Hello. Good afternoon. Welcome to the SAPPHIRE NOW 2018 Financial Analyst Conference. Thanks for joining us here on the ground in Orlando. Also a warm welcome to those of you who follow this event over the web.
My name is Stefan Gruber. I'm Head of Investor Relations. As usual at the beginning, I want to give you a brief overview on the agenda for our conference for today. It's the clicker test now and to work. Look at this.
That's the agenda. We have 3 product related topics at the beginning: Intelligent Enterprise, Then C4HANA and then the SAP Data Hub, Intelligent Enterprise. The presentation will be given by our CTO, Bjorn Gohrke, who made the quote of the day, which I'm not going to repeat now. He might repeat it later on. And he will talk about how SAP Cloud Platform provides a competitive edge.
Then we focus on C4HANA, our CRM story. I know there's some skepticism in the financial analyst community as SAP is seen primarily as the king of in ERP or off ERP. And hopefully, Mr. Arzberger can change that perception today. And the 3rd product related presentation today is SAP Data Hub by Franz Weber.
Those of you who attended Capital Markets Day in New York remember Franz was on stage, and he does a little deep dive on the Data Hub and how it helps customers to get better insight into data from all sources. I have, as usual, a couple of housekeeping items. Before I do that, I want to remind everyone there is an executive Q and A session at the end. And a classical element in our Capital Markets events, a presentation by our Chief Financial Officer, Luka Mutic, who will do a summary of the key announcements here at SAPPHIRE and also talk about our growth aspirations on the top and the bottom line. And Luca will also provide an update on the currency impact in our 2018 numbers.
This evening, we have an Executive reception, this will be held at the Norman's restaurant at the Ritz Carlton. Please join us at the lobby of the Hilton at 7:30. Buses will depart from the Hilton to the Ritz, and there will also be buses that take you back after the reception. And finally, this event is also webcast on our Investor Relations website. So all the slides will be available on the IR website soon after this event.
And then at the end, That's my classical element. It's the famous safe harbor statement. Probably over the next 10 years, there will be a point in time where this will be replaced by Visual Intelligence, but I was told I still have to read it at least for this event. Please note that except for certain information, matters discussed Today's conference may contain forward looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future financial results are discussed more fully in our most recent filings with the SEC.
These were all my opening remarks. And now I want to invite Bjorn Berke to the podium. Thank you.
Thank you.
Thanks, Stefan. Thank you.
Thank you. Yes, thanks for getting that out of the way. Yes, my pleasure being here. I want to share a little bit After you some of you probably or most of you hopefully have seen the keynote this morning, the keynote maybe yesterday from Bill kind of introducing and presenting our company strategy around making our customers intelligent enterprises and supporting our customers in their ambition and their strategy to get to the next generation of business solutions that we foresee and that we see happening in the market. Now If you look at the history of Business Solutions, it's definitely kind of major disruptive steps that the whole S3 has gone through and Hasso alluded a little bit about the origin of ERP and how R3 was invented and how SAP has always been at the forefront of bringing The latest innovations and the next generation of these solutions to our customers to help them run their businesses better and deliver better customer experience and better service.
Now what we see Coming up right now, and some people may argue that it's already present but not evenly distributed yet, is the whole Concept of intelligence, which goes kind of as a next iteration beyond what we've seen so far in digital transformation projects. Digital transformation has been changing markets. It has been disrupting business models of companies around the globe in any industry. And with the advent of new technologies, topics like machine learning, topics like conversational user interfaces, Natural language based interaction with systems, with things like robotic process automation, With a broad set of new technologies coming to play, which support the new workloads at scale anywhere in the cloud, We see that companies also need to start rethinking how they drive business solutions across their portfolio. And if we look at how the interactions look like with our customers, what we've seen is that over the past years, while there was an Enormous push towards individual best of free line of business solutions.
We just move forward here. We have seen that push towards individual line of business solutions driven by the business individually, More and more customers realize that there is a big hurdle and a big effort necessary, a big headache involved in bringing and orchestrating all those solutions to deliver end to end business processes for their business and their enterprise, Which has led somehow to the effect that best of breed in individual LOB solutions is not sufficient anymore. It's really about bringing end to end processes together, bringing intelligence into how you operate your business from front office to back office And making all of that basically into an intelligent suite of solutions that can run business processes like lead to cash from end to end that can run holistic workforce management from end to end, procure to pay end to end. And it always involves more than a single LOB solution that needs to work holistically together. Now if you want to bring intelligence to this, It's important to see more than what's going on in individual solution.
I think that's if you look at what human intelligence What makes human intelligence still superior to machine learning is definitely the fact that we can bring context into the picture. We can look beyond the particular problem you're trying to solve and apply context and come to the right decision in the right context. Similar things apply, of course, in this context as well. If you want to make the right automated decisions in your business, you need to be able to look broader Than just an individual solution. It's not just looking at the front office.
You need to see what's happening in the back office as well and correlate that together. That's why we believe intelligent enterprises will need a framework to support them in implementing that intelligence and getting their business into that mode. And that starts with an intelligent suite of solutions. And there is no other company on the market that has this broad spectrum from front office to back office Like SAP, to make that actually happen. And whether we talk about customer experience and Alex Absberger is going to talk right behind me about Our C4HANA product in that space, whether we talk about the whole fulfillment that needs to follow any customer order, any customer interaction, So whether we talk about digital supply chain and manufacturing, whether we talk about the digital core with our S4HANA for HANA and S4HANA Cloud Solution around the core ERP and Finance space.
Whether we talk about how you empower your workforce and your contingent workers to deliver on your company's promises. And if we then look into the whole topic of your business network that reach beyond your corporate borders, with Network and Spend Management from procurement with Ariba to the whole topic of travel and expense management with Concur, All of those solutions in the end need to seamlessly work together to make the intelligent enterprise happen. Now that's the application side. That's the Patient side, that's the business process side of the house. Underneath, you need an enabler.
And that enabler is number 2, that's the digital platform. This innovation will require Agility. And it's not a one stop kind of activity to turn into an intelligent enterprise and then you're done. It's something that will need you to be able to, in an agile fashion, Adapt to changing market conditions. Learn as you go.
Figure out what you can do even better. How you can deliver a better customer experience. So the whole idea of a digital platform underneath is absolutely crucial to deliver on that promise. And that's where 2 elements come together. 1 is The SAP HANA Data Management Suite that we heard about yesterday already and also Haso talked about it this morning, where we take enterprise workloads, enterprise scenarios in SAP HANA, but we go beyond the enterprise.
We go with SAP Data Hub also into the space of big data data sets, which are distributed anywhere in your corporate environment Or distributed and coming from the outside into environments like an Amazon Cloud where you store big data out of IoT, where you tap into Social sentiment data out of Facebook or Twitter. So we're really kind of using SAP Data Hub as part of this overarching data management suite to combine your enterprise workload and correlate it and bring it together in a controlled and governed fashion with Data sets which are coming from the real world, which are coming from the outside to make sure both things fit together and you have a realistic view of what's going on in your business and around. And Franz Ferrer will present also here later on what this idea of the data hub and how we work across those things will come together. So that's part of and to figure out the core of our digital platform. On top, we have the SAP Cloud Platform.
And SAP Cloud Platform now is this agility layer. It's Our platform as a service offering, where we deliver, 1st of all, flexibility to our customers to run this in a broad set of environments, But we also bring a rich set of individual capabilities, so called microservices, in a cloud native architecture into the game that will allow you as a customer or a partner to quickly iterate and adapt your solutions in an agile fashion to the changing business needs. And I'll have a little bit more of that later on. That's element number 2. And element number 3 is intelligent technologies themselves.
So things like machine learning with our machine learning foundation, Partnering also here with Google and others. The whole topic of IoT connectivity, the topic of analytics, Prediction and planning, the topics of big data management, those are all capabilities that we embed into our And deliver them through the digital platform underneath. So these three elements, we believe, need to come together to help customers Turn the enterprise into an intelligent one and make them ready for agile innovation in the future as well. Now As a little shocker to the audience, this is a little bit of a technical picture of what is this cloud platform. It remains a little bit kind of Cloudy on all the pictures you may have seen before over the last 2 days here in the keynotes.
This is more of a technical architecture, market texture picture. I will not go into all the details. But what it in the end should show you is it's the central element that brings together all those capabilities that you hear of Here at SAP at SAPPHIRE to make sure that we have the central enabler, the central fabric, the central Orchestration layer to weave together our individual LOB solutions for integration purposes, Bring the innovation in there and deliver that in a flexible fashion. I'll quickly explain what's going on. First of all, SAP Cloud Platform CanTech or we operate SAP Cloud Platform for our customers.
So it's a managed offering that we have. It's a public Cloud, it's a public task platform. And we have been partnering with Google, with Microsoft and with Amazon to to not only deliver that capability in SAP data centers, but also benefit from the reach and the local presence and the scale And the elasticity of the hyperscale cloud providers to deliver SAP Cloud Platform Provision Services around the globe also in their environments. Beyond that scale, what is relevant is that we are able to co locate SAP driven workloads now with innovations that are coming from those hyperscalers. So whether you want to use BigQuery from Google or machine learning from Google, whether you want to tap into Office 365 from Microsoft, Whether you want to use your big data services and IoT capabilities on AWS, you can combine them and co locate them, Taking latency, taking network issues out of the picture as we co locate SAP Cloud Platform and its capabilities on top of those environments.
2nd is we're pushing massively towards openness. Such a platform lives off the fact that you have an open environment that is accessible to developers. I talked this morning about, and as my second most like quote is, cloud platform is where Cool meets or hangs out with enterprise. So it's a lot about making that platform accessible to a broad set of developers. That's why we engage in Cloud Foundry, which is the leading path open source platform.
We engage around on Cloud Native Computing Foundation around Kubernetes as a cluster management environment for container based workloads, The next big thing to come, we add, of course, our ABAP environment into that as well because we have a broad developer ecosystem out of the past from SAP. We make that the basis for all of the services we provide on SAP Cloud Platform. SAP Leonardo, The innovation services you have heard about are delivered through the SAP Cloud Platform. Our integration capabilities are delivered through the platform. And we're moving up the stack into business capabilities as well where we provide easy access to any of the master data objects That reside in the SAP systems, not just the customer, but also elements like supplier, the employee, the 3rd party contingent worker, Things like product, things like asset, which are provisioned on the cloud platform in a native fashion to make it easily accessible to developers and to systems integrators to build into and around the SAP ecosystem.
You combine that with a marketplace. We have a new commercial model for this platform, which Provides you basically all of it in an all you can eat kind of fashion of a menu. Under a single contract, you can basically get Any of the capabilities in the platform and consume them on a pay per use basis, which gives you the consumption flexibility Basically on the user side, where we can now deliver new capabilities into the platform in an ongoing fashion, And we're delivering features in a 2 week release cycle into the platform, and you can use any of it that we have in the platform as you need it in your transformation on our implementation project. Now all of this is used to massively push API. So the whole platform is API enabled.
We talk about microservices. We're API enabling our solutions as well. The SaaS solutions that we have from S4HANA Cloud to Fieldglass, SuccessFactors and Concur, because we believe that in the future, you need much more open systems that can be This from the outside in a standardized fashion, and that's a big push we have for the whole platform. And then you can start putting the capabilities flexibly together and Adapt, how you support your business going forward. In the end, Why do we why am I so convinced of SAP Cloud Platform being moving forward one slide.
Why am I so much convinced that SAP Cloud Platform is relevant to our customers big time? And there's I talked about my 5 finger pitch this morning. The first case, it's the best extension platform that you can have to extend any SAP solution. In the past, we had a lot of, let's say, learnings. Our customers had a lot of had a lot of learnings about going deep into ERP and over customizing the system.
So they started to tweak it to their specific process, Added additional functionality and basically locked themselves in to be able to update to upgrades to our latest releases. So usually, they kind of lost kind of the connection to the innovations that were coming from SAP because it was too hard and too difficult to upgrade. Big learning. Now in the future, we want to do things in a smarter way. We put open APIs around the core system and S4HANA is one of the most open systems we have ever had in the history of SAP.
Through standard APIs, we make everything that is within the system accessible from the outside So that you can build extension applications basically outside the core solution, keep your core clean, keep taking the latest updates on SAP. In the cloud, we do that for you, and you build your extension applications, your process extensions basically around the system. That's wonder 1. Number 2, the big, big topic of integration. Super important as we talk about how we bring that suite together And how you run businesses, kind of your processes, not only from SAP to SAP, but also from SAP to 3rd party.
Integration, we have one of our, let's say, most successful services on SAP Cloud Platform is our integration services, which is in the old days, we would talk about integration middleware. It's a holistic integration capability or a set of capabilities Ranging from application to application, business to business integration, data integration is part of it. We have IoT related integration capabilities. We talk about API Management and Open APIs. So it's a holistic set of capabilities.
Within 2 years, we've been able to grow that to 5,000 customers using those capabilities to integrate our solutions. Now what SAP is providing as part of the Intelligent Suite is Out of the box, ready made, ready to consume integration content. So if we talk about providing an end to end process like lead to cash, SAP is provisioning and providing that integration content that goes into connecting your C4HANA system and your S4HANA system. If we talk about Total Workforce Management is us who provides the necessary integration content to make sure that your contingent worker system with Fieldglass works Together with the SuccessFactors HCM solution and connects into your finance system with S4HANA. So SAP is providing more and more of the APIs and more and more of the integration Content out of the box to provide customers basically with integration as a service for all the SAP solutions And then in the end delivers an intelligent suite, an integrated suite and not just individual LOB solutions.
So that's a big effort there. 3rd biggest case we're seeing is the build platform. So it's a powerful platform to build new applications. We have one customer who builds An airplane fueling application, getting rid of a paper based process, replacing that with a mobile application on a tablet, which is used at Airports around the world to actually manage the fueling of airplanes. And they built that outside of the system, but of course it needs to connect back into an ERP system to actually do the fulfillment and get the delivery done.
So, To actually do the fulfillment and get the delivery done. So this is where basically the innovation starts outside the SAP process, but it leans back into an SAP driven process to get the fulfillment done. This is where Leonardo technologies are often used like we talk about IoT, we talk about analytics, Talk about big data. This is the classical build case. Number 4, I talked about that a little bit earlier already.
This is where we talk about a different way how you interact with systems in the future. And it might be early on. But we see it already in the consumer space with Amazon Alexa, with Siri and other ways how you interact, Let's say as an end user in a consumer space, if you're private life with systems, with natural speech, where systems talk to you and actually Playing to you the relevant things where systems start to have context that you will, of course, require if you talk to a system. So we see that this is going to be a part of the intelligent enterprise as well. This is how enterprise solutions will look like in the future.
So what we need here is the basic kind of capabilities today like mobile enablement, like multichannel access, But it's really also going into a broader set of new technologies like chatbots, like national language processing, Topics like conversational UIs, in our case, that product is called Copilot, where you have a central access point into any of those Business solutions, any end to end process, and the system needs to understand the context of what is happening in your various systems to be able to interact with you in a meaningful fashion. And again, also here, SAP Cloud Platform is in the end the enabler where we Provide those capabilities to embed them into our own applications, but not only use it for us, but also provide it As microservices, as individual capabilities on the cloud platform, so that partners or customers can use those capabilities as well to build our own solutions and enhance what SAP is delivering out of the standard. And the 5th element, which is not on this slide, and I Talked about that this morning is in the end, it's the agility platform. And I talked about that earlier already. It's in my opinion where experimentation that is happening in many customers Actually, it means predictability of a delivery that you need in an enterprise environment.
It's where your proof of concept that you quickly build in the end needs to come to a robust productization. It's where your millennial software developer that you hired Is going to meet with your Chief Security, your Chief Data Protection and your Chief Compliance Officer because whatever you build, In the end, if it starts to impact your business and becomes part of your enterprise solution, you have to be aware of security, you have to be aware of compliance, You have to be aware of data protection and privacy. And these things need to come together in a meaningful fashion. One doesn't rule out the other, And you need a place where you can bring that together. And that's why I this morning said it's like very cool hangs out with enterprise.
This is where the cool shit happens. Kind of growth wise now I have it out a second time. Growth wise, Hasso mentioned that as well this morning. Platform has been developing very, very nicely. Over the last 2 years, we have been growing by roughly 2 30%.
We really see strong adoption. We have more than 9,500 customers in the meantime. We have for integration services alone, I alluded on that, 5,000 customers. Just to give you some perspective with NetWeaver integration, it took us a few years to get to 10,000 customers. With integration, it's So much easier to adopt the technology.
It's so much easier to put it to action because it's in the cloud. It's operated by us. After 2 years, We've already reached 5,000 customers for that environment. So it really is a proof of where we're going. We have roughly 9 50 partners who are Certified for the platform, which are building industry specific, LOB specific extensions who work with us in providing integration services Our systems integration services on the platform, there are big names amongst them.
We have roughly 15 100 applications in our SAP App Center. That's our partner solution marketplace, which is out there. We manage roughly 40 multi tenancy shared environments across the data centers around the world. And we update them every 2 weeks with a full release without any downtime for customers. So it's really a proof Of how much such a central platform that only gives our customers agility, but also allows us to constantly bring new capabilities in.
Now the result in the end is an intelligent enterprise where you can accelerate value creation. And that's where what all of this is about. It provides you better visibility into what's going on in the enterprise. And Frans will talk about Data Hub and the SAP HANA Data Management Suite. And the basis of all of this is consistent data.
It's governed data. You need to know what's going on within your environment. And you need to get visibility into all of what's happening across those individual solutions. It's then focus. So you can spend efforts on the wrong things.
So with solutions like Analytics Cloud, we provide you with solutions to get right to where the problem is, to pin out where the exceptions are that you need to handle. And intelligence like machine learning can help you understand patterns in your processes that go south and that require attention, and then we can help you optimize. And it's about kind of agility that you gain and agility that you need because it's not a one time shot. I always Say digital transformation sounds like it's going from 0 to 1. Reality is it's a pretty analog process to get there.
It's kind of you're continuously improving And that requires agility. The market is changing. Your customers are changing. And you better make sure that you are not static and stay where you are. Outcomes.
Of course, in the end, it will all be measured by outcomes. It helps you to become better in doing more with less and empower your employees. To a large part, we will see that standard processes go away. They will be automated. They will be done by machine learning to an increasing extent, and we need to work with the workforce to upscale them and handle those special cases, work on the value add capabilities That make you as a company deliver better value to your own customers and provide a better experience.
Let's see, deliver best in class Customer experience, if you are able to get an end to end view, a holistic view about your customers as a company, how you can better serve their expectations, How you can bring down cycle times to react to what they actually want from you and you are actually able by connecting front office with back office to deliver, that's what In the end, we'll make your company become a great brand and become successful in the market. And Alex Asberger, if he made it, there he is. He will actually Explain in more detail on what that means for us. And with that, I would even say I'm done for my part and would hand over to Alex to take it from here. Thank you very much for your time.
Alex? Thank you, Bjorn. Thank you, Bjorn.
Thank you so much. Thank you
so much. Good afternoon. Thank you for joining us at SAPPHIRE. Yesterday, we made a very, very important announcement, which is that SAP is going after the CRM market. Why is this an important announcement?
Because this is the largest enterprise software market today. Last year, Gartner Communicated that CRM as a market has overtaken both ERP and database as the largest market With an addressable market of $45,000,000,000 growing at 20%. And we believe that market is far from being done In terms of evolving, in terms of changing, and we believe that SAP has an extraordinary opportunity to capture this market capture market share in this market and obviously provide tremendous value to our customer base. Why is that? That's because today's customers are changing.
And we made a case yesterday on MainStage They are changing around 3 key elements. 1, customers are still trying to develop one single complete view of their customer. 2nd, we believe that customers want to develop trusted relationships with their customers beyond a transactional relationship. And 3, that we believe that the connected experience from the front office from that customer experience to the supply chain Truly determines the customer experience. And all of you are probably well familiar with the market and the acquisitions that have taken place, But we truly believe that SAP's unique value proposition comes from delivering the intelligent enterprise where we connect The customer experience to the supply chain.
So those trends are shaping today's market today, And that's why we believe there is an inflection point in the traditional CEM system to today's 4th generation CRM. And what you see behind me on the slide are a couple of the dimensions that are fundamentally changing today in the CRM market. Based on those changes, we designed SAP S4HANA. This means it's not a transactional focused application. It's one where we actually put the profile and the single view of the customer at the center.
It's not one where we think about the sales opportunity only as the key driver, but we actually think about, again, that That's that consent driven customer profile, but also from an architecture perspective, where we believe that our competition is Actually now falling behind because they sit on a monolithic architecture versus SAP embracing the SAP Cloud Platform, Microservices built for big data and obviously built for openness. So those are some of the Key aspects that we believe are now changing and give us the opportunity to introduce SAP C4HANA. We have a very clear strategy in regards to our SAP S4HANA portfolio. We want to be number 1 or number 2 in every market that we compete in. That means solutions for marketing, solutions for sales, solutions for commerce And solutions for service.
We want to deliver 1 integrated suite that is SAP C4HANA. And finally, we want to realize the core benefit of SAP's Intelligent Enterprise, which is the connection from the customer Experience into the supply chain. How do we do this? This is through the delivery of 5 core clouds. This is the SAP Marketing Cloud, SAP Commerce at SAP Sales Cloud and SAP Service Cloud.
Each one of these clouds, SAP has a unique Differentiated value proposition as well as a strong market position. If you take commerce, for instance, which was previously hybrids, SAP Commerce Cloud is the market leader globally for commerce, both for B2B as well as for B2C. We absolutely intend to keep that position in the marketplace by embracing cloud technology, by obviously leveraging a very fast agile development platform, but obviously also continuing to expand our largest customer deployments for SAP Commerce. The second piece is the SAP Sales Cloud through the acquisition of Callidus earlier this year, has now the most widely adopted That system for incentive management, sales performance management and is also a market leader in that space. We combined our existing C4C solution, which was our cloud for customer, which is the Salesforce automation with Callidus to form the SAP Sales Cloud.
Again, we believe that is market leading, the highest adoption rate in sales you see around commissions. And I'm very proud to also share with you that SAP itself has rolled out and is successfully using the SAP Sales Cloud for our own internal operations with over 20,000 sales and service professionals. On the SAP Service Cloud, we see tremendous growth opportunity because with the acquisition We announced yesterday of a company called Core Systems from Switzerland. We have a differentiating offering for field services, which is By itself, a multibillion dollar market opportunity. In the field services space, the constraint for our customers It's typically the availability of service professionals to deliver services.
What SAP does with the acquisition of Core Systems It's actually provide our customers the ability to build their own private freelance network, thereby giving our customers the ability to Tap into the gig economy, lower the cost to serve, yet at the same time create happier customers. And then on the Marketing Cloud, which is one of the fastest growing solutions and also most Being our largest market opportunities we see, we have developed the SAP Marketing Cloud that leverages SAP HANA from an analytical side in order to ensure that we actually provide targeted segmentation, not just at larger segments, but actually at people Using the capabilities of geospatial capabilities in SAP HANA for better targeting. So So when you look at these 4 markets itself, again, they make up that €45,000,000,000 that I spoke about before. And 2 of those, I feel we are already market leading today. And the other ones, I think the suite always wins, which is really our approach to change the game in the CI market.
But what brings it all together is actually the yellow line on the bottom, which is the SAP Customer Data Cloud. This was the previous acquisition of GIGA. This is now the SAP Customer Data Cloud. This was our fastest growing part of our Folio in the Q1 of this year. And it's been not just driven by the need for GDPR in the marketplace, but also based on the fact That Giga provides a unique approach to the market, which is through a consent driven profile.
And every Customer that I speak to at this conference speaks about how to create a 3 60 degree view of their customer. But what matters so much is that this customer profile grows with every interaction in the marketplace. And that's what the SAP Customer Data Cloud provides is this trusted profile. And that ties to SAP's master data management strategy that I'm sure you will hear more about as well Actually gives customers a single view. So if you take a company like Nestle, for instance, that has 300 different brands, They want to have one view of that customer across every brand interaction that exists.
They accomplish this today through the SAP Customer Data Cloud. Now once they have that profile view, that profile view feeds into their marketing activities, Speeds into their commerce activities and so forth. That's the power of the integration. What you see today in today's marketplace Is that there are hundreds of providers in each of these verticals. Every company that I meet with, they are getting exhausted and tired By having too many choices that are not integrated that create additional silos and additional data elements that they need to manage.
What SAP provides them with is now one platform, one integrated process. But where the beauty comes from across the suite It's obviously that it's based on SAP technologies that companies standardize their company on for the intelligent enterprise. That's really the key Key ingredient of why we believe this strategy is not just differentiating in every one of the pillars, but really as a suite. So when you look at how we think about extending and giving our customers the ability to extend the solutions and give agility to them, That's where we'll leverage the SAP Cloud Platform. And the key here is that obviously all these solutions that you see, They move at a very rapid pace.
That's why you need extensibility, microservices to actually drive that forward. But on top of this, the SAP Cloud Platform also gives you the integration into SAP S4HANA. And that combination of See for HANA for every customer interaction and the customer experience tied to the supply chain is what other companies can't deliver. And that's completing the process from what we call lead to cash. If you take that for instance as an example exemplary process, Every company in the world has this process in terms of delivering value to their business.
Right now, this process in every company is broken Because when it stops at the order, you start to have the interface to actually the delivery and the fulfillment. With SAP, Key companies as part of the Intelligent Enterprise have one end to end integrated process. So why are we so excited about the market opportunity for SAP S4HANA? Because it goes back into what made SAP always differentiated in the eyes of our customers, which is the suite, the end to end integrated process. What the strategy also does and through the acquisitions as well as the organic developments that we made in our portfolio, It gives us a very distinct approach to the marketplace where we believe our competition is not at yet, Which is understanding that trusted relationships matter.
This is why the SAP Customer Data Cloud is so important. That recognizes that connected experience matters so much, which is the front end to the back office and that recognizes that the single view of the customer It has to be achieved across the entire end to end process. So stepping back from the technology And going at this conference, seeing the reaction even over the last 48 hours has been extraordinarily positive because I believe the market is ready for choice. The market in Centimeters has gotten fatigued about a lack of choice and too many point solutions in the marketplace. I think SAP's announcement that we are going after the CRM market as well again has been received very, very positively by our customer base Because our customer base recognizes that the Intelligent Enterprise needs that customer view in order to drive the rest of And I think a great example obviously for this are many of our customers here in attendance, but also SAP itself, Where our journey to implement the SAP Marketing Cloud, our SAP Sales Cloud, to create GDPR compliance Has been one of the most important things we have done internally and that obviously also led us to have confidence in the acquisitions we did with Hybris, Callidus, Giga and our core systems.
So that's the strategy for how we plan to win in the CI market. Through that 4th generation customer experience suite, we believe the time for this is now. And I would love to take any questions that you might have to give a good sales staff and I want to make a question on that strategy. Now we move forward.
Time for 1 or 2 questions for Alex before we move on to the data hub. Stefan Slowinski, maybe we can start here in the middle.
Thank you. Yes, Stefan Slowinski from Exane BNP. When you say you're going after CRM, a lot of the products you have there, you've already had before today. So you made a small acquisition yesterday, but are you ramping up your sales and marketing efforts? Are you doing sort of Special pricing in order to try and aggressively take share?
Yes. Great question. So on the First of all, besides the repositioning of the entire portfolio, we're obviously investing in the development, as Asos said, today around the investment that we are making in the entire portfolio. It's obviously very significant around integrating at the different clouds to develop that end to end process. From a go to market perspective, as you could tell even from this event as well as Our go to market investment, it's not so much about just one team taking this to market.
It's really about 90,000 people at SAP talking now about the CI market as well. So our general sales force will position SAP C4HANA. Evi, Industry Account Executive, will speak about SAP S4HANA. And then obviously, we continue to invest in our sales and marketing and distribution organization around the capabilities to deliver C4HANA. Obviously, with the over the last couple of quarters, we've seen tremendous demand from our customer base around each of these solutions.
And our expectation obviously is when we actually give a full view of the portfolio that that demand will continue to grow and even get at Stranga as customers see that they can actually have opportunities to leverage larger parts. So our upsell and cross sell opportunities in that portfolio are significant because again in a lot of cases, if you're an installed base SAP customer, this is great news for you because you have an ability to Expand your footprint with SAP also to the front office. If you are a customer who has a very heterogeneous environment With many different solutions, you will probably start at 1 or the other of the pillars and then slowly start to replace others. So we see a massive opportunity both in the core SAP installed base to both defend and grow our Presence, but also obviously to win a lot of customers over who have, again, a very heterogeneous environment in their front office. And that's what I see, by the way, in most customers that I speak to.
They have not made their decision on CRM yet. They have not made their decision yet in terms of the customer experience. So our view is that this is absolutely still a market that is up for grasp. And when I look at the €45,000,000,000 that we are going after, we still See the potential to be again the market leader in that space.
Yes. Good. Another question for Alex. I see one here from Monica Algarve and maybe Walter Pritchard, and then we move on to France. Monica, you first and then Walter.
Hi. Thanks for taking my question. Maybe can you talk about if you look at your vision, what you talked about, a C4HANA, What are the verticals you are looking to target for us and you think you could see more traction in?
Yes. So obviously, C4HANA is available across all the industries that SAP does business in. The key verticals are aligned also with our priorities for S4HANA, so that we go after similar verticals, including also for our very important obviously for the C Brana portfolio, consumer products, retail, professional services and manufacturing because we have a lot of B2B customers where we think our portfolio is very differentiating in. But again, we go after all 26 industries also through our partner and
Just a quick product question. On feature parity, are you at feature parity on C4 with On prem CRM and the cloud for customer or if not, when do you expect to be there? And I'm just curious qualitatively, how do you get mindshare from Partners who if I look at all the players here, they're all substantially invested in Salesforce, I think, are making a lot of money. How do you sort of Get some of the mind share on the front end from their practices. Yes.
So first of all, on the on prem Centimeters parity question, We are absolutely at parity. I think we are again differentiating what we do actually in the cloud to what's being done on on premise. And especially with the acquisition of Callidus, what we have now in the cloud in terms of capabilities of incentives, commissions, it goes beyond what's actually available in on premise. And then the second part of your question on the ecosystem and the partners. I think the partners obviously see opportunity as well with an announcement like this because again, there is a lot of customers that are still on the fence.
And we work obviously through our relationships with those partners to expand our opportunities also for them Expanding the opportunity in the marketplace. So all the big partners and the bigger size as well as These smaller partners see tremendous opportunity to expand as the SAP relationship in the front office as well.
Thanks a lot, Alex. Thank you
so much.
Thanks a lot.
Thank you.
Have a
good step on. Thank you. Thank you. Now we move to next topic, SAP Data Hub or the SAP Data Management Suite. And we bring Frans back to stage.
He was already participating in our program in New York. Frans, the floor is yours.
Thank you. Thank you. Good afternoon also from my side, ladies and gentlemen. In the last months and especially in the last days, we had a lot of discussions with customers and especially looking into what we are providing with Data Hub. And what we have seen there and what we also heard from also from analysis is these five points where customer are looking into when they speak about their data sets.
First of all, almost every and this year is the number 75%, 74%, almost every CEO is telling enterprise is telling us That they don't have enough visibility into their data into their complex data landscape. And that's obvious. There are multiple reasons why the data landscape is so complex. So first of all, we have different technologies where we want to treat data. Of course, you want to store Your transactional data in a transactional system in the ERP system.
You have a data warehousing system. But now with Hadoop and with big data lakes, There's another big system coming into game where you store data, especially non structured, semi structured data, but also maybe age data. And then you have organizational boundaries where different organizations store their data in different stores and have different preferences. And then of course you have multiple cloud systems as well where you can store your different data. And that's obvious that in an enterprise You are not able to control that.
That was a wish 2, 3 years ago when we did a lot of discussions with customer where the original plan of a data lake was That is our method to bring all the data together into 1 data lake and there then we have one view of the data. I think This dream nobody dreams anymore. It is obvious that this is not possible in an enterprise. And this is also not really good In an enterprise course, we have different requirements for different data and that everything can be done via a data lake in the traditional thing. So more and more we are looking into virtual data lakes where we still have the issue that the data is stored on different places.
And even if we improve that, we still have the problem that the data landscapes will be also in future quite complex. The second issue customers are telling us It's about data quality because many, many of the data are just stored there without a real process of how good the data is, how can I trust the data And trust and data quality in 2 senses? One is, are they really wrong data? And second is, how much can I trust the data? And who put the data there?
And who is able to really change the data? Very big worry from our customers. The third thing is about data innovation. The question is there, Even if I have now the control over my data and even if I have enough data quality, do I really make enough out of my data? Many, many customers just store lots tons amount of data or have tons amount of data, but they have the feeling I could do something with it, But currently, I don't do it.
They have the feeling that there is machining and learning out there. There are tools out there. But really, the step until I really get the value out of that, I don't have that currently. I have data, but I don't do enough with my data. And For this data produced, if you have that, it just stored a lot of costs.
And I do a lot of copies. I do a lot of data movement back and forth because I needed That produces a lot of costs. And now especially with GDPR, customers know that they have to take care of That's an issue where they are worried about. They want to define this compliance, and this is what customers are worried about. And this is now what we want to what we target, Tacker, with DataHub.
Especially, and I mentioned that a few times when I presented already DataHub before, What we want to do, we want to do data management end to end, where data is created to We feed the data into a process, into a visualization, but especially into a business process where we really can create the value or take the value out of the data. So it's not just a database. It's not just a data preparation tool. It's not just a data quality tool. It's not just an aggregation tool.
It's really a tool end to end where we do the data governance and data preparation and data orchestration end to end. So It is. And we compare that sometimes. It's kind of an ERP for data. Maybe really take care of your data.
And why is that so necessary? Because if you want to take results out of the data and if you want to take value out of the data, of course, You have to be sure that you have a process in place which allows you to be to make decisions out of that. And if you want to take decisions out of that, of course, we have to reproduce the process. And you have to do everything which you are normally used from transactional systems, Now also on Visual Data Systems. First of all, of course, you need visibility inside the data.
That means That we are connecting the different data sources without moving the data into one system, what we call Data Hub. And in Data Hub, and that's really important, We are now collecting the metadata of the connected system. And that's the big thing of the system. That's kind of the heart or the soul of the system which we are doing. We have we are knowing about every data source, what is in the data source and what the data is about.
And that you have central, this metadata. The data itself stay where we are. Of course, if you want to have Parallel data consolidation project, that's a parallel thing, but it's not enforced by the data hub. And this metadata, first First of all, which kind of data do you have there? What is the semantic of the data?
And if we cannot crawl it automatically, then we have a mechanism how you really can specify that. But in many, many systems, we know the semantics. From our SAP system, of course, we know the semantics of the data because we know The business value and the business information and the business object of the data, so we can understand really the semantics. And of course, we can now use these semantics and apply that to data which we don't know. Look at the case where you have CSV files on your data lake With some columns where you don't know what it is about, of course, we can do machine learning and learn from our ERP system what the data is about and apply that applies it to the data Which I just saw there.
So we can really derive metadata and semantics out of the data which are connected. 2nd is, we provide processes where you can guarantee data quality of your data. So we are not just saying We're providing data quality tools where you can improve your own quality and check the quality, doing outlier detection and these kind of things. But we even have processes and we record the processes and we take care of the processes in the life cycle management that you really get a guarantee On the quality of the data. So you know which data are on which state on the quality.
Then we allow, of course, that you Integrate now your machine learning algorithms, which you often have and where you often have data scientists which are working on these machine learning algorithms, we allow you And the customers to integrate that into your standard process. Why is it so important? We have a lot of machine learning systems out there. We have tons of algorithms out there And a lot of research is going on. The problem with all these projects is how do we make them really productive and how do we really create value?
When we look in the big data projects, which are currently going on in the industry, all analysts tell us, and that's also our experience, The 95% of these POCs of these projects, they are just stopping at POC level. So they have a nice output. You can do a nice demo. You can show it around, But you don't make them productive and don't create value out of this project. So it is easy to show a demo About a nice machine learning face recognition, whatever classification, whatever algorithm.
That's easy. All the students can do that now. You install a TensorFlow, you Whatever. Put a few data in which you can download, even your own data, and then you can do it once. But have that operational and feed that into your processes, that's a big thing.
Then, of course, we don't copy the data because our paradigm is we leave the data where they are. We don't produce additional costs. We just leave the data where we are. And that's really very important. Because if you today go to the big cloud providers or other systems, What they tell you is, you know, first give us your data, then we take care of you.
That's not our story. Our story is leave the data where we are. We take care that we extract as much more metadata and semantics as possible. We allow you to model in addition on top of that, and then we take care of your processes and of your data. Leave the data where you are, no additional costs.
And of course, with that transparency and additional functionality, we allow you to be compliant Because the first thing in compliance is transparency, that you know what you do with your data. And that's currently not the case. Data processes and data storage is just not Visible, customers do not know if they have personal data in many, many cases. They just don't know. And they don't know Who is really accessing the data in many, many, many cases?
And having the transparency allows you to put tools on top of that, which we are providing And doing compliance. And that is what DataHub is about. Looking here a little bit at the Very high level architecture view. I'll come down a little bit more into detail. So we have, of course, on the left side our traditional SAP systems, Which are providing all the value and you have heard about that also during SAPPHIRE, what the new innovations are And so on.
Of course, there we have huge amount of data, especially very high quality data. On the right side, we have more the Kind of big data storages, kind of algorithms, kind of semi structured data, where you have a really complete different world also from the semantic point of view and the quality Love you. There, the quality requirements, the consistency requirements and so on are really different. And there are also data coming in in a different way. So the goal of the DataHub is now, besides the orchestration and governance, is bringing these data and really together.
Across all the cases I have seen so far and we have seen so far, it's always about combining this kind of data. In order to create value out of your sensor data, it just makes sense if you do something with the sensor data in your transactional system If you combine them with your master data in your transactional system. So at the end, you want to create an order, you want to create a predictive The process, you want to create any kind of other process because just that creates the value, not just starting at a nice UI where you see some curves floating around. That does not create value. That is fun to see.
And then somebody is sitting in front of that and is judging something. That's not the thing We want to create just a combination of these data. And therefore, we need SAP HANA, where we are running our Traditional systems on that. And on the right side, in order to process, we have Vora as part of the data hub, Which is processing the unstructured and semi structured data. And in the middle of that, what is the clue of that is what we call the data hub, We bring the things together with orchestration, monitoring, ingestion, and of course, data discovery and pipelines.
And pipeline It's our way really to model and execute data processes which allow you to bring data together from different sources and process This is what we call pipeline on data flows. Looking a little bit deeper into the architecture, there you see what we are in general doing. So first of all, we are based On the cloud infrastructure. So, of course, the system can run on on premise and also on cloud. But, very important is That we are extremely scalable.
And that's really important if you want to run these kind of processes which consume Huge amount of data and are able to consume huge amount of data and therefore also need some processing capabilities. We are doing what a lot of What I'm now doing, which is really the technology of choice, is we are based on containers and then having container management with Kubernetes on top. Based on distributed storage, and we are running on the different cloud platforms and, of course, on also on SAP Cloud Platform, but also on premise. Then we have in the middle what you are seeing, we have the SAP Data Hub system. And what's important in there, without looking at the details is, This is not just a tool.
So DataHub is not just a tool. DataHub is a system. DataHub takes care End to end of the data. So compare it more with an ERP system or with a suite system than compare it with just a tool. So we need all The quality such a tool has, which is privacy, which is access rights, which is taking care of user management and these kind of things, this is embedded into the system.
And then on top of that, we have our runtime, which is a massively distributed runtime to provide the computing capabilities which you need In order to process your data processes, these data pipelines ask kind of the program code of what we are doing. And then you have Services on top of that, which is metadata is the most important scheduling and so on. Very important is, of course, also data discovery, But if you have really unknown data that we provide services, how you can really understand and discover the data and giving the user kind of help in order to understand the Hey, Dan. And then on top of that, as you are seeing, we have this data this access governance, this is access rights and especially self services. So the question is now why DataHub?
First of all, We have a universal view with DataHub. You get a universal view of all of your data, including big data. With a central metadata management, which allows you to have metadata across all of your data, including the transactional system, We are the only guys who can build such a semantic layer, which goes across your transactional systems And your other systems. And that's really important because if you want to bring the data together, you have to have a common semantic model of your data. If you don't have that, how can you map the data?
How can you bring the data together? And we understand our business models and business And we understand how to feed our own processes as a result of the processing of the data. That's really unique and others cannot do that at all. We can intelligent discover data relationships. We know which data fit together, which are in our transitional system transactional system and in the General system, we can do efficient data enrichment.
Because we have HANA as an engine beyond that. We can do all these processes, which you know from Hana and you have heard today in the keynote, what new things are coming with Spatial, with All of this graph and so on. We can all do this processing in the system in extreme suite with HANA. We have massive scalability. I mentioned that we are based on containers and cloud system.
And with that, with a new transparency, We have optimal compliance and data governance, which is based on transparency of the data. So with that, I want to stop with a sentence From a customer, from BASF, which is saying SAP Data Hub has the potential to become SAPS's next game changer. And this is what we really believe. This is something more than just and I mentioned that a few times, just another tool, just another Small application, this is a system where we believe that now customers can really create the value out of the data, They can really create business value out of the data, that they can trust the data, and they can build systems which take advantage of the data, which they store already, Or they will anyhow store in the near future. Thank you for that.
With that, We come to the highlight of the session, Luca, about the financial impact on everything.
Thank you. Thank you very much, Frans. And Must say, big compliments both to you as well as to Alex and It was really great to see how much you're in command of the very significant undertakings that you're driving to fulfill SAP's corporate strategy. When you have to follow these Strong operators, you have actually a great job because you can play the role of the smooth operator and can focus on just laying back and reaping Fruits and harvesting the fruits of all of this hard work. And that's, of course, what I'm concerned about, ultimately, the financial performance of the company.
As a CFO, that's what I care about day in and day out. And I judge the quality of our corporate strategy, obviously, through these lenses. Now I have learned over the course of the last 22 years that I'm with the company that a successful corporate strategy Should fulfill exactly 3 prerequisites and requirements and not more than those. The first one is obvious. It should address The demands of the market and of customers.
The second one is it should be focused. It should not be convoluted. And the third one is obviously In being focused, it should be differentiated at the same time. It does not serve a lot of purpose if you're focused on things on which you cannot differentiate at all. And that makes me so excited about the corporate strategy that these three colleagues have laid out to you all.
Because what is the address the market demand that we are addressing these days. Customers in the wake of digital disruption and digital transformation across all industries that we are serving Want to become data driven enterprises. They want to become intelligent enterprises. And how are they getting there? Well, they need to devise a process landscape across their entire operations end to end across the most significant company processes That is seamlessly integrated and intelligently digitized.
This is what we are addressing with the Intelligent Suite, so check that mark. Then they, of course, have to have a robust understanding of how are they harvesting the huge amounts of data that they need in order to make These end to end business processes intelligent, that's what we are addressing with the digital platform with the data management suite. Check that, Mark, as well. So we have now talked about the Intelligent Suite, about our digital platform that enables this through the SAP Cloud Platform and fueling through the data management suite, the data aspect of it, and the intelligence is delivered through Leonardo. That's the focus.
We have 3 priorities that we are Going again. And if we do those right, I can swear to you that the financial performance in terms of Both the top line as well as the profitability of the company will be great, and I will show you why that is in just a minute. Secondly, we need to talk about differentiation. So why do we have the right to win across all of those priorities? Why is SAP the only company that can bring us together.
Let's look at the Intelligent Suite. I think the points have been made by Bjorn beautifully. We are the only company in our industry that can, through the entire process chain of thinking about hire to retire, thinking about procure to pay, thinking about lead to cash, Thinking about produce to stock, thinking about the core finance processes of the company, bring all of those capabilities together functionally. We have the leading digital core and manufacturing supply chain solutions. Obviously, there is no debate about that.
We have leading assets for network and Spend management to drive total spend management processes. We have leading total workforce management solutions with SuccessFactors and Fieldglass, And we have a very strong portfolio by now in the customer experience area. What is different about SAP is that we have already today The best integration across those assets, and it's only going to get stronger. We are doubling down in terms of investment On the SAP Cloud Platform, internally, Hasso has talked about this a bit in the keynote today. There is no debate whatsoever anymore that this is the way to go across All of our LOBs, they're all committed and prioritizing the corresponding work to work together with the SAP Cloud Platform to converge On a common master data management solution on the cloud platform, a very, very significant step and to converge across the entire spectrum of our solutions on one common user experience paradigm that will also be driven by the SAP Cloud Platform.
No other vendor in the industry can do that Because they are lacking the breadth of the end to end process coverage of SAP. Now let's talk about customer experience. You might wonder how can we differentiate in this space. Alex has been very clear about that. First of all, count the vendors in the industry That have very credible and strong solutions across the entire spectrum of CRM as a market as a whole.
Some are strong in marketing but don't have Any solutions in sales or in services or they don't have the commerce capabilities. SAP has very strong capabilities across all of those Pillars by now, also driven through the acquisitions that we have made. Moreover, we have a game changer through GIGIAR in being able to drive a consistent Customer Identity Management across that entire portfolio of solutions and actually even beyond that across the other solutions that also constitute the And most importantly, we will take care of end to end seamless integration into fulfillment into The back end piece of the business through S4HANA. That's also something that no one of our competitors can do the way SAP can do it. And when you have this end to end process coverage, then you can go into intelligence, then you can build artificial intelligence solutions That are not sitting somewhere as a sidecar outside of this end to end business process landscape, but then you can really build that directly into the end to end business process flows.
I won't repeat all of the arguments that Frans has made around the data management pillar and why SAP is differentiated there. Suffice it to say, what Frans has presented today with the Data Hub is unique in the market. You cannot find another solution that allows you to have a central management of insight, visibility, transparency, quality of data in a decentrally Heterogeneous setup where your data is stored. This is groundbreaking and transformational and augments the capabilities that we have already Built out with HANA, which have anyway been highly disruptive and positive for SAP. That's why differentiation is key and to the core to this product strategy.
And with those three elements come incremental growth on the top line and profitability expansion. That's A simple math that has always held true as long as I've been with SAP. When we have this differentiation, this focus, Then we will win in the market. And so let me cover those elements that you have been waiting for, obviously, in terms of how this will translate towards continued Outpacing growth that will exceed our competition as well as the expansion of profitability that we have committed to all of you. First on the growth.
I know that there have been discussions in almost each and every investor communication and dialogue that I've been having about Can we really sustain the 30% growth CAGR in the cloud that we have seen over the course of the past few years into the future, into our midterm ambition going through 2020. I think when you take a look at the picture that you've seen just before, The answer is quite obvious. So far, when you take a look at 2017, the vast majority of our revenues in the cloud Have been driven by the scale assets that we had acquired basically before. These scale assets will continue to benefit from two things. First of all, the secular upgrade cycle to S4HANA that is underway that drives customers to also consider other elements Extended to, for example, digital supply chain elements that you want to extend it to procurement and to spend management.
So these forces will continue to be underway, but they will be augmented actually and strengthened through the focus on the Intelligent Suite, Which will make these arguments just so much stronger and will drive continued growth in those assets. But on top of this, our strategy now amplifies and augments the growth opportunities for our organically developed cloud assets, be it the SAP Cloud Platform, Be it solutions like the Data Hub, be it S4HANA Cloud, be it Analytics Cloud, they're all elements And they are all components of the Intelligent Suite or the digital platform. And this strategy will, We'll grow at a substantially higher pace than 30%. We'll make sure that we will at least lift our compound annual growth rate at the entire portfolio level And to the 30% that we need. The strategy also does something that is equally important.
Due to the scale that we are now about to reach In those organically developed cloud assets, which for the last few years, while they were growing very fast, have been dampening the gross margins For SAP as a whole in the cloud because they were still in an nascent mode, we are now reaching a stage where they are not dilutive any longer. And therefore, This is one of the key factors why we are so bullish about the public cloud gross margin aspirations for the company and why we expect such a huge uptick in gross margins going into 2020. The second reason, as we all know, is that we are coming to the end of migrating Our existing scale cloud assets from 3rd party databases to HANA, once this is accomplished as of next year, We will have significant savings there. Due to the fact that we are open, that we are collaborating with the hyperscale cloud providers, we will also benefit in our private cloud business Now let's come to the profitability side of the house. And as you know, this has been a subject of strong debate for some time now.
We came from a period in which our cloud transformation had a dampening impact On our company margins, it was actually overshadowing continuous efficiency gains that we continue to have in our established on premise business. And I committed to all of you, at the beginning of last year at the Capital Markets Day in 2017, that we would see the trough Of company margins in 2017, and we'd start to see an increase in the margins again as of 2018. The key factors that we talked about there was, of course, the conclusion of the migration efforts in the cloud and The technology platform migration to HANA would be accomplished and completed by the end of 2018. We said as well We see an opportunity to simplify our engagement model in sales and marketing and thereby drive a reduction of overhead and a reduction in capacity that in non sales functions within sales and marketing, plus, of course, We wanted to make sure that we continue to increase the efficiency in our cloud operations through scale And data center consolidation to just talk about some means. So where are we now?
At Capital Markets Day 2018, I reconfirmed this message, and We said a couple of things about SAP's financial performance to be expected. First of all, you said that in terms of our cost ratios, We need to continue to invest in R and D, and you see the explosion in innovation that we have all across the portfolio in C4HANA, in the digital platform, in the Intelligent Suite. Overall, this is important. And indeed, when you take a look at Q1 2018, It was hovering around at the same levels as the previous year. So it is broadly in line with current levels.
We also said, however, That's due to the simplification in our sales and marketing structures, due to the focusing again on fewer categories and the suite approach, We would see benefits in the sales and marketing cost ratios. And indeed, in Q1 2018, we had quite In the sales and marketing cost ratio, admittedly, of course, also a good part of that was driven by accounting changes to the cutover through IFRS 15, but not entirely. About 2 thirds were driven by the accounting changes. The other third was those efficiency increases. And in G and A, we also said that we should continue to see slight benefits And continue to decline.
And this is also what you have seen in Q1. On the gross margin side, we clearly stated that we want to start to see an improvement of cloud margins, While the larger increases will come in 2019 2020 when the migration of third party databases will be over, But you see already that this trend is starting with a sequential quite nice sequential increase that we have I've been seeing in Q1 2018, software and support margins should continue to benefit from ongoing efficiency increases As well as the fact that the maintenance piece of software and support is becoming bigger and bigger, and this is, of course, a highly profitable business, a very stable business as well for us. And exactly this has been holding true in Q1. And finally, we said that services that had a very nice turnaround subject to restructuring Should stabilize at a relatively high level that it has achieved already. And when you take a look at it from a constant currency perspective, actually, we have even been doing slightly better than that in Q1 2018.
So we are on a very good early track. Let's not call this war 1 yet and declare it 1 because This is the long term fight that we are fighting. In Q2, Q3 and Q4, of course, software revenues have a higher weight on our overall result than in Q1. So the volatility of software might now lead to even bigger increases of the margin or a Or a slightly dampening effect there, who knows. But we feel very comfortable taking a look at the strong results in also the core business that we posted in Q1 Against the very strong prior year result that the thesis that we had underlying our margin increase ambition Actually, it's holding and that we are in a position to definitely meet the margin targets that we had, which As you have seen on the previous slide, for roundabout80 basis points in margin increase in 2018, we've then actually Significant incremental increases in 2019 2020.
If you discount the fact that the IFRS 15 benefit that has contributed in 20 2018 positively will turn to a slight headwind in 2019 2020. Finally, We also said that 2018 will be the last year with quite significant CapEx increases And that as of 2019, when we are done with the database migrations, we should see very limited, if at all, any further Expansion of CapEx needs. So here, we are right on track. We said that we wanted in 2018 to end up slightly below €1,600,000,000 In Q1, we have been doing a little bit more, but this is mainly a spillover effect from CapEx that was already Acquired in 2017 but only became payable in 2018. Actually, from a budget perspective for 2018, We are right at where we want to be.
So we're very confident that this will remain the status on CapEx. And then as of 2019, There should be no further meaningful increases any longer, which means at the same time that we are committed as of 2019 And to quite significant expansions of cash flow, especially free cash flow, in line with the profitability increases that we as well in 2019 and 2018 should be rather roughly stable because we have some extraordinary effects and onetime payments to make in 2018, in particular, the payment for the IP consolidation of Hybris in Switzerland, Which positively influenced the effective tax rate in 2017, but now has to be basically paid out. And as you know, in light of that, we are also committed towards increasing shareholder returns. When you take a look at our dividend policy, we have updated it This year, from more than 35% to at least 40% of net profits, we have paid out a 12% increased dividend in 2018. And of course, we continue to target a constant increase of our dividend also in the years to come in light with our increased profitability across the company.
Now finally, the hygiene slide at the end of the day, just to let you know Nothing has changed in terms of our commitment towards our outlook for 2018 as well as our midterm ambition going into 2020. As you know, after Q1, we did a quite unusual step, and we updated our full year guidance and increased Already very early in the year. Mainly this was a reason of the closing of the Calidus acquisition in April, Which is contributing roughly €150,000,000 to cloud subscription revenues and therefore also to cloud and software revenues and roughly €200,000,000 to total revenues. However, we have also updated the operating profit guidance based on the very strong Q1 And I have slightly moved it upwards. And that effect is not only due to Kalidus, which contributes around about €10,000,000 of those €50,000,000 But also due to the strong momentum that we have gained in 2000 in Q1 2018.
Going into 2020, as we said before, we have ambitious growth targets. We want to reach up to €29,000,000,000 in total revenues Up to €8,500,000,000 in cloud subscription revenues and up to €9,000,000,000 in operating profit. We have kept this Midterm ambition stable despite the fact that we had experienced substantial currency headwinds in the second half of twenty seventeen and also going into 20 2018, we will evaluate this now at the end of Q2, whether in light of the KALEDOS acquisition and the current currency movements, We should update this already now or whether we will do this in early 2019. What is clear is that beyond 2020, Our target framework will be very consistent with the commitment that we have given to you For the period from 2018 to 2020, we should see further continued consistent improvement of margins also beyond 2020 on a very consistent trajectory. And we should see continued strong growth.
So we see no flattening of the curve there. We Believe that we have a strong strategy, that we have the assets that we need to scale our business beyond 2020 and continue to post superior returns also in terms of our revenue progression. Stefan has pointed to the fact that we have updated also Our currency expectations based on the end of May results, if they remained the case through the end of the quarter or through the end of the year, we Actually, the U. S. Dollar euro exchange rate development in the last few weeks was a little bit more pleasing than in the months before.
So we are gaining here Basically, roughly 2 to 3 percentage points of less negative impact than what we previously saw. You can take note of these numbers. We will file them as well after the conference. And with this, let me end here. I'm not sure where our Folks are.
But let me end with the following statements. We have, In my point of view, a trifecta, not Bill's trifecta that he's always talking about, but a trifecta that makes me very, very confident that SAP is poised to meet its targets and commitments to all of you. We have a strong corporate and product strategy. I think it is the most convincing one that we have had in a very long time. We have the right focus.
We have the right ambition on both the top line as well as Profitability, and we know what levers we need to pull in order to meet those targets. You have seen on the previous slides We have met our commitments that we have stated even last year at the Capital Markets Day and this year. So far, in the last 3 years, SAP has always consistently met and outperformed the financial ambitions that it has set. This should give everybody a lot of confidence. And most importantly, We have a great team, a great team, not only on the executive board, team members that I'm really very privileged to work We're very close and are really aligned across this strategy as well as the need to deliver the profitability and top line increases.
But more importantly, We have a great team at all levels of SAP. You have seen 3 of those great leaders just previously to me. And we have lots of people more that are united. When you walk the show floor here today, you will see There is great consistency in our messaging. Everybody is behind the strategy.
And with this, we will win in the market. Thank you very much.
I think we should be able to continue soon. Your Executive Board member colleagues should have all arrived, maybe 1 or 2 minutes to get them ready with the microphone, and then we continue with the Q and A session. Thank you, Luca. Thank you. So let's start with the final session of our Financial Analyst Conference.
Today, we've heard a lot about the SAP strategy, the Intelligent Enterprise, C4HANA, the Data Hub. And Bill just asked me what we want to cover in this session. I said, well, we just take questions from the audience. As usual, the financial analysts are never shy to ask questions. And so I would ask you, raise your hands and please use one of the roaming microphones for the questions.
And I see one question here on the left hand side from Kirk Materne and then one here in the middle section.
Thanks very much. A lot of new announcements this week. Obviously, C4HANA is one of the bigger ones. I was wondering
if you could just talk
to us a little bit about what needs to happen, if anything, from a go to market To put you in the position to start either taking some share or sort of building out the type of business you want to have in the broader CRM market. Thanks.
Sure. Sure. Well, I'll let my colleagues build, but maybe I could just start it off by saying we will not waiver, we will not bend until we have taken full command of the CRM market So please know that the entire company is committed to being the CRM market leader. That's the first thing. The second thing is We pretty much are following a similar go to market strategy with all the businesses that we think are super important.
So for example, within the Cloud Business Group, Rob Enslin leads that initiative from development Into the go to market where he teams up with Jen and Adair, Alex obviously has responsible for Cifu Hana reporting to Rob, but there's specialists That are in every region on the go to market side. These specialists are equipped to handle any conversation, Whether it's a sales, a marketing, a field service, a end to end Scenario that might be industry specific, they are really the specialists. They team up with the generalist who's the account quarterback or the account executive. And this model has worked very well for us. Now this business has thousands of people in it.
So this is not a startup. This is like a big business unit. So one of the things that most encourages me, and I sincerely tell you from the bottom of my heart, the best management team I've ever been with in my life. And the teamwork across this group is truly remarkable. I love this team.
This team is built to win, and that's really what makes the difference.
Thank you. Let's take the next question here from the middle.
Bill, it's Keith Bachman from Bank of Montreal. I'll Stand up since I think the lights are shining right in your eyes. I want to ask you about your aspirations in the Data Hub. In particular, I think it's pretty clear that SAP has leadership on all the systems of records. But I think if you ask customers, it's not clear that SAP has Leadership in the marketing area by any stretch or even in the post sales support or what Adobe calls a services cloud.
So How are you going to be successful, you think, in grabbing more share in the broader CRM market without More competitive offerings, if you will, in the marketing area, in particular, the Marketing Cloud.
Yes, sure. I'll let Rob and Bernd and Jen and Adair make any comments they want on this. But in terms of the data hub, the one point that I would really call out Is that SAP is going to be a very serious leader in not just the runtime database, Not just the business model innovation concept of the application oriented database as it attaches to S4HANA, but as a full use Database. And I think the fact that the Data Hub can get data from any source, including the hyperscaler sources as we Partner with these infrastructure as a service partners and processing that transaction on that information At in memory speed and having all the security in the world because you're not moving the data from one database to another gives us unique competitive advantage. So please, I really believe that the database future of SAP is underestimated in terms of its upside.
And then in terms of the C4HANA specifically. I'll let Rob and the team discuss that.
Yes. So how
are we going to take market share? First of all, we have, I would say, the best go to market team in the world between Jen and Ade and some of the folks we've acquired from the acquisitions. But remember, when we launched C4HANA, this is not day 1 for us. We've been working for 9 months on how to put this into a CRM suite across all aspects. So we already have sales, the calluses, Configure price quotes, sales performance management, we've already had it completely integrated.
We have plans on how to do that. And we've linked in the lead generation piece from the marketing piece. So the So the process is already complete. So we know how to take that to market. Together with Commerce, we've actually understood how we deal With the customer ID through GigEa and how we build.
So when you look at sales, marketing, service, commerce, this our plan is to build a complete End to end suite that ties into the intelligent enterprise that connects to the supply chain as well and connects to the fulfillment engine to ensure that the customer gets the whole piece. And I think there's maybe a piece missing on the field service. We don't want to be a me too player in the field service. We acquired core systems because they do crowdsourcing for workers. And when you look at what we want to do in this space, We're talking about total workforce management.
The future of enterprise applications is going to be around Solving big problems around total workforce management, employee, contingent worker, casual worker, and we are the only ones that can close that gap. So These are all added benefits that we bring with C4HANA to the bigger enterprise, and that's how we'll change the game on the rest of the competition Because they have a single play. By the way, the other piece that's key, especially the marketing piece, we've already got 25 new partners lined up In that space, new partners, a new ecosystem, and we're driving that exceptionally hard because marketing is a massively fragmented market. There are thousands of companies out there. It's not only about Adobe and Microsoft and there are thousands of and somebody has to be the platform and we will be the platform for the intelligence suite and that's what's going to change the game in that space.
Okay. Thank you. So a question in the middle from Michael Briest, and then we continue with Charlie Brennan. William, thank you, Stefan.
Michael Briest at UBS. Rob, just to go to one of the issues that I've asked about a few times before, but on SuccessFactors, the migration to HANA, You said it will be done by the end of September. And Luka just said end of the year, all of the acquired clouds will be completed. Can we just get an update on that?
End of the year.
End of the year. And then for the more recently acquired Kaleidus business, etcetera
End of the year. All done. End of the year. And then
Luca, I guess you've talked about triple digit million savings coming out
of this year. But Michael, before you I can answer the full financial questions. Ani Jockey. The piece with SuccessFactors, we have also re architected, and this is really important to understand. So not only have we moved the actual architecture to move on to HANA is done.
We're getting
That's the actual engineering. We're actually just migrating customers. And at the same time, we rewrote the whole analytics piece to build on the SAP Analytics Cloud So that it could tie into the Intelligent Suite. So when you look at SuccessFactors, you're looking at OnHANA fully built on the Intelligent Suite, Completely connected to Apple Ios. It's a differentiated solution end to end.
And at the end of the year, all of that work's done, And then you'll see massive innovation also come out of SuccessFactors.
And massive benefits to margins, Luka?
Yes, of course. I mean, that's you will always see us talking consistently about that as long as the plan holds. It's Quite simple. We will have mid double digit €1,000,000 savings just purely from the retirement of the outdated Legacy platforms. And we will have another mid double digit €1,000,000 savings from the increased conversions that we can achieve Data center consolidation, the additional savings that we have through additional automation.
So it's a simple math. And as long as we are done by the end of the year, that What you will see next year, and that is one of the key thesis that is underlying not only the profit progression, But also the CapEx straightening out because that is the only reason why at the moment we still have such substantial CapEx increases.
Sorry, just a second one on cloud for Verhana or sorry, customer Verhana. That's obviously pitched as being integrated into S4. What about the majority of customers who are still on ECC? Will they get the same benefits? Or is this a carrot to move them on to
I think I wouldn't call it a I would not call it a actually, Bernd, you can answer. You want to answer this one? Yes. Why don't you answer from an AS4 point of view? I can elaborate on the C4 piece.
First of all, you need to understand that the integration is done via the cloud platform. And any system that can expose APIs is able to be connected. So it is not limited to SAP system. We have embraced the openness. Of course, if you now look at the openness Often ECC, which was built at a time when SAP was having a proprietary approach.
And now the openness of Sfour, There is significant more APIs available. Is it possible to connect it technically? Yes. But It is not coming out of the box. And when we were talking about the Intelligent Suite, we committed to the customer that we will deliver The beautiful capabilities of consuming and digesting software as a service wherever they want to start, While if you look at ECC, this is still a monolithic system with technical capabilities to be connected Where I would say you need a service partner who is able to do it.
Is it technically possible? Yes. Is it more effort? Yes.
Okay. Thank you. We'll take next question here from Charlie Brennan in the second row and then Vijay Arnaud from Jefferies.
It's Charlie Brennan here from Credit Suisse. Just a general question on licenses actually. You We need to flag up some uncertainty in whether customers take licenses or cloud as adding some variability to your results this year. But investors are starting to ask me about the bonus depreciation aspect of the tax reform as an indication that Some customers are going to move back towards licenses. Are you starting to see any of that in your customer dialogues?
And could we see a license surprise on that? Maybe I
could just start out, if you don't mind, and then give it to Jen and Adair to give you perspective. But one thing that you could say first of all, we're not seeing it. But if you wanted to make a leap, you could say, some of the booking activity might have been A little bit less than the revenue activity based upon that. I don't think that is the case, but certainly that would be something to watch out for in the future. We think we're unique in the sense that the core licensing business of SAP, unlike any of the competitors in our space, Has remained robust and solid.
And you know where the guidance is at and we stand by that, while at the same time, we have a very fast growing cloud. So Jen, Adaire, are you seeing any change in behavior out there?
I'm not in my territory.
No. I mean in the United States, maybe here or there, like one But I was looking for that trend as well. I'm wondering if I was going to start to see that. I can't say I saw any kind of trend. Look, I think you see the on premise because a lot of our customers, most of them are hybrid, as Bill said.
And a lot of them, when they're buying Most of them are hybrid, as Bill said. And a lot of them, when they're buying the on premise, they're still moving large landscapes, including SAP, over to the public cloud anyway. So You still see that hybrid environment, which is still driving some of the core growth.
Okay. Thank you. Let's move to a question from Vijay, and then we have one for Monica Karl, to begin.
Thanks. I wanted to go back to the on premise CRM Customer base, how should we think about the migration opportunity to C4HANA? And as this customer base migrates, should we think about the impact on your support revenues and renewal rates? Thank you.
Yes. So look, we have approximately 7,000 CRM on premise customers. Many of them are living in a hybrid world, in any case, today with SAP. So I believe that they will definitely start to migrate To our C4HANA platform in a much bigger way because it's complete. It's a full suite solution.
We have the extension plan that we put in to help these customers migrate, so I think that will have benefits. But we haven't seen any significant drop off in maintenance revenues because of customers migrating to SuccessFactors to any other Solution, and I think the same trend will take place.
Yes. And maybe to add to this exactly right, I mean, we have now Five years of experience with our cloud extension program. And during this period of time, we've had Whole market categories like HR, like procurement, increasingly already CRM even today, even before we have augmented the portfolio, Migrating to the cloud. And you've still seen very, very stable maintenance renewal rates and continuously positive growth in support revenues. And that is due to various features.
Our portfolio is really very complementary and that we have a very, very strong asset, especially for the largest enterprise of the world with S4HANA, where a secular upgrade cycle is underway. And for customers that migrate, for example, their CRM solutions to Our C4HANA cloud portfolio, there is so much opportunity to potentially repurpose some of those licenses to augment a sale, which is part of the S4HANA migration sale in order to stay on a broader license scope, For example, going into extended supply chain, extended warehouse management on top of what they have today, We don't see any noticeable impact that would be different from what we have seen been seeing for the past few years.
Okay. Thank you. We have the next question from Monika Garrett.
Hi. Thanks for taking my question. A question on the cloud ERP Could you talk about the interest you're seeing in the cloud ERP? And are you seeing larger enterprises moving to cloud ERP? And then when a customer is evaluating a cloud ERP solution, which are the companies you really you see competing against And what makes SAP win a deal or not win a deal?
Thank you.
Yes.
Yes. So one of the things that we've done this year to really make sure that we get the conversation really focused immediately versus on a product It's cloud ERP. Most of our customers, they're wanting to move to the cloud. I'd say we see a few different flavors. We see a lot of our brand new customers.
I'd say Almost all of them are starting in the cloud, whether it's Sfour public or whether they are starting with on premise license and they're moving that into the public cloud. I'd say that's pretty much The profile of any of our new customers. From a competitive standpoint, who do we see? You'd see the usual suspects. Why do we win?
I think a couple of things. 1 is the industry aspect. We've always kept that really strong industry approach. And I think another thing that's definitely helping us is we've got a great Ecosystem and we continue to evolve the relationships with the hyperscalers. As an example, you heard some of the announcements Bjorn made this morning.
You see the SAP Cloud Platform taking hold. Our SIs are really embracing it. They're able to then go into the customers and talk about The extensions, the industry accelerators that they're building on top, so they just see this wealth of support and resources around that. So those are a couple of the trends that I see.
I also think that there's a very strong value basis to the decisions that our customers are making. This element is core to their business. And so in conjunction with our SI partners and of course with the SAP sales org, it isn't just Solving the how for the customers, we're also solving the why. And so value based selling based on our industry DNA is a very core component of our Sales strategy and part of the reason why we're winning.
Okay. Thank you. The one thing, if I could, just build on Luca and Jen and Adeo's remarks. This completeness of vision in the enterprise really pays off because You're so relevant at the CEO level for the digital transformation and how those business models need to evolve, especially with this Ever mobile digital consumer and their higher and higher demands for how they will insist vendors treat them. So We had the complete relevance at the top of the house.
But if you think of things like your install base and protecting your core revenues like maintenance, There's so many things that you can do. There's so many different solutions that we can provide. So you're shielded from a lot of the risk That less complete vendors have. And as Jen said, in particular, these accelerators. I was in a meeting this morning with some very Sharp independent research analysts and they basically said what they got out of SAPPHIRE is so many of the SIs and the various partners Want to get on board with these accelerators where they can use the SAP Cloud Platform to not only hold their water on the install relationships that they have, But to take their relationships with their customers to new places based on the SAP Cloud Platform.
And I do think you're 100 Right on this industry reach because we could be very honest and very open with our partners because we do go to market 25 distinctly different industries. These are all fast growing markets. So there's so much robustness to the SAP relationship plan. And that's why I think If you look at the big partners that have lost in the marketplace, watch, the second they started losing is when they diluted their Relationship with their focus with SAP and they said, well, we want to have friendships with everybody. Once you don't have a very strong relationship as it relates to EAS With SAP, you'll see over time, your overall health of your market goes down.
Your overall business model goes down. So I think this completeness of vision And how we matter to the world ecosystem is becoming more and more, not less and less relevant.
Maybe, Bill, if you're allowed to add? Yes, please. When you ask about winning factors, when a customer is running today an ERP system And it's making the decision to move to the cloud. That vision of bringing in incorporating intelligence with our Leonardo capabilities It's truly a winning factor because they if we would just say we changed the deployment model, then it's What is the value? What is the return on my investment?
And we have these cases. But the moment we have started to Machine Learning, artificial intelligence, robotic process automation. That value is obvious. And they understand that with these Technical capabilities, it's a massive advantage to consume ERP out of the cloud because it's more than just Changing the deployment model. It's a redefinition of their processes, and that is clearly a winning strategy.
Yes. Okay. Thank you. We call the boys of God, but we have time for 2 final questions. I have Walter Pritchard and then Stacy Pollard, please.
I think what strikes me coming to the event here in the last 3 years or so with Sfour is you've had various drivers of the upgrades emerging with Accelerator packs with the cloud platform maturing, even Bill's roadmap speech, I think, a couple of years ago helped. I'm wondering, as you look at the pace of migrations right now, Maybe for Bernd and Jen and Azir. Is there something that is still to come that you think customers are waiting on that will help With the pace of upgrades to S4? Or is it just this is a complex upgrade, maybe these things just are going to go at a steady pace through 2025? But I'd love to hear what you think
I'll take that at first, if that's okay. I think that When we look at the opportunity in our installed base, it is the opportunity to migrate them to the S4 environment. But when you look at the depth of customization that many of our customers have, we have to ensure that we are able to answer both the how And the why question. And for many of our customers, that has to be a personalized approach because their starting position is quite unique Depending on where they were. And so we're in the process of working on a very specific program right now targeted on moving our installed base From the ECC6 environment and bridging them to the cloud and doing that in a way that, first of all, It starts with answering the business case scenario, the value based outcome, defines the clear how for Chris, that customer based on their starting point.
And we've been building along with Michael's organization and along with Vern's organization A series of tools and accelerators to help that process. So that's something that I think you'll hear more from us over the course of the next 6 months, But it's a very significant program for SAP, and we've already signed up 15 of our partners to help participate in that program with us.
Thank you. And now the final question from Stacy Pollard.
Thank you. If I'm the final question, then perhaps I should ask the most Forward looking question. You mentioned margin upside potential beyond 2020. Is that Mainly at the gross level or at the operating level? And what drives that?
Yes. First of all, we definitely should have opportunities to both further improve On the gross margin level as well as on the operating margin level, and we should see consistency actually in both. When you take a look at what we want to achieve until 2020. On the Business Network side, we want to achieve already a situation where we will surpass 80% Gross margins, is this the end of the chain? No, not necessarily because we see other players in the market that are operating at a similar scale That can do slightly more.
Is there endless upside beyond that? Certainly not. Where there is substantial further upside is on the public cloud side, where we will have reached around about 70%, right, in 2020. And clearly, those assets, There is no reason whatsoever why they should not catch up with the business network assets over time, especially once They're catching up after the migrations on to HANA. So there is definitely an opportunity on the gross margin level there and on the operating margin level.
I think through scale come efficiency benefits. That has always been the case. I strongly believe on the sales and marketing side that we are seeing now the, let's say, spike of specialization that we needed. The Intelligent Suite strategy, I think, will give us an opportunity to become really integrated in how we go to market, how we play out those reduced sets of clusters that we have created at the beginning of the year, as we discussed at the Capital Markets Day as well. And as this will play out, we certainly have an opportunity there as well to contribute.
And At the end of the day, you will hear very soon at the Q4 earnings our view on the ambition beyond 20 Because 2020 is more or less tomorrow, and we certainly need to address the expanded horizon. And so you shouldn't be surprised to see something from
And to build on what Luca is saying, if we can fantasize for just a second, If there's 16,000,000,000,000 Search companies that state that. And there's another 4,000,000,000,000 that comes out on the cost side through the massive efficiencies that comes with AI Automation, the whole future of work scenario. Can't you, in a certain sense, imagine SAP Leonardo Embedded in the enterprise applications and the business scenarios, the mega process scenarios, Can't you imagine a different dynamic pricing scenario where a company like SAP that It adds billions in value and sometimes only gets 1,000,000 in license from the billions in value. Can we not fantasize for a second and say, Isn't it true that SAP would be the most likely company in the EAS industry To figure out a way to get the big win for the customer and find a way to more cleverly get themselves some advanced upside based on Undeniable value. So if you're willing to put a little bit of risk into the equation and not take as much upfront, but benefit from the of the value one can create.
Maybe we can get a bigger chunk of that $30,000,000,000,000 than we have currently put in the plans. And I believe this is absolutely possible. So SAP Leonardo, the one office, not the back office or the front And the end to end mega process scenarios are most likely won by SAP if you see it our way.
Yes. And maybe just a last point to that to augment what Bill has been saying because I think he's absolutely spot on and right in that. We also see a growing trend that we move into more of these network type payment models. You see that with the cloud platform as well where we go to consumption based pricing. If you imagine that we win in this market, that we will attract a huge ecosystem to start to develop on top of the platform, This will be printing money while we sleep basically, where we don't have the sales effort anymore, where the attractiveness of the platform itself attracts Huge loads of developers, ecosystem partners, which then will, through the consumption based approach, drive the value for ASIC.
And I know we're done, but Just to build on that, let me give you 2 stats that you might find interesting based on Luca's conversation here with the business networks. Every 60 seconds, a new partner signs up. And we're not out there with someone carrying a bag signing them up. They're doing it online. So the more and more Relevant the networks become and the more and more awareness there is for the networks, I think the more and more members that will be on the network.
And then think of us between the buyers and the sellers more and more and doing it digitally at the lowest cost of sale possible. That's number 1. How do you like that one? I'm serious. Like, is that amazing?
Like, what that could actually be? That's amazing. And I don't even think people have turned this button on in their minds around SAP. I'll give you the second button. Facebook, They have a pretty good user base, right?
We're not talking GDPR issues right now. I'm just saying their platform, they're getting 10,000,000,000 hits a day. We're getting 1,000,000,000. And literally, we just walked it out of the garage. So can you imagine when we're together next year at SAPPHIRE and we're talking about 5,000,000,000 hits on the platform Or even more.
And what does that create in economic value by having a whole new ecosystem? And that's the thing On the C4 HANA side that I don't think people have factored in, the relevance in the CRM market right now has very little to do with 1st generation SFA that nobody likes to use. It has much more to do with the platform approach that people are getting on to make it simpler to integrate To some of the back office applications so they can do some of the modern scenarios. We will own that. And what does that mean To the competitive dynamic, the ease of doing business and again these mega processes in the enterprise.
So I love the question because I I think it really does leave it open to fantasy and speculation as to what could happen if a company like SAP would have really organized the swim lanes for growth, and we intend to.
Well, thank you so much. This concludes our Financial Analyst Conference for today. Thank you all for joining. Thank you. We look forward to seeing
you in touch with us. Thank you. Thank you. Good job. Good job.