we have achieved in 2021. How are we going to get there? Well, simple math. It's a combination, obviously, of the revenue growth as well as expanding cloud margins, and we are focused on both elements. The revenue growth side, I think we have checked that box already, through what I said before. We're very confident about our continued cloud momentum.
Actually, we're running ahead of plan for the last five quarters, and we have been beating our internal revenue plan in the cloud, so very confident about that side. Of course, we need to support this also by expanding the cloud gross margin, as we have committed to the market when we unveiled our new strategy, and this comes through two factors. One is the revenue mix, and the other one is the delivery efficiency. On the cloud revenue mix, we have one element that is a benefit, that is a tailwind, and that's the declining infrastructure as a service share.
On the other hand, we have a slight headwind that is coming through the increasing share of S/4HANA Cloud, because as part of the great success of RISE, we have currently a higher share of very voluminous private cloud contracts that we're taking on board and what we have originally assumed in our October 2020 plan. If that continues, we would have actually a great problem to look at in a couple of years from now. We would have an outperformance of the revenue plan through continued outsized growth in S/4HANA Private Cloud, which would come at a very strong outperformance of the absolute cloud gross profit. Through a change in the mix, it might mean that we're falling slightly short on the cloud margin target.
I don't have that kind of a crystal ball that I can tell you with a guarantee that one or the other scenario will come to fruition. What I can tell you is, no matter what, S/4HANA Cloud and the private cloud piece of it will be a very strong contributor to the absolute cloud profit that we expect. Either way, it will allow us to achieve or outperform that target. The next element is, of course, the work on the efficiency that we are planning, and this has, again, also two elements. One is the next generation cloud delivery program that we have been talking about a lot over the course of the last two years. The other one is the portfolio aspect that Thomas mentioned as well.
Let me quickly talk about the converged cloud program because it came in three waves. As you know, a couple of years ago, we harmonized, first of all, the database layer underneath some of our major cloud solutions. Then secondly, we made all of our main cloud solutions available to run on a hyperscaler or SAP internal converged cloud infrastructure. Since a few years, we have already deployed all new customers coming on board on this new infrastructure. The one thing that we are now accelerating is to actually move the majority of existing installed base customers who have been deployed originally, sometimes many years ago, on legacy infrastructures that we acquired sometimes through the M&A of the cloud companies that we acquired to this converged cloud and hyperscaler infrastructure.
This is what takes now a mid triple-digit million euro investment in 2021 and 2022 to accelerate this to be concluded in early 2023. This cost is a bit back-end loaded, so a higher share is occurring in 2022 than in 2021, and a higher share of that cost in 2022 will occur actually in Q2 and Q3 than in Q1. Upon finalization, within a period of 12 months, we actually expect to realize several hundred basis points of gross margin improvement in the cloud from the greater efficiency that we gain through this infrastructure harmonization, as well as, of course, from offloading the project costs from the migrations.
When we have achieved that, we will be able to drive for further continuous optimization, which will drive us in the direction of the 80% cloud gross margin target that we have set up for 2025. At the moment, we have an increasing visibility in our ability to complete the program. A couple of months ago, the supply chain shortages and semiconductor shortages actually had us concerned a bit, but we are beyond that, and we see now that we don't face obstacles to the completion of the program from that perspective. We are now finalizing the migration data center by data center. Some, like Toronto or São Paulo, have happened already. The next is in line. We expect that the vast majority of the migrations will be done by end of the year.
There's some final closeout activities that we'll still need to complete in the first half of next year, in particular, the retirement and decommissioning of the legacy infrastructures after the customer migrations. Then we will have made room for that significant increase in cloud margins that I've talked about. Most of it will happen in the second half of 2023. Not only is this good for the cloud margins, as Thomas has said, but it's also good for the resiliency. It's also good for the customer experience, so it will make us more competitive in the market as well. Finally, Thomas has already talked about the advantages of our portfolio strategy. I want to take a look at it now from a profit perspective, because there it's also extremely helpful.
When we onboard partners to make their solutions available on our business technology platform, when we help our partners to position them with our ecosystem, we actually take a revenue share, and this revenue share comes at a very high profitability. Because first of all, we don't have a cloud delivery expense associated with it, and also our sales and marketing expense is at a lower level than if we tried to position and sell a solution that we develop all by our own. Secondly, of course, we also have an OpEx leverage because we can focus our own capacity and our own attention to the solution areas so that we decide to build out on our own. I invite you to remember this.
Oftentimes, we talk about the portfolio evolution of SAP in a two-dimensional way. Are you building organically, or are you acquiring through M&A? The ecosystem is a third dimension that you will see SAP utilizing way more. As part of this, we also consciously decide on a continuous basis whether there are areas in the portfolio that we want to de-emphasize and perhaps put into the hands of a partner to make better use of them because we don't consider them as strategic. That is a continuous process of pruning the portfolio that you will see SAP engage in also in the future. Which brings me to the free cash flow, where clearly we also have a midterm ambition out there which remains in place.
We want to achieve EUR 8 billion in Free Cash Flow by 2025. This was a subject of a lot of debate at the beginning of the year because we obviously are moving our cash-settled equity-based compensation plans to share settled. There was some disappointment in the market that we did not one-to-one reflect this impact of several hundred million euros, quite a significant triple-digit million euro number, in an upgrade of the free cash flow guidance. Let me be very clear on this. First of all, of course, we are extremely confident in reaching or also exceeding this Free Cash Flow target by 2025.
Of course, that confidence has been further underpinned by additional helpful factors such as, for example, the development of currencies in the short term, which is going to be helpful to Free Cash Flow as well. However, it's also a target that is four years out, and that, at the same time, is one of the most volatile ones that can be most affected by one-off impacts. You actually can see this in the years 2018 and 2019. We had significant one-off impacts, such as, for example, cash taxes or restructuring impacts or adverse currency impacts that we faced back then.
What we want to do if we set a target that is so far out is to really be sure with enough, you know, safety room that we will hit it. We believe in this target very strongly. It will follow, of course, also to a good extent the evolution of our profitability. We will see an acceleration in the Free Cash Flow growth from next year on. However, 2024 and 2025 will see a stronger progress than 2023.
At the same time, I wanna recognize as well that in the operational readiness of us to sustain substantially accelerated Free Cash Flow in the years beyond, we have actually made great progress, in particular on the working capital efficiency side and on the cash collection side. The DSO at SAP, even though we officially don't report about it anymore, has been materially reduced over the course of the last two years. So all of the operational ingredients of you know driving for that number and certainly having the opportunity to outperform it as well by a bit are in place. Finally, of course, we also want to do something with that Free Cash Flow.
One of the important factors is to properly make sure that we can share our financial success with our shareholders. You have seen us for many years now consistently increasing the dividend payout in line with a progressive dividend policy. This year is obviously a special year on the 50th anniversary of SAP, which we are celebrating with a special dividend of EUR 0.50 on top of the increased regular dividend. In line with this, our capital allocation priorities remain unchanged, but will over time offer more opportunities for additional cash returns. We will continue to invest properly in our organic growth. We will make sure that we repay debt when it is becoming due. You have seen that the deleveraging at SAP has made strong progress.
At the end of Q1, we were left with less than EUR 1 billion of net debt. This is making very, very good strides, in particular in times of rising interest rates. I think it is good to have such a conservative policy in place. We will continue to pay an attractive dividend. Of course, if we have inorganic growth opportunities, more likely on the tuck-in side than on anything large, smart acquisitions like Taulia and Signavio in the past, then we can fund them as well through our cash flow. Finally, we obviously see an opportunity to drive for more cash returns through share buybacks also in the future. We will see a declining financial leverage and the free cash flow relief from share-based compensation programs.
We will make sure that we will offset any dilution that will come from the conversion of our share-based compensation programs to equity-settled for our shareholders. That's why you can expect to see not so tactical, but more regularly recurring share buybacks from SAP to make sure that we can counter this dilution. Finally, I want to spend one minute on something that is very close to my heart, and that's the non-financial performance of SAP, because I truly believe that this is a strategic differentiator for SAP. We have been on a journey of being an ESG leader in our industry for many years since 2009, actually. Back then, we had 6% ESG investors. Now we have more than 40% ESG investors.
The journey was rewarding for us, not only in the sense of being an exemplar and being recognized for many years in a row, as the leading sustainable software company in our industry, but more importantly, by driving real outcomes for our customers. We have a great portfolio with the cloud for sustainable enterprises that you're seeing at Sapphire all over the place. We have actually great customer examples, leading consumer products companies like Colgate, Unilever, are using our products to move towards, for example, complete usage of recycled material for their packaging and many other scenarios. Per our calculations, our customers that are most advanced in adopting our digital latest solutions actually drive for a significant better performance from an ESG perspective.
That is giving us a great opportunity as ESG is becoming way more part of a license to operate for companies across all industries. We will continue to also make this a key steering aspect for SAP by not only disclosing and measuring and guiding for key non-financial indicators, but actually also making the incentives for the executive board dependent on those criteria like employee engagement, carbon emissions, and the customer Net Promoter Score. Let me conclude and take you back to the big picture. Let's assume we're all back in this room in 2025, perhaps me in a different role than today, and look back at the company that we hopefully all own all together. What will we have seen?
In 2021, in the first full year of adopting our new refreshed strategy, we clearly saw that our strategic move was paying off. Customers voted in favor of it with a tremendous growth in order entry in the cloud, which you have seen coming through in the CCB. That momentum has translated into the cloud revenue line in 2022 already with accelerating growth. In 2023 and 2024, we saw it coming through on the real heavyweight, company level, high visibility KPIs like total revenues and operating profit, moving back into double-digit growth territory. End of 2025, we will all look back at several years of double-digit growth on the top line as well as on the bottom line.
We will own a business that consists of 85% very high margin, more predictable revenue, and we will still be left with EUR 8 billion-EUR 9 billion in support revenues that can be converted to cloud revenues at high, healthy multipliers for many years to come, propelling our growth in the double-digit space also beyond 2025. I think that should be the basis for a very attractive valuation, and I can leave you with one last promise. When you are joining me, I will definitely stay a shareholder as well, even beyond March 31st, 2023. Thank you very much.
All right. Welcome back. We have now the privilege to have the entire executive board of SAP with us on stage. I hope you had a productive time so far. It's been a great experience. We'll take questions from the room, but you have also the ability to ask questions online, so feel free to do so. We have hundreds of people online. We have some mics available, so we'll take a first question in a minute. Maybe we have Thomas virtually. Yeah, we still have Thomas with us. Hi, Thomas. That's great. Already in the metaverse, as I can see.
In the hybrid world. Anything's possible.
Before we take the first question, maybe breaking the ice. Julia, it's been a spectacular event for the past two days. We have now two days into the Sapphire. We still have one day to go. Maybe some impressions from your side. You put that together, so that's pretty impressive.
Yeah. Well, it's my first Sapphire, so I consider it the best one. No, but I think we're coming back in person, right? It's been a while. We had a chance to step back and think about how we wanna do it differently based on where we are. I think the whole design principle of the event was around connection and relationships. I think I definitely feel like I've heard from the attendees that they got that out of it or getting that out of it. It's still underway. That's been great. I know there'll be other outcomes as well, but that to me was the most important part, creating that connection and that relationship building again. Well, we'll see what the end results look like, but so far so good.
Great. Thank you. We have maybe, Adam, you are first for us. Maybe if someone can bring a mic to Adam.
Great. Thank you. It's Adam Wood from Morgan Stanley. Maybe first of all, if I kinda think about how we can judge you on this journey from the winner in ERP to this broader platform vision, solving end-to-end processes for customers, I guess two of the critical things that we'd need to see would be the BTP adoption, and then also from a kind of stickiness and differentiation point of view, it'd be the industry clouds.
There's been a lot of information dotted through the presentations on those, you know, kind of those two things, but could you maybe help us bring it together a little bit with some metrics around the scale of those two areas today, the attach rates that you're seeing at BTP, you know, maybe a year ago and now to S/4HANA, renewal rates that you see on those businesses, and maybe some insight into the industry clouds that are really doing well? Maybe if I could ask a kinda shorter term one, probably for Luka, there's a lot of moving parts this year on the EBIT with, the impact of Russia-Ukraine on Q1, Q2, the investments you're making on the cloud.
Could you maybe just help a little bit with the seasonality that you'd expect us to see on the EBIT line through the rest of this year, please? Thank you.
Yeah, absolutely. Perhaps if someone else wants to start.
Yeah, I can talk on the BTP. So a couple of data points, and we talked a little bit about this at earnings as well. The reality is, when we see the customers about scale and innovation, they are demanding both, and the innovation runs on the platform. It's important to note that the platform is now the unifying platform for all of our technologies. So it's not just about RISE, but it's about all of the portfolio. Juergen and Thomas have been able to build that, which means the data, the processes, the integration, the workflows, all being able to build that, all of the artificial intelligence and those other capabilities. So the expansion of the platform from a customer, from a growth perspective, I have two pi...
I call them load bearers of our growth. RISE with our S/4HANA and the platform. It is growing exceptionally quickly, both in terms of new order book but also on the adoption and the consumption. In fact, if you look at net retention rate, it is our best performed category, which means customers are using and consuming the platform more than ever. As well as up, you know, we're getting more upsell opportunities. 'Cause what we do is we start usually with one use case, address that use case on the platform, and then we expand the use cases with other scenarios, which are short, sharp, easy engagements. The other thing is our partners are using the platform to do the Industry Cloud extensions as well.
The optimism, and I think back, Christian, a year and a half ago when we were really driving the platform, we were really trying to force it, in terms of the adoption. Now the demand is coming in. We see the customer pool, which is what we obviously wanna be.
Yeah. Perhaps to conclude on that in terms of the metrics that we will provide about those, they are the ones that I kind of pre-announced around obviously the platform revenue growth, as well as then also the profit contribution. I think that will provide you at least with a good yardstick of how we are able to penetrate the customer base. Now in terms of the seasonality, let me expand on that a little bit and also cover the top line and the CCB, because indeed, I mean, across all of those elements, of course, the war in Ukraine is playing a certain role.
I think we have said all along that we want to drive in 2022 to an exit CCB growth in Q4 around the same level that we saw in Q4 last year, which was at 26% growth. We're also clear that in Q1 we would see a slower start because of the tremendous pent-up demand that we recognized in Q1 in 2021, which was going to be hard to even you know significantly outpace in Q1 of this year. Of course, there was the impact of the war on the CCB that you saw in Q1.
Having said that, the basic underlying, you know, premises have not changed. You should expect in Q2 and Q3 a significant acceleration of that growth rate. Certainly, in Q2, we will see a higher CCB growth than in Q1. In Q4, we should land at the 26%, roundabout, that we have indicated already at Q4 earnings. On the revenue front, I think it's important to understand that what we saw on the CCB line in Q1 is now of course what we are going to see in Q2 on the actual cloud revenue line.
I would expect a small blip in the growth rates in Q2 as the Russia impact, so to say, comes in for the first time before it will be then overshadowed by the strong growth in the order entry that we have been driving in Q4, which then starts to get into the figures materially in the second half year. Therefore, cloud revenue growth will then re-accelerate as we move into the second half of the year. On the EBIT line, it's also important to understand we were always clear that we would have a tough compare in Q1, as I said during my presentation as well. Pandemic impacts in Q1 last year very strong software revenue performance.
It was evident and we actually did better than what we had in initially internally planned outside of the special impact around the war in Ukraine. Now in Q2, we will face the full impact of the decisions to also start to you know retire our on-premise business you know software support business. This will result in accelerated depreciation of sales commissions also for our on-premise business. We saw the much smaller impact of that in the cloud business in Q1 as part of the EUR 70 million. In Q2, we'll see the bigger impact of that decision on the on-prem business.
You should expect that this will have actually a majority of the impact that we expect for the full year will be recognized in Q2. You should also expect the restructuring impact to already be recognized in Q2. The second half year should be much better. In addition to this, in Q4, we would expect the divestiture to close, which would then mean that there would be a one-time gain that we will recognize in Q4. Last year, we recognized the one-time gain from the financial services joint venture in Q3.
There is going to be slightly different timing, and therefore, Q4 will be certainly with quite some margin the most positive one from a profit perspective. I hope that helps to model. Yeah.
Thank you. Maybe Toby on the second one.
Thank you. Toby Ogg from Credit Suisse. Two questions. Firstly, just for Luka. I just wanted to come back on the cloud gross margin pathway 2023- 2025. Now, clearly feels like the bulk of the volumes on S/4HANA are coming through via single-tenant private cloud deployment. So, you know, with that in mind and with the lower gross margins in the single tenant, could you give us a sense as to what a lower band could potentially look like on that cloud gross margin pathway, 2023- 2025? And then secondly, just for Christian. O n the RISE side, and the RISE implementations, I guess we're not far off now, you know, some of those first customers actually going live under this construct.
Could you just give us a sense as to how the progress has been, you know, for those advanced customers, and how confident are you that these first customer go lives are gonna be successful?
First of all, on the cloud gross margin, as I also indicated in some of the individual discussions that we were having. First of all, it's important to note that many of those deployments actually when they are fully ramped will have a very decent gross margin. If you're running a six-digit number of users on a single tenant, I mean, there are some public cloud solutions out there that probably don't have that number of users. This is a story that in the long run will actually drive for a very, very profitable cloud business as well. Now, when it comes to the mix, there is of course uncertainty out there.
I can tell you if we continue to over-deliver on the S/4HANA front as we have done in the past few quarters and if we would extrapolate that same kind of outperformance to let's say 2025 it could well be that we would land you know 1%-2% perhaps below the 80% mark. On the flip side of course we are also seeing that the rest of our portfolio once we have completed the next generation cloud delivery program will actually land above the 80% mark. It's a big question of course what the exact mix will be.
The one thing that I'm absolutely certain about is, if that happens, and if S/4HANA Cloud continues to outperform the way it is right now, then we will absolutely land at an absolute cloud gross profit that will outperform our expectation for more than EUR 17.6 billion. Therefore, in terms of the contribution of our cloud business to our operating profit and ultimately therefore then also the operating margin, that would be a great problem to have. There is actually no risk connected in this. It's only the question how the derivative from a profit perspective will develop on the margin front. I would say the swing there is probably up to a 2 percentage point value.
Thank you, Luka. Maybe to the second part of your question, look, out of the 2,000 customers we have, after 12 months, 50% are already live. Just yesterday we celebrated the HCL go live.
Also pretty complex landscape which has grown over the years. Definitely the time to value is much, much better now than also in previous ERP upgrade cycles. You also have to understand that all of these customers, and you have seen Penelope here on stage with Scott, I mean, Accenture will end up in the public cloud. It just takes time and it needs, you know, two parties because they now also need to standardize. We will move very soon certain parts of their landscape right away to the public cloud, while others will stay hybrid. Each and every customer I'm talking to, it's a journey. Some of them will hop on immediately to 100% standard because their business model is not so complex, smaller size, different industry.
We even have now manufacturing customers who did, you know, where we did a fit to standard, you know, like for example, Schneider Electric with many factories around the world, and they will also move to the public cloud. Again, it's a journey. On the go lives and the feedback so far, it's extremely good. The performance is better, the stability is better. They really feel well that they can outsource now big parts of the operations. Thomas and team do their very good job on the onboarding, on the provisioning side. Then again, on Scott's side, together with, you know, Juergen and Thomas, we are then really helping them now on, you know, transforming their business models, doing the work on the process layer, doing the work on the core innovation side with the Industry Cloud.
We have now steady delivery calls where we monitor all of them, not only the technical side, but also the transformation side. When you look at these customers, the 2,000, probably you have 20% who just do a lift and shift because they wanna get, you know, TCO operations benefits, but 80%, they are immediately also going into this transformation work on the business process side. I see actually that this is coming, and it works out very well.
Very good. Mo?
Hi. Two questions from me. First one, Christian, you talked a lot about the new customers you've been adding with S/4HANA. Many of them are kinda fast growing, and you talked about the breadth of the portfolio. Can you tell us how you think about the kinda lifetime value of those customers between now and, say, in five or ten years' time? H ow significant can they become, and how quickly you can realize that? The second one, for Juergen. We've been hearing from partners that perhaps some of the industry cloud functionality is still taking some time to develop. How do you think about optimizing some of the resourcing you have around putting it into, you know, more on the kinda cloud ERP industry cloud?
'Cause Luka obviously is saying that R&D will start to kind of taper off as a percentage of sales. Do you feel the need that you may have to reinvest again, or there could be some reprioritization of that spend? Thank you.
Yeah, I take the first one, and maybe I split it, because Scott can also talk to this much better than I do. Look, I'm just personally involved in a RISE deal with, it's not anymore a startup out of Berlin. Now they are at the stage where they wanna grow their business to more than one country, and now they're actually already at the turning point where they say I wanna go now to SAP to scale my business. You also need to help me, to especially, you know, on the quote, on the order management, and then with the supply chain, how can I get this automation in place? Because now I'm at the point where I not only can focus on quotes, but also at the scale and the automation.
That's the tipping point where they start to come in. Usually, yes, the entry point is often, but not always. They already a SuccessFactors customer, now they're expanding it to S/4HANA, truly 100%, you know, running in the standard. It goes from there. Now they need further scale on the procurement side, they need to adhere to new regulations also there in other countries. This is usually where we are then, you know, taking or grabbing a lot of market share. I know there's always this debate and this, you know, plan dropping from some of our competitors, but the reality is as well that you have seen Ooredoo, it's one of the largest telcos in Qatar, 100% different ERP.
These guys are now coming over because with RISE, we wanna build up from ground again, the messed up data model, the messed up business processes, and also sometimes the lack of capabilities like, you know, as a telco wanting pay-as-you-go, bill every minute. That's actually the way to go in the telco industry, so we see this both. It often starts with SuccessFactors and finance, but then we are expanding as these companies also globalize their business. Scott?
Yeah. I think you explained it really well. Number one, cloud is the only choice. They will not go to any other platform. They implement super fast on the ERP, but they're also the fast adopters of the platform. The question that was asked before about the use of the platform.
They've got no pre-built environment, so they just take it out of the box and innovate straight out of the platform, and then they can extend the capabilities. We already get that cross-sell capability from the get-go. There's two scenarios that we see where then the expansion. There's the natural expansion as their business grows and expands and goes international. I think it's a great example of why they often come with SAP, because we definitely know how to deliver to regulatory environments. One is on the employee side that Christian mentioned. The other is on the commerce side, because often they're trying to do customer acquisition, and that's their first point of call, and they're engaging with us on the commerce platforms to be able.
They're like, "All right, well, if I'm gonna then do that, then how do I fulfill? How do I make sure that my sales orders that I'm able to then get the supply chain?" That usually then pulls through pretty quickly. Again, the platform is the unifying part of the architecture. I've seen that on a large number of cases. Sometimes it's starting with the ERP, but quite often it's on those others as well, on the edge solutions.
Mo, I can take the second part of your question on BTP and Industry Cloud. Actually we do a lot of excitement of partners around BTP. We had multiple partner events here, and there's really a lot of energy around the platform. We ourselves, we are building our new applications on BTP and also our partners do that. Potentially, Thomas, you can also comment, but to the R&D part of the question, we decided to also make Industry Cloud a partner play. We embrace our huge ecosystem of very capable partners, and you see them being super excited, be it in profitability management, in ESG, in tax management. They are also like providing solutions and content to our business technology platform and bundle that into Industry Cloud solutions.
That's why also we can be very cognizant with our R&D dollar investment, but still offer a huge variety of Industry Cloud solutions. Thomas.
Yeah. I think to make it really clear, I mean, the Industry Cloud is a huge success. We have more than 230 applications, which again, leverage Business Technology Platform as a foundation. Actually, majority is partnerships like you mentioned and I also alluded to, because we really wanna focus on our area and then embrace the ecosystem. To give you some sense, because the question was also about how mature are Industry Cloud solutions.
Every Industry Cloud solution, which we build from an SAP perspective, and we have more than 20 already with GA, they're built with at least 10 co-innovation customers. It's directly together with customers to prove the viability and the success of the product itself. As it's cloud, for sure, we continuously innovate, and that's the beauty of it, and we continue to do that together with our customers, along the way and really grow. That really delivers then the innovation on the vertical edge what we need. Really rethinking entire processes, because the key aspect is. I mean, let's be clear, I mean, we are serving more than 25 industries with industry-specific processes already today, but we really wanna reimagine, the process for the next decades to come.
That's what we do with Industry Cloud, again, together with our customers and partners together. They are quite frankly, the feedback is phenomenal. Also, quite frankly, how we engage with the customers to deliver this continuous innovation with cloud-native solutions, which we build.
Thank you. Let go. Yeah. Thank you.
Yeah, thanks. I'll stand up. Kirk Materne with Evercore ISI. Thanks for the time today. I guess maybe two questions. First one's maybe for Christian and Scott. When you think about where we are today versus maybe three-five years ago on the cloud, just in a cloud conversation, has the pendulum swung back to the core? Meaning because of what happened in COVID with supply chains.
Do you start more conversations at the core or in the back office? I think five or seven years ago, you would argue it maybe started at the edge. I think that probably benefits you all given your position. I was just kind of curious if that's what you're seeing happen given some of the macro events. Then secondly, I think Luka, Christian, and Scott all talked about them sleeping pretty well at night because of the pipeline. I know because of the recurring nature of your business, you should feel better about the revenue side.
On the order entry side, can you talk about how programs like RISE give you more visibility into spending patterns with your customer, the consultative approach, how that changes maybe, you know, your ability to gauge when a customer wants to spend with you versus five-seven years ago when it might've been one big bang up front. Does that. I assume that feeds into your comfort level and your healthy amount of sleep, but if you could expand on that'd be great. Thanks.
Yeah. I can answer the first question very quickly. I mean, when I'm talking to the CEOs these days, I mean, you are for sure right. It's a lot of now inflation, high energy prices, especially in Europe, and how can we help to offset. So what comes into play is, of course, ERP, Taulia, the network. The second one, I mean, sustainability. I mean, I had some customers here. Everyone is under such immense pressure, yeah, to cut costs, but then also cut the carbon side, new energies. W hen you are not even, you know, a utilities or oil and gas, still you have to prove that you are decarbonizing your business and your supply chain. Then, of course, the business model transformation continues with commerce. Scott is absolutely right.
Of course, with all the, you know, associated, you know, modules we have. Let's not forget, when we talk about core ERP, we talk about HXM, we talk about intelligent spend, and we talk about S/4HANA. That's our ERP. It's not like only S/4HANA. We are doing a really good job also, on the go-to-market side on really also outlining that we have this end-to-end capability.
Categorically, the demand for the core has increased and quite substantially, and for all the reasons that Christian's described. The reality is, when it's disruption, you need to be really good at your core business processes to be able to withstand change, to be able to meet those regulatory and those other factors. You know, being able to deliver on the regulatory, find efficiencies and standardizing the way. You can't deal with inefficiency. But the inefficiency is not just a financial one, it also inhibits their ability to serve their customers in a more agile way. I know Julia focuses a lot on the agility. We've seen that increased demand and also the willingness to take on those bigger transformations.
When you're doing it in your own environment where you're allowing yourself to heavily customize versus moving to the cloud and being forced to standardize, it's amazing how much more willing they're moving into that, into that play. To answer your second question about what we saw 5-7 years ago, there's a few trends that I see. First of all, our pipeline in the breakdown, it's really interesting to watch. When we used to have our pipeline on-premise, we would have these big deals that would have hundreds of products, and we weren't quite sure how much they were actually gonna get adopted. They were events. They were events of a deal. What you now see in the pipeline is the breakdown of the solutions that they want and different timelines.
That gives me one level of visibility that I can see the journey that they're on just through the insights about how they're indicating whether it be early phase in discovery, they've gone through a marketing engagement, all the way through to a late stage, whether they're in the late in the buying cycle. First of all, the visibility. Then secondly, the sequencing. It's still you go out to in to out. We get a bit of both on that. You get the predictability. On the CFO agenda, which we are, I would argue, the best at, you can see the flow where you standardize processes, then you're managing risk and compliance, and then you're doing spend visibility, and then you can see the sequence of that in terms of the insights.
That guides some of our sales plays. That guides our engagements about when would be the right time because we've got the advantage to be quite sophisticated and say, "Well, we've already solved that challenge, and we know the next one is this, and then the next one's this." That guides in the way that we do our engagement with the customers, which is different from before when we were trying to do it all in one hit.
Perhaps just a quick one, because that's one that we have built in partnership also with Sabine and her teams. I think we have also become way more scientific around how we actually measure the pipeline at present, where we have worked for years now on capturing the data points, building predictive algorithms. By now we have even gotten the field to adopt those predictive algorithms and not only the library tower. I think through that we have actually now a pretty good visibility into the risk profile, which certainly we probably have been managing rather from the gut perhaps five- seven years ago. That helps as well.
That's a great point.
We have maybe Michael on you. Lena, maybe Michael on this one. On the first one. It was behind.
It's okay.
I'll ask a quick one. Stefan Slowinski from Exane BNP Paribas. Just I guess as a follow-up on the previous question around the demand environment. Obviously, when you look at financial markets, I know you don't run the business based on financial markets, but we've got Nasdaq down 30% and some of your competitors down 80% in terms of their stock prices. In the past, SAP's benefited in that, in those kinds of environments because customers have maybe seen SAP as a more reliable potential partner going forward. Are you starting to see that at all in your discussions with customers? Does that factor in at all to those discussions? I guess secondly, along those lines as well, are you managing the business any differently?
Is it starting to get easier to maybe hire or to retain staff, based on some of that volatility that you're seeing in the market? Anything else that it's changing in terms of how you run or how you see your business. Thanks. Maybe on the acquisition front as well, if it changes your views.
Yeah, very quickly, please build on to what I have to share with Stefan. I mean, Stefan, first, when we would not have Russia and Ukraine, I would say we would just stick to the plan which we also build out at the end of the last year, despite the macroeconomics definitely have changed. When I'm talking to many customers now these days, especially in Germany, I had a conversation this week. They're telling me. They say, "Christian, we have to cut some investments in our budget to offset the higher energy prices, to offset, you know, the war," where they also get some, headwind. What they don't wanna do is the investments into their transformation.
This is where, you know, we actually I have seen not one, so far, customer who said, "We're gonna delay our RISE journey, we're gonna delay our S/4HANA investment." Of course, we are seeing that the macroeconomics of war, they are not just turning to the positive side. This is not news. Second, what is also for us very important. Of course, on the cost side, where we, of course, as a team now coming together is, I mean, we said that we have somehow an impact out of Russia, and we are sticking to our guidance. Somehow we have to do something about that. That just is not coming just out of the blue.
Of course, we are now tightening also our investments in certain parts without hampering, you know, our growth abilities, because that is, of course, still where we're strong, and this is what we are working on internally to really make sure we're gonna hit our operating profit guidance, despite now the headwind we are getting out of Russia.
On the customer side, what we're seeing, you're right. Don't underestimate the power of the fact that it works. There's many debates that companies will have about their transformation role with SAP, but the one thing that I have never received is any debate about the technology works. When you're in an uncertain environment where you've got a lot of unpredictability, the safety and the knowledge of working with an organization that delivers at scale, and it works, they trust on that fact. Which is a responsibility that we have to uphold and continue to deliver to in a cloud world. But that's led to an increased willingness to move to SAP. Maybe it was in differing priorities before, maybe on their call.
The willingness to do it at speed, because they think that by doing so, that it'll give them the predictability that they deserve. On the talent one, Sabine, you're probably better to answer. The one thing that I see is the talent market for technology is aggressive, and it's not just in our industry. Every company that I deal with is a technology company. You know, they're hiring technology talent. They look at the platform. They're not always going to partners to build on the platform. They're looking to do it themselves. Sometimes the very customers that we're serving are competitors for talent, for technology skills. It's great for us in the industry, because demand will continue to lift when they're investing in that capability.
It doesn't become any easier as an organization when you're trying to hire and retain and reward the best talent. Sabine.
Yeah. Let me maybe pick up on that actually with a couple of comments. As you said, Scott, it's very clear that the competition for talent, that's gonna stay independent of kind of like tightening of market , possibilities and opportunities. Because most of the predictions are actually talking about massive shortages of skilled workforce going into the end of the decade. We're talking about probably about 85 million sort of missing workers in the workforce with the right skills.
Which is actually why we are really doubling down on learning and actually learning not only for our employees, but actually providing learning opportunity for the broader ecosystem, and actually even sort of providing learning opportunity for students to make sure we're actually funneling talent into the broader ecosystem, and actually making sure that people sort of coming out of universities, they're actually ready that are understanding how to put SAP solutions and technology to work to solve business issues. And that's one of those, where you'll be seeing a lot of work and a lot of very focused efforts from us.
Just talking about our retention rates, I think one of the things we have to say at SAP is we've been actually really good in terms of our retention, even though we have that war for talent. Our retention rates are sort of in the 92%. We're actually much better than the industry average. I think there's many things we can credit to culture. There's many things that we can credit to really sort of leadership development, enabling our people, their personal growth, their opportunity to learn. You know, we're very focused on keeping it that way, and we're very focused on also sort of bringing in additional talent, sort of in the right spots as we as a company actually transform as well.
That's the other piece that certainly y ou've seen some investments from our side, kind of like making sure we understand sort of the talent bench that's out there, actually internally and externally, and make sure we're finding the right great people for the right roles.
Just a mini comment on top of that. It also has an impact on our portfolio. That's why you see us already for quite a while doubling down on low-code, no-code technologies and capabilities. Because all our customers and partners have that challenge in the competition for talent.
Thank you. Thanks, Stefan. Michael?
Yes. Maybe a little philosophical question. I mean, SAP is co-innovative with customers. You've cross-sold third-party products on your card for many years. These joint ventures with Dediq, with Fioneer are slightly new. Can you talk about the scope? Would you be willing to do these at a much grander scale? You know, thinking of networks, would you be willing to partner more? What's the risk of losing control, if you're sort of pooling resources to save costs to a degree?
I'm thinking back many years to Commerce One. Just, you know, some context on how you think of that risk-reward. A separate one for Julia. Just Julia and Sabine, really. I mean, you've been at SAP for not two years, not eighteen months yet. What are the biggest changes you've made? I guess, Julia, marketing's never been a board seat before, so what are the significance of that and the sort of latitude of change that you've brought about? Thank you.
Perhaps so I can start and then please have my colleagues chime in. Look, I think the joint venture route is not one that I would say is the suitable one for the lion's share of partnership opportunities that we have. Because a joint venture is always a complex undertaking. At the end of the day, where it makes sense if you can combine complementary strengths under one roof in a model that helps us to scale faster than otherwise.
This is true and was true for the financial services industry because we could work with a partner that has specific competencies and is able to provide, in this joint venture structure, an amount of patient capital that otherwise in our portfolio priorities against 25 different industries we could not have sensibly provided. However, that is a very specific scenario. Clearly in other industries we have, for example, already a much broader scope of capabilities to which we can incrementally add. There, you know, working through some of the edge capabilities in a classical partnership is something that would typically make a lot more sense.
I think you should not expect SAP now to branch out in, you know, dozens of different areas through the setup of joint ventures. I think at the FSI space was a very specific one where the, let's say, arguments for going down this route were particularly strong. That would not be the case in a lot of other industries, for example.
On the other part of the question, from a board seat perspective, I would say I think maybe the genesis, maybe Christian probably knows, was that the delta between the value that SAP is providing and what people know about SAP is a pretty big gap. I think there's a real opportunity, and hence I think an additional investment to say incredible capability, incredible value we're giving customers. Most people just believe we have we're an old ERP company. Closing that gap and shifting the perception and helping people really recognize this incredible portfolio we have is a huge opportunity for value creation and understanding of, you know, what we can do for the broader world and the community and even in sustainability. In the first year, focus has been a couple of things.
One, shifting really into performance marketing, not just brand marketing. That's really been in partnership with Scott of how do we drive true end-to-end demand into sales and measure customer lifetime value from the minute they learn about SAP to the minute sale, sales takes it and runs with it on that front. Building that muscle up in an end-to-end way. Then the second part of my kind of remit is around solution management. That's making sure that as we think about our portfolio, what we're building, where we're focusing, where we're defocusing is based on very much a market-led orientation. We have great technology innovation. We have great customer signal, but balancing that with overall market demand. What's the competition doing? What are the big secular shifts? Making sure we're placing our investments aligned with that.
Those are the kind of two big focus areas.
Maybe picking up from there, on my side, you know, I would define my role, actually as sort of, you know, focusing on our own transformation journey, both in terms of making sure we have the right talent, the right skills, providing the right learning opportunities into our ecosystem, all the way making sure we're really clear and focused on what are the capabilities we need to build on the process side, on the technology side for us internally, and how do we actually get on a, like, on an accelerated internal business transformation journey? The journey that so many customers of us are on. Obviously our job is to be ahead, to really think ahead and sort of being like that role model and the thought leader around it. That's the job.
In terms of the key things, I mean, clearly, it's certainly been around, again, talent, revamping, learning, looking at a lot of the cultural evolution and driving a lot of the clarity on the focus areas on the business transformation side.
Maybe also to Julia and Sabine, what we should not underestimate is also all the work the two board areas doing on the commercial side, yeah.
W hen we see we are completely under-leveraged today on how we're gonna, you know, bundle and commercialize our solutions, because sometimes you can bundle them really well. When you talk about the services cloud, you can combine asset management with the professional services side, as there's a natural connection. Oftentimes on the analytics side, where can we embed analytics to come to higher cross-sell rates? This is also work what Julia and Sabine are driving inside SAP to also, which is highly beneficial then also on the growth side of the house.
We have time for one last question.
Oh, lucky me. Need to make a good one. [Audio distortion] from Barclays here. Hey, thanks. Maybe it's actually a wrap-up question. As we kind of have been back here at the conference and kind of seeing the customers talking with the system integrators, it does look like the sentiment has changed towards understanding RISE better as not a lift and shift, but more a transformational project. Also on the SI side, there seems to be a lot more buy-in into this, a lot more excitement around that. Can you maybe speak about the journey that the customers and the SIs had to go through to kind of get to this point? Thank you.
Yeah. I can quickly start. I mean, first of all, Sabine's board area plays a vital role in that and the learning, because for a partner who modified ERPs for many years on NetWeaver, it's also a transformation, yeah? You cannot expect you launch Rise and everyone just stands there, "Oh, hey, we just waited for that." It's also an enablement side of how we're putting so much efforts in, you know, the training, in the certification, and really help them. Of course, you know, Juergen and team, you know, co-innovating API, so to really make it the best experience. On the partner reception Sunday, there was not.
Maybe because it was me, but there was not one partner who said to me, they all started the introduction, "Christian, we built everything on BTP." I said, "Here we go, finally." Y ou heard Accenture, you heard Deloitte. It's so important that they are with us on that. You are right, it was not perfect from day one on, but who is perfect with the ecosystem of 23,000 partners? Yeah, that takes time. We are getting there. Absolutely, the ecosystem is with us.
Yeah. I'd probably add two things on the ecosystem that we've seen. First of all, we've identified new revenue models for them that they didn't in the past. The Industry Cloud, the platform, and our willingness to open that up and us actually be a route to market for them rather than the other way around. That's actually been really interesting because they're seeing new ways of being able to derive revenue streams that don't rely on the amount of hours clocked in a transformation program. That's then led to their willingness to be more proactive because they understand that's a cloud model. The second is an understanding and a patience that we're forcing, not just SAP, the industry is forcing them to change their business model as well. Their hesitance is not so much about RISE.
The way I was always interacting was, "Well, how do I now come up with a new model? What's my role? How do I differentiate myself?" That takes them time to go through that. There was a bit of an iterative process that we've been through. The mood has changed, but also the structure now. They've now got clear business models. They now understand how they're gonna monetize and differentiate, and they're coming now back to us and saying, "Here's now what we expect of you to help us further expand upon that new ways," Christian mentioned before, the commercial models that Julia and Sabine are doing. Well, actually that's not just with our customers, it's also our partnership models to commercialize, to make it easier for them to leverage SAP technology versus maybe something else.
I think that acceleration, you know, I feel like we've got some good muscle memory that we're running with now with the ecosystem.
Very good. Thank you. Thanks to the executive board for your commitment and your engagement with the investors and the financial community. I hope this was a constructive dialogue throughout the day and a productive time spent. It was a pleasure to have you today. We still have some activities to go, but we'll keep the dialogue. Thanks for the people online and all the, let's say, the dialogue that we had throughout the day. It was a pleasure having you. Thank you, and we are looking forward to talk to you again in July for our earnings. Thank you.
Thanks a lot, everyone.
Thank you.