SAP SE (SAP) Earnings Call Transcript & Summary

All right. Good afternoon, everyone, and welcome to our Financial Analyst Conference. It's a great feeling to be back at SAPPHIRE in Orlando. Welcome to the Sunshine State. So I hope you're enjoying the program so far. We had a comprehensive program for the analysts, and it's great to be back together as a community. We have a great lineup for you today and a great agenda. So welcome also to those who are online, joining from around the world. It's a pleasure to have you. We are glad you're here. We have a great agenda for you today. So we first welcome our CEO, Christian, onto the stage to give you some insights on our vision and strategy. Then we'll have Thomas, the Head of Product Engineering, joining us virtually today and covering really the latest innovations from SAP. We'll then have Scott Russell, the Head of Customer Success, from SAP. He will provide some insights about the cloud, momentum, RISE with SAP and share some customer use cases. And then last, but not least, we will have our CFO, Luka, giving you an update on our financials and some insights on the outlook. So it's a great lineup. We have -- we are really excited to give you that update today. And after that, we'll have a short break, and we'll have the entire Executive Board from SAP on stage to answer your questions. So now, let me just say further, it's a tradition, during this presentation, we'll make forward-looking statements, which are predictions, projections or other statements about future events. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding these risks and uncertainties may be found in our filings with the Securities and Exchange Commission, including, but not limited to, the risk factors section of SAP's annual report on Form 20-F for 2021. Unless otherwise stated, all financial numbers mentioned here are non-IFRS. Growth rates and percentage point changes are non-IFRS year-over-year at constant currency. The non-IFRS financial measures we provide should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with IFRS. And with that, I would like to ask Christian onto the stage. Welcome, Christian. I'm sure you're having already a fantastic SAPPHIRE so far, and please take it away.

Thank you, Anthony. I have to say, somehow, you do the safe harbor statement faster than Stefan Gruber. So I have to say that that's good, so we can have more time to talk about our vision and strategy. And yes, a very warm welcome also, again, from my side to all of you who are joining us virtually. I can tell you, you missed something here because also, of course, a very warm welcome to all of you here in Orlando. And I said it yesterday in the keynote, virtual events are good from time to time, but it feels so good also now to be back, to feel the energy. We started on Sunday, with our partner reception, and to get the community back again together, to get feedback about the great progress we are moving in the ecosystem and then today, the customer meetings and talking about these massive transformations ahead, when you can do this live. That's, of course, also a big, big advantage also for the year ahead. Now talking about the vision of SAP. Yesterday, in the keynote, I explained it in a bit more detail. Today, I want to be very crisp. For me, when we are defining our vision, our strategy, it was very important from day 1 on, during my tenure as CEO, that we do it from a customer perspective. And so much has happened in the last 2 years. And of course, while the world has become more complex, the supply chains have become more disrupted, the pace of change has even more accelerated, when you look at retail, when you look into the oil and gas, when you look into the automotive industry, and of course, also, there is a big, big push also on sustainability. The good piece is in all of these battlegrounds, in all of these challenges, SAP has a great -- a big white to win because when you talk about business transformation, you're talking about mission-critical business processes our -- the customers are wanting today with us. And now, it's on us to enable this change. And again, and I come to that when we speak about RISE with SAP, this cannot only be done with a technical migration. There, you need to understand the industries. There, you need to understand where is the industry going and how to redesign certain business processes, like quote, to cash, to enable this new business model. Supply chain resilience. I talked about that we are creating the LinkedIn of the B2B world, and that's not an understatement. When you look at Catena-X and what we are doing there and connecting the whole automotive industry to do track and trace, to do real-time demand and supply checks across the whole supply chain, not only with your direct suppliers, that's a big game changer, including, of course, the manufacturers, the logistic providers, which are also playing a big role in the supply chains of our customers. And then it's sustainability. And there, when I'm talking to the CEOs, the conversation always comes to the point where they said, "Christian, I mean, we have to act, but we cannot measure." Just last week, I'm not showing now the name, I just had a big customer from the U.S., and he said, "Hey, I have my ESG data in so many different databases, not standardized, and then somehow we aggregate it to come up with a number where I'm really not -- cannot really trust on and where I don't have really the insights, to really understand where can I actually want my company in the future more sustainable." And this is where we are now developing new data sources. We're going to release very soon a green lecture in the ERP so that you can do carbon accounting and as we do today, the financial accounting, so that every asset in your company has an ESG dimension. In our Universal Journal, in our ERP, down on the transactional level in Concur, in SuccessFactors, we are providing the social data across the whole hire-to-retire process. And then with the Business Network, we are bringing it together end-to-end. Because, again, oftentimes, the carbon, for example, is -- accounts for 30%, which is then in your own enterprise. But 70% of the carbon footprint of an automotive sits outside of the enterprise, in the supply chain, and this is where we can use our network to really give our customers also, end-to-end, the view on sustainability. And then we go in and enable our customers to make conscious decisions. How do I source? Which supplier? What is the trade-off between cost, price, quality and sustainability or circular economy? And then we are bringing in partners, like EcoVadis, who also do certification on certain other ESG dimensions. And then we are creating a very, very strong foundation. If we move on. Now when we are then coming to our portfolio, I would say, when you look at the total addressable market, SAP has no lack of market, no lack of potential for future growth. I mean we are playing in many, many markets, and we are the #1 by far in enterprise resource planning, 29% market share. And what we are doing with RISE, and when you look at our net new customer share of 60%, there is no doubt that we're going to further expand our market share going forward. In procurement, we are back, I would say, stronger than ever. While others acquire to somehow sustain their growth and somehow, it still doesn't work out, we did our homework. We have now one procurement platform. Yes, there is Ariba. Yes, there is S/4. But what really matters for our customers is Procure to Pay, direct, indirect procurement, on the fly, one user experience, great mobile experience and then intelligence sourcing, connected to the network. How can we make sure that we also -- make sure that when you are sourcing, that you, for example, don't have any human rights, well, violations, yes, in your supply chain. That's seamlessly connected to the procurement side of the house. And then, of course, downstream, when we come to the payment side of the house, we are, of course, automating a lot with machine learning, with RPA. And again, it comes across as one platform, which is very, very important when we also come later about the cross-sell effect, when we are starting with ERP, and then go over to procurement. Supply chain, spot on, demand supply checks, very important. When we talk about supply chains' disruptions and when we are talking about move to commerce, what you need to make sure is, for a seamless consumer experience, demand supply becomes more relevant than ever. We are the market leader for that. And now, we are also making our strides on the manufacturing side, where we are moving more and more customers to the manufacturing cloud, plus when we then also integrate with Siemens, with Teamcenter, to really also make the shop floor integration work through the ERP. Again, you see how I always relate back to the ERP. The ERP is, of course, our starting base. But now, we are expanding more and more in the cloud also with RISE into the other territories, where our customers have strong needs as well. And then it's good that you don't need to play always this best-of-fleet, but that you can also show them how this needs to work together in an intelligent enterprise because the supply chain cannot be decoupled from the procurement side of the house and from the ERP side of the house. The human capital side of the house, same here, I mean, hire to retire. When I look at Employee Central, we have, in the meantime, so many large customers and win-backs with customers, running with over 100,000 users, our Employee Central solution. And when you start with the Employee Central and you own the master data for the employee, then you can talk about also the compensation side of the house. Those of you who maybe remember that we also acquired Callidus a few years ago, we have the world's leading compensation management system, yes? And when you are talking about a business model change, sometimes, you need to also then compensate on subscription and pay-as-you-go to have a compliant P&L. And again, here we talk again, the integration back to the ERP is very important. And we also, and Scott will talk about that, yes, I'm not offering this anymore product-by-product, but again, here, we're also talking about very, very important capabilities for the transformation of the company, also in the Human Capital Management space. Fieldglass. You see, total workforce management, do the reskilling in the right way, having the transparency also into -- for your contingent workers is something which we underutilized in the past, from my perspective. And now, we are pushing it really, really strongly, not only Fieldglass, but a combination, about albeit your own and your contingent workers, tend to really manage your workforce. That's the name of the game here. The data management side of the house is actually -- usually, we should even move this more up. It's so, so key. The data is our asset. The material flow is SAP. 90% of the companies worldwide, we are running the material from the commerce side of the house, into the manufacturing, into the supply chain, back to the finance to do actually the accounting in the P&L of a customer. That's us. And in the cloud, we have now the data model sitting on the BTP. Why is this so important? It's not anymore the monoliths, is what it is, is we have modulars and the cast -- the partners can come, we have [indiscernible] team here, and they connect to that because also a contract needs to have master data, which is harmonized. And when Icertis is now seamlessly integrated as the leading management contract provider in the market, seamlessly integrated to our order, to our data assets, then we are winning big time. And then we have customer relationship management, commerce, CPQ, it's so important. When you talk about the business model change, you need to have the flexibility on the go-to-market side to sell everything as a service. But then you need the connection into the back end because somehow you need to know to get an order out, and sometimes, you also need to get the billing done -- not sometimes, you have to. And this is where we are leading. This is where we are running Apple. This is where we are running Samsung. And we have now a public cloud solution where we can also go after Zuora, against the public cloud, who can immediately go to a greenfield approach, together with our S/4HANA Cloud solution. And that, again, ties the front office to the back office. And the customer data platform, what yesterday Julia showed, this is where we did our homework. We have data privacy capabilities in our portfolio, which are very strong. And now, when you do the customer 360, you can have a 360, not only including what is happening in marketing and sales, the leads, the prospects, what you have from a potential customer, now you can link it. Is this prospect already a customer? What is the supply chain data of this customer? And what are -- how are the financials looking, the revenue looking, for this customer? We have the 360, combined with data privacy, is a unique capability when -- because data protection and data privacy is a big topic these days with everything else, what is going on in our world. Next slide, please. I wanted to have a customer to show you also the power of SAP and what does it mean to connect such a customer, like the BMW Group. And Luka, I guess, you agree, it's one of our best customers because we are co-innovating a lot. And it starts with the commerce side, where BMW and others, they need hyperpersonalization. When you're going to configure a car, you want to have a very personalized experience. It's not any more about only the color of a car. You can put so much services around a car, when it comes to the navigation system, when it comes to other services, especially when you're driving now an electric car, like we do, Luka, you and myself. You have -- you need to configure a car in a complete new way. But again, when you are then talking about it to the Head of Supply Chain to -- of BMW, he says, "Oh, now you need to give me this translation, what I talked earlier about. How do I -- can I get these materials and back into the design and to the manufacturing process of BMW? How can I still produce at mass scale?" And this is what we are translating, yes, into the supply chain. And then, of course, with S/4HANA finance, we are allowing BMW to not only outsource to shared service centers, but really also automate at scale. And the BTP is there to move them back to the standard. We always have this discussion. Do you host such customers? Or do you want them at scale? We want them at scale. But customers like BMW, it needs time until they are fully standardized on each and every business [ post ]. Analytics Cloud, they are big, like Redbull and others. What they are doing is actually, with Analytics Cloud, you can maybe remember, I showed here some years back, in a different role, the value driver tree, and say, how can we connect the planning -- the financial plan, the guidance we put out there to the workforce plan, to the sales plan and to the supply chain plan? This is what BMW does with our planning foundation. What we did on the product side, we connect it. So that the planning, the value drivers are connected. When you have higher attrition, when you have inflation, what does it mean for your P&L? How does your personal expenses move? Are you still in the guidance, yes or no? What can we -- can we do certain predictions? Can we simulate it? BMW does it, connect it end-to-end, financial, to all of the other functions inside BMW. Great customer. And then growth. I guess, Luka, it's fair to say, yes, when we launched RISE with SAP, we, of course, also had our own models. And now, that I'm seeing here this revenue curve, I have to say, I'm so, so happy. I could not be more proud about our own transformation. Yes, because when you are launching something with RISE with SAP, you have to understand, that's not only a technical lift and shift, maybe in the first step because sometimes, customers just want to go to the cloud because of cybersecurity reasons, because they are not wanting -- don't want to run their own operations anymore. But when they come to us and not to a hyperscaler, they want to do more. And that also is on us then, with great assets like Signavio, yes, to also make this change happen and to show them the value offerings like RISE. And this is what worked out so well. And then when you see that, suddenly, 70% of the RISE customers are also using the platform and you see suddenly the consumption coming, and then you see customers -- partners coming, like Icertis, who connect to that, then you see how all the things I just talked about are coming together in this revenue line item. And we have 25% growth. Nominal was -- it was 31%. When we came out with our guidance, we guided for 21 -- a CAGR of 21%. So you see, we are very, very confident about our ability to close. And now, the question I'm sometimes getting from customers, says, "Hey, how do you actually charge the macroeconomics? So what is going on with your pipeline?" I have to say, the cloud side, when now, inflation is increasing. And I think it will even further go up because we have a huge problem, especially in EMEA around energy, and the pricing there and the sourcing there, for us, this is actually another strong argument to move to the cloud, to change CapEx to OpEx, to find also new commercial models where -- like pay-as-you-go, like commit-to-consume, where we give the customers the flexibility, also commercially, to tailor the commercials according to their outcomes and to their transformation. And then when you look at that our revenue stream up is becoming more and more predictable, and it will continue in this way, and even more important, that the customers are happy, then actually, it just gives really a sound, sound picture. And so also, for the rest of the year, I'm very confident, of course, yes? When you are now talking about business model transformation, customers are now coming to us. What can we do around cash flow optimization? What can you do to offset a little bit the margin pressure, what we have? We have great technology for that, which we can then make happen Y-o-Ys with SAP. If we then move on, and I talked about RISE. Yes, for me, it's very important. And that's part of our own transformation, that we sit on the table like this morning and that we are talking first about what is happening in this industry, that we come in with Signavio and explain to them how to change their business models, how are the best practices in their industry, that we lead the game, that we -- like in the morning, we also explained to an oil and gas customer how to move to renewables, how to best sell and also deliver hydrogen, what kind of processes do we see, what are the best practices in oil and gas for that? And then we come in the next step to the cloud migration. And this is, of course, where we see a lot of customers moving plain vanilla immediately to the standard 100% because we have, in our RISE customer base, we have customers, yes, with a few hundred users. They can go greenfield. And others, it takes time. It's a journey where we're still going to support them to further and further standardize, build the extensions on the platform and then move to a 100% modular application landscape in the cloud. And then, let's not forget, when we are talking about RISE, and we started with S/4HANA, with supply chain, sometimes also, with HR or commerce, but when you talk, especially around supply chain, immediately you are coming back, "Hey, what are actually your SLAs? What are your performance, your stability SLAs?" And then when you go with a hyperscaler, separate to SAP, you get an SLA for your application landscape, you get an SLA for the platform, and you get an SLA from the hyperscaler. It's nothing what you want. In case you're facing downtimes, you want to have an end-to-end accountability. And this is what you are getting from SAP, together with the hyperscalers, or end-to-end SAP, if customers should choose to run in the SAP Cloud. And then, of course, when you have a why to sit at the table and when we are playing out our strengths on the business side, on understanding the industries, then I would make a claim that we understand these industries much better than any other hyperscaler or any other player out there, then you can infuse your new innovations. Then we talk about the industry cloud. Then we are talking about customer loyalty, like last, last week with an airline, or with certain retailers, then we talk about returns, claims management or in the utility sector, around intelligent asset management, for new ways of supplying the energy to the end consumer. We talk about network, and we talk about, of course, sustainability, about the green line. Next page. S/4HANA. I mean I have seen a few ERP cycles. And I have to say, I have never seen such a strong increase in revenue, but also customer adoption. Let's face it, yes, behind the 71%, in the meantime, close to 5,000 customers, of which 80% are already live. And again, it's not only a lift and shift. 60% are net new. Because we are ending the discussion with business model transformation, and sometimes, customers come either with a line of business landscape, a best-of-3, then see that they cannot continue because it doesn't scale, it's a lot of complexity to stitch it together, or localization becomes an issue. This is where a lot of net-new customers are joining us. Localization is a key differentiator. And then, of course, the conversion ratio, which Luka is watching very closely, that we are not only making our way to the cloud commercially, but that we sell value. Especially now, with the inflation, we need to make sure that we have good pricing and we have a strong focus on that. We are using telemetry data to measure the adoption. And then once the adoption is there and the customer sees the value, I mean, then you can also come at the point of the renewal and say, "Hey, what about the price?" Now that you see the value, now that we have delivered on our promise, so for us, this conversion ratio is very, very important and then the cross-sell part. Yes, so that's also when Scott talks later on about the go-to-market side of the house. For me, it's very important that we not have this line of business [ centers ]. I want to have our account executives coming in selling our holistic road map. And then we can, of course, go in and address the different buying [ centers ]. But for me, it's very important that RISE is, of course, the platform is the basis. S4, of course, we are SAP, but then, hey, here we talk. Yes, you really want to connect and want your enterprise end-to-end. Let's talk about human experience. Let's talk about Intelligent Spend management in a modular way. Next page, please. Why do we believe we have even further upside? And why, I guess, Luka, when we look at our pipeline, we can still sleep well during the night? I would say, we are not only happy and satisfied with the portfolio as it is today, yes? So we don't want to play everywhere, but we picked our bets. And the bets are sustainability, I explained it, because we feel we have a right, yes, to come up with the data sources, what our customers need to really also act on sustainability. The industry cloud is a huge partner play. And when you would have been at our partner reception, they are all building on Business Technology Platform. Yes, they all get certified now on BTP. They all get enabled. It's a transformation for them as well. I mean you used to modify ERPs on NetWeaver, I mean, in our old world, and you have to move it over. It takes time. And you maybe also have heard that our ecosystem, once we launched RISE, I said, "Ha! Let's see how this plays out." I can tell you, the big ones, you have seen yesterday, Julia with Accenture, but also our midsized partners, they are all on that now because they also see that they are winning. Now that we have the strong API layer, now that we have the data model, and now, that they can see they can resell this IP, what they built on BTP, to the whole industry of SAP, and now, that our field is also selling partner apps just like it would be our own apps, then you know that you have really also a strong ecosystem play. In the meantime, the ecosystem, when we talk about bookings, it's actually growing faster than our direct sales. And then the business process intelligence, Luka and team did a job there with Signavio, it was a very smart acquisition, to give us also the credibility when it comes to RISE and the business model and the business process transformation. And the network is an asset, which we underutilized and which we are now engineering together to really build this largest B2B network in the world. And with Taulia, I mean, we didn't see, at the point of the acquisition, the inflation coming and the rising price pressure. But of course, cash flow optimization, financing, when you have billions of transactions, is I feel a very natural connection. And then the sovereign cloud, yes. That's why we are very confident on our absolute gross profit target in the sovereign cloud. We have to accommodate for that. But again, they are profitable. They will further accelerate our growth, and they will also deliver very positive, absolute gross profit for our P&L. If we then move on. Yes, I talked about that. I mean we have -- we will see later on, Icertis, is a very prominent example, but we won't stop here. We are very, very focused on screening our portfolio and say, "Where can we partner and where do we have to build?" And when you see partners like BlackLine, just in the morning, it's a very strong connection. And we need to push this even more. And there we are on, as I also mentioned, on a very good track, that we're also positioning these partner solutions now much more than in the past. And then when it comes about the future innovation, when you think about what comes in 5 years ahead, of course, we are talking to -- of course, to customers, but also we are talking to analysts, to investors. We have the Sapphire Ventures, to really see, okay, what is happening in the field of crypto. Yes, we will now offer our first crypto capability with a partner, BitPay, in the next months. We are, of course, looking into the metaverse. We don't want to say, now, we want to play in the metaverse end-to-end, but there are few scenarios in commerce, in learning, where we definitely want to have a play. We announced a partnership with Apple when it comes to the digital twin in the -- on the manufacturing side of the house, how can we also dare drive further automation, together with Apple. And these are the types of partnerships which we are going to expand and will also drive big innovation as part of our portfolio. If we then go to the next page, Luka will give you full insights into our outlook for the operating profit, but also there, we always said it. We gave you our promise that we are doing now this transformation full steam, that we strongly feel that the strategy is the right one for the long-term success of SAP. And we gave you this promise, which means, Luka, myself, the whole Executive Board, that we were going to deliver this double-digit profit. And yes, and we will, because our revenue base now has a much higher recovering revenue share. The cloud growth is coming. What we also see is, of course, that we are doing our homework in the cost base with regard to the next-gen cloud delivery. This is hard work, but we're going to get it done. And then, of course, we are pulling off further triggers to drive automation, to drive further scale, especially when it comes to our G&A functions inside the company. And then what also helps, when you talk about profit, is, of course, that you have an easier sell when it comes to cross-selling certain assets. And this is where we're going to leverage now also the platform and the integration work, what we have done, to really sell now much more into our installed base with existing solutions, what we have. With that, we come to the revenue side of the house. And this is -- when you look at the CAGR, it stood -- when we came out, it was a CAGR of 21%, 24%. We are very confident. We are ahead of plan, for sure. And when I look into the remainder of the year, I would say, despite there are, of course, some macroeconomic concerns, but this is always the time when SAP actually did best. And we have technology to overcome these challenges for our customers. The cloud has the benefit of switching from CapEx to OpEx. That's another strong argument. And then, of course, the portfolio, it's relevant. And the customers are not scaling back their IT investments, at least not on the SAP side. And this is why we are very confident that we are going to hit or even overachieve the EUR 22 billion. And then, of course, the rest will follow subsequently. With that, again, thanks again for coming here to Orlando. And now, I would say, I heard that Thomas is here virtually. Thomas, I hope you are doing well. It's not a secret anymore. He -- did you have COVID or do you still have COVID? But he's here now to give you an update on the product side of the house. So over to you, Thomas.

Yes. Thank you very much, Christian. And also a warm welcome from my side. And as you mentioned, I caught COVID, but actually, I tested negatively today, so I recovered from COVID. So all good news from that front. So even if I'm not able to participate in-person with you in Orlando, I'm very pleased actually to join you, at least remotely, to talk a little bit about how we actually turned this into product truth, into reality. Christian talked about the fast-changing market forces, the geopolitical pressures, climate issues, sustainability and our vision and strategy. And from a product perspective, for sure, we want to translate these challenges into product and fundamentally solutions and business outcomes for our customers, which means we need to build solutions that meet the critical business and customer needs. As a former CIO, I have a lot of empathy from a customer perspective, what it means actually to drive business transformation, to embrace new technology, to fundamentally help the business to succeed. And here, one aspect is, for sure, agility. And Christian talked about modularity as a key aspect, and we drive our entire portfolio in a highly modular approach that, basically, our customers can reduce the time-to-value significantly because they can take our SaaS solutions and implement the innovations with their respective speed and for sure, have the built-in integration, which we delivered in the last years as well. And I come to that point as well, which means, for sure, the key aspect is the agility, but also the continuous innovation. And that's the advantage of the cloud, that we have a continuous feature delivery for our products. So it's not just one big release a year, but actually, we can deploy with confidence every single day. And this gives us the opportunity to adjust also our backlog, way more agile. And for that, we focus on this customer outcome and the customer success, to increase automation for our customers, to increase the productivity and as Christian mentioned, to be able to enable new business models rapidly. All of that is built cloud-natively on the Business Technology Platform. If you think about our new solutions like subscription-building, digital manufacturing cloud, our sustainability apps, all are built on the Business Technology Platform as a foundation. And with that, for sure, our customers can focus on the key business challenges, so not anymore on technical upgrades and the likes, because, for sure, we want to help them to succeed in this environment, because we truly believe the new normal is not just about work-from-home, it's actually about the continuous crisis management. We come out from COVID and war now in Ukraine. And we will see more and more crises. And for our customers, for enterprises, it's so important to become resilient. And resiliency, we learned, in the last couple of years, even more in this global economy, you need to be network, network businesses. And that's what we bring together with our SAP Business Network, is a centralized global direction of intelligent enterprises, trading partners, as Christian mentioned, logistic partners, carriers, to really ensure the commerce and the flow. And that is very essential. And here, we talk about 639 million B2B transactions, which we had last year, which is basically 1.7 million daily transactions and more than 10 billion of daily commerce through our Business Network. And that's a 23% increase purely last year, where we brought together all aspects. So it's just the starting point. Christian talked about Catena-X. So we evolved into industry-specific networks with our pioneers and partners, like Siemens, Bosch, BMW, Volkswagen, Fraunhofer. We basically can establish a true end-to-end visibility and transparency from the OEM, to the raw material. And that is actually essentially if you think about collaborative quality management, to avoid actually callbacks for cars, or if you think about sustainability because to measure the current footprint, you need to have this end-to-end visibility. And here, Christian mentioned it, trust is essential because we need data sharing to ensure that, and that's where our customers trust in our network to enable that. And I think that's an important aspect. And I want to give you a quick glimpse into that. And there, we connected our supply chain planning, our integrated business plan, together with the Business Network, which means you get an immediate action based on an issue, leveraging external sources, which we integrate, that the logistics planner actually can take direct action. So not only the automatic information he receives for each of the component, which perhaps is stuck in the port in Shanghai, but actually, what does that mean for all the current production orders or even sales and customer orders, and with that information, with our integration, directly can correlate the financial outcome and the sales impact and what does that mean. And that, for sure, we don't stop with that. We give actually intelligent recommendation based on our AI, which we embed in our products, leveraging the alternative suppliers, alternative ways, how to produce the good to be able to, in time, ship it to the customer. And that's where, again, the integration back to the network is coming, leveraging partnerships, like EcoVadis, for sustainability information. And again, in the recommendation, for sure, it's about profit. We need to see what does it take to leverage an alternative supplier with a different route from a cost perspective, but also from a sustainability angle. And that's exactly what we all brought together with the integration of our portfolio. And sustainability is something which we consider in a holistic fashion. And we actually want to go away from [indiscernible] dashboards because sustainability, you need to have a true effort. And that means we need to embed it into all of the business processes. And here, we take all of the ESG dimensions. So the environmental ones are, for sure, key with carbon or methane or others. But also, if you think about the societal and governance aspect, like ethical sourcing to avoid child labor, diversity and inclusion in HR and then you directly see again the strength of our portfolio and how this is coming together, and the key aspect, you cannot do that alone. We leverage partners like BearingPoint, BCG, McKinsey and many, many more, to bring that together because I fundamentally believe we do not inherit the earth from our ancestors, but actually, we borrow it from our children. And now, in order to have this macro and these trends which we support from the networks, from a sustainability perspective, from a supply chain resiliency and all the key trust processes which we enable, and as an example, [ the need for cash ] to design, to operate our total workforce management, but actually, for us, it's clear. The whole needs to be greater than the sum of the parts. And with that, for sure, we need to bring our portfolio together. And that's what we do in our cross priorities: localization; user experience; AI; operational excellence; and integration. And if we go quickly to localization, it gives you some sense of where we are because we all see the rising regulations around the globe and even more so in this geopolitical situation. Last year alone, we delivered more than 1,211 legal changes to our customers, to stay compliant, to be able to make business. And we, by far, have for sure the highest level of localization across the portfolio, more than 565 local versions. And if you do want to think about HR and our SuccessFactors product, we support more than 102 different local versions. And fundamentally, we want to help our companies -- our customers to grow globally, to be successful locally. And I think that is becoming more and more important. Fundamentally, you can argue this is Regulatory Relief as a Service. If you think about user experience, SAP has a holistic approach for user experience. So we not just think about the ethics and design, but also think about accessibility, performance and fundamentally, to get the job done. And we want to provide equal opportunity to everybody. And that's the reason why, for instance, accessibility is so important for us, that everybody can leverage our products. And for sure, expectations are clear, effortless, intuitive and for sure also, to be able to get the workforce more quickly productive. So we are now setting new standards for enterprise software. And this is not just talk. We already delivered last year at TechEd, our new visual theme, Horizon, [ with Fiori next ], which is already live with S/4HANA Cloud, and also embedded in our new mobile experience, SAP Mobile Start, where the entire Intelligent Enterprise is coming together on their fingertips, and Christian mentioned it, with new strategic partnerships, with Apple, in our digital supply chain portfolio to revolutionize how people work, for instance, in the warehouse with augmented reality and mixed reality, which is also giving us a good additive holistic view on that. And fundamentally, if you think about user experience, another topic which is absolutely critical is AI because that also helps how employees and end users are guided through the system. And for sure, let's be clear, we want to ensure that the end users of our software, that they can concentrate on high-value tasks, on the critical, business-critical situations. With that, we want to avoid manual repetitive tasks with our AI cases, which we deliver. And from our end, we embed natively in our applications artificial intelligence cases. And more than 120 cases are live for our customers to fundamentally drive the future, which, for sure, is autonomous for all these core standardized repetitive tasks. And we also see the success from a customer perspective. Think about Switzerland's national rail company. We achieved an automation rate of 99%, which was sure is reducing the pressure and the work on the shared service centers on that front. Or if you think about the City of Hamburg, which is basically managing all the corona [ health ] funds with our solutions. And based on our document information extraction service, they can actually process more than 900,000 application documents, which they receive per month automatically and are able actually to pass them through in time for people in need. Another aspect, and Christian mentioned it, is operational excellence. We know that customer trust is the foundation for everything, what we do, because we know we run the most business-critical processes and operate the most business-critical data. And that's the reason why our next-generation cloud delivery and also operations harmonization is so essential. And here, we leverage all of our assets at scale with all of the entities which we also acquired in the past. And this gives us scale. So we modernize our infrastructure. But with that and the scale, we also reduced the TCO and improved the resiliency. We increased the SLAs last year already to 99.7% on an application level, and the actual is actually, by far, higher than 99.9%. Quite frankly, most of our products have actually 99.999% in the SLAs. What is also super important is our cybersecurity program, with a zero-trust policy, multilayered approaches, which is absolutely critical, especially in these times. But also, if you think about, from a customer perspective, our portfolio, I think GDPR, and Christian mentioned it, is absolutely essential, which means also the authorization. I heard from a lot of customers, who took our data and have put it, the data, into a data lake and analyzed it somewhere else. The problem with that is you need to ensure that the same authorizations which you have in the operational systems are also there, which means you need to have double and 3x the effort to ensure the security. And if you need to delete data, if a customer calls and says, "Hey, I want to get my data deleted," you need to track all of where you put the data. And that's the reason why this integrated approach, which we have with our Business Technology Platform, that you -- from our SAP Analytics Cloud to the data warehouse cloud and HANA Cloud, have all of this lined up in a seamless fashion, gives us, for sure, an edge in this regard. We talked quite some time about integration. And I have to say, I am so pleased about the progress which we see because the whole is certainly greater than the sum of the parts. If you think about the end-to-end business processes, which we now can enable in this regard, and Christian mentioned about it, but also think about scenarios like the cross analytics and planning between all of the assets, which is now available with our product portfolio, cross workflows across our application portfolio, we delivered last year alone, 450 integrations. And for sure, we will not stop here. We will continue. But this is actually the foundation where you see that our customers can run that. We also embraced Qualtrics and Experience Management, which is a very essential aspect. If you think about our newly launched service cloud product, which we also launched here at SAPPHIRE, which is natively integrated with Experience Management. Because if you think about, for instance, a call center, we all know that one call, which is not -- if not well perceived by the customer, can turn the entire brand and loyalty downside, which means we need to get the sentiment of the customers, natively integrated now in our portfolio, to help our customers succeed. What is also important, we want to be an open system. It's absolutely clear. We need to be open. That's the reason why we focus on our API-first strategy. And we already delivered more than 3,000 APIs on the Business Technology Platform for extensibility, but also for our partners to extend our industry standard domain model, which is leveraged across the area. And I think that is a very important aspect as well. And for sure, this also simplifies the cross-selling opportunity, as Christian laid out, and will, for sure, increase the stickiness because you have this prebuild integrations across with our portfolio. The foundation of all of that is the SAP Business Technology Platform. It ties together everything, what we do. It's business-centric, unified and open. And also, it's the foundation for all integration extensibility, what I explained. And it's also essential because it's the vehicle that our customers can develop, differentiating capabilities on the side, in a clean way, to keep the core clean, that you can continuously receive innovation and upgrades as well. Also here, some amazing statistics from some customers, but actually, they could reduce the TCO by 40%, leveraging the Business Technology Platform in HANA Cloud, and also could increase the project speed, which also led to reduced costs by factor 5 compared to other projects this customer did. And here again, and we -- I think you'll hear it at SAPPHIRE continuously about the partners, about the ecosystem, how important that is. And it's the center stage of our portfolio, to leverage partners. And so we're also pleased that already more than 4,000 partners are engaged with the Business Technology Platform. We have more than 750 partner apps already built on the Business Technology Platform in our ecosystem of 23,000 partners. And I think it's always good also to really show the significance of our partners. And with that, actually to talk about Icertis, and Christian mentioned it as one of the great examples, how we bring together the best of the worlds in the industry, as an industry leader for contract lifecycle management, Icertis, and for sure, SAP, because there, you can really connect the contracts, from commerce, to procurement and HR and finance altogether. So I'm very proud about this partnership, and I'm very pleased to have, Monish Darda, the Co-Founder and CTO at Icertis, here in Orlando today. And I want to give him a warm welcome. So Monish, I would like to ask you on stage to talk with you a little bit about our partnership.

Thank you so much. Thank you, Thomas, so much. So Thomas, I was hoping to see you today here. But I think this has worked out very well. You have tested negative, so no symptoms, nothing, and you're giving company to all the great people who have joined us digitally. So thank you, thank you for having me. I really appreciate that.

Absolutely. Monish, tell us a little bit about Icertis. What should we know about Icertis?

So, and I'll tell this for not the people in the room, but people who are joining us virtually, we have these pedicabs going around the convention center, and they will tell you a contract joke if you have a ride in them. And one of the jokes they tell, which I loved, was how many contracts does it take to screw a lightbulb? And the answer is one, but if you don't read it well, it will screw you. So that's actually very interesting because contracts are the foundation of the relationship, any relationship in an enterprise. Every dollar, every euro, in and out of the enterprise actually has a contract behind it, right, which means that if you know what the intent of the relationship is, you can have a contract management system, like ours, actually correctly memorialize it and then make sure the intent of that relationship is fully realized. So what we do is we get large companies, like Microsoft, like Sanofi, like Daimler, together and make sure that these contract flows, these workflows are actually connected across the enterprise. You look at -- starting with the buy-side, the sell-side, the corporate contracts, the NDAs, the human capital, all of the people contracts, all of that coming together in a connected workflow, making sure that all of these come together. And when they come together, when all of these systems are connected, it's the contracts that actually bind them because that's the data that flows. And Christian actually mentioned the importance of data. We have maybe the largest repository of curated contracts on the planet, right? So if you think about how the contract actually takes care of the business process and how money flows in and out of the enterprise, you layer it with all that data and you put artificial intelligence on top, we call that contract intelligence. So we make sure that intent is fully realized. We make sure that, that intent from the transactions, where partners, I guess, safely can give us that data of the transaction, we can say, "Hey, here's the transaction that comes together. Here is the intent that is realized." But also as part of that process, we give insight into terms of how that business decision is being made. So the insight into the contract repository is very, very critical. And some of the largest customers we have, I think, that's how they're using it. They are taking that data, contract data, which is new data into enterprise. The contract object is a new object in the enterprise architecture. It's been in the last 5 years. And then they now infuse it into their contracting -- into their business processes so that they can actually run their business very well. So it's essentially the intelligent, sustainable enterprise with contract intelligence.

Monish, thank you so much for this update. And also, I mean, we talked -- we've worked and collaborated already together since 2020 with our SAP Ariba solution, our SAP Customer Experience solutions. Tell us a little bit, what excites you most about this partnership with SAP? And also what customers actually can expect from this, I mean, as you mentioned, integration from transaction to the contract and vice versa, to really drive new business process? So tell us a little bit about what can customers expect from this.

Yes. First of all, actually, I want to thank you and congratulate you for 50 years of SAP. Actually, join me in an applause. I think that's -- it is fantastic. It's fantastic for us. We're not even 1/4 of that journey. And Samir, my Co-Founder and my CEO, is here. He knows it's very hard, especially quarter-over-quarter, year-over-year, through the pandemic, through wars, through all kinds of things. Kind of going and making sure that you have a stable base is fantastic, and then have that base complemented by partners is even better. We went through negotiations when we put together the SAP and Icertis contract. And we did this with fairness, openness, respect, teamwork and execution, that those are our values as well. And it was such a smooth experience. We've learned a lot from this partnership over the years. But what is also important is that this partnership kind of has a cornerstone of 2 very interesting things. The first thing is that if you think about it, 50 years of SAP, that was the first system of record in the enterprise in my mind. SAP was the first one. It was followed by HCM, PeopleSoft. Then it was followed by SCM, which SAP owns, most of it now. And then Salesforce, CRM. And of course, SAP also has Customer Success and Customer Experience. And then it was the fifth system of record, which was CLM. And 2 systems of record coming together, and that can create magic in the enterprise. I think that's how I see this partnership. That's how I'm excited about this partnership because Samir and I know that if you can put this together and if you can execute, and if we can do this right, we have that enterprise data, we have the rules of business that is memorialized in the contract, we can actually get our customers to make sure that, that intent of that relationship is fully realized. I think that's a great journey I'm really, really excited about. What does that mean for our customers? If you take Ariba and you make sure that you are doing procurement, you click a button, you get your contract ready, you make sure that the contract is now, not just the execution, what happens to the contract on the transaction side, you make sure that you are now checking whether all of these transactions confirm to what was meant in the contract, whether it is volume discounts, whether it is making sure that you're doing the right things from your obligations perspective, making sure that you have all of your clauses for sustainability for ethical sourcing right into your contracts and that you're abiding by what you're obligated to do with your customers, it's all in there, and it all takes place starting with the contract. And I think that's where I'm really excited because it goes end-to-end. It doesn't stop at Ariba. It goes then to S/4HANA. It goes into SuccessFactors. And it continues because, at the end of the day, even the people from an enterprise perspective, you're really looking at how this data flows across the enterprise and how it all comes together, layered with AI. I think this is a partnership that really -- I'm so excited about this. There's so many opportunities here that it is quite incredible, and I'm looking forward to it.

Thank you so much, Monish. But also, thanks for coming over here to Orlando, and enjoy your first time in SAPPHIRE. I think we've got a great glimpse into the partnership and for sure, the potential it will bring, if we bring together the best of both worlds together. So thank you very much, Monish. Also, a big round of the applause again for [ Icertis ].

Thank you so much. Thank you, Thomas. I'll see you soon.

And I think what you see, we really mean it serious with our partnerships and the ecosystem approach, if we bring also partners here on stage in this event. And I think that's really important for us. But also, quite frankly, it's important because it's important for our portfolio rationalization. Because at SAP, we focus on our core differentiated right-to-win areas, and we leverage strong partnerships actually to succeed and also enable these truly differentiated new possibilities, leveraging also our partners. If you think about innovations and also the various areas in our portfolio, it's actually hard to talk about all of them because it's, quite frankly, a firework of innovations which we see across all of the areas, with a clear focus on how we want to actually differentiate in each segment and then, for sure, also the innovations we deliver. So I most probably could talk hours and hours purely about that one slide, about what we do in Customer Experience, taking CRM further than just the front office. But if you think about commerce and recommerce, if you think about return processes and also the shipment in time, you see it's getting across the front and the back office. If you think about SAP S/4HANA, the enabler for new business models, sustainability embedded across an AI with the deliveries we do, also with regards to our digital supply chain, digital factories and Industry 4.0, really a core essential area. And then Christian talked about Intelligent Spend in the Business Network, where, quite frankly, the opportunities are just endlessly what we do and the leverage there of AI, like in Concur, verified, now intelligent audit components, material track and trace, is just an enormous opportunity. And then, last but certainly not least, human experience management, which is centering around the employees. And not just the employee, but, quite frankly, new concepts like the whole self-model, that we don't only think about the skills, but also capabilities, but also beliefs of people and experiences, which we bring together also in dynamic teams, new concepts, that if we talk about an opportunity marketplace, that we combine learning with the AI behind what this person needs to succeed, leveraging fellowships, different role rotations in the company, positioning, bringing that all together and ensuring that the experience in the entire employee journey is flawlessly by embedding Qualtrics, again as part of our portfolio itself. And that's where we really focus in each of the areas with a continuous innovation delivery across the entire portfolio. And having said that, in closing, I want to reiterate that, actually, with the broad and deep integrated portfolio, we truly deliver the intelligent, sustainable enterprise to re-enable a true business transformation, leveraging [ SAP's ] now to analyze the processes, but also with our Business Technology Platform, to embrace and change the differentiated areas of the processes and fundamentally, with that, to really ensure that the whole is greater than the sum of the parts. With apps, and which we have in applications which are network directly natively integrated in our largest B2B Business Network, which we operate, embedding sustainability in all of our applications across to really ensure that all of the ESG dimensions are passed, so we are making significant progress. We are delivering and ultimately we are solving our customers' most pressing problems, what also Christian and I talked about. So we are certainly not resting. And quite frankly, the proof, Christian mentioned it, and we're very proud about that, is the increase of the customer satisfaction, which is clearly a signal that we did the right thing. So I truly believe technology is the foundation for a better world, and innovation is the road to success. And with that, I want to thank you for the attention. And actually, I want to hand it over back to Orlando and want to welcome, Scott Russell, on stage, our Head of Customer Success, talking with you about how we can make our customers successful and how we deliver the business outcomes to our customers. And with that, Scott, over to you.

Thank you, Thomas. Hopefully, you can hear me. Thank you, Thomas. Good afternoon, everybody. All right. We're back in the room again. Hopefully, I can get your attention for the next 15, 20 minutes. And if I can't get your attention, I've got a great special guest, who's going to give you some insights about how they run their business on SAP and the partnership with us. I need this. So what I'm going to talk about today is our cloud momentum. I'm going to talk about the reality of what is happening in the market right here, right now. I'm going to talk about SAP as a growth company. And I remember a conversation I had with a number of you 18 months ago when I took on this role, and there were open questions about SAP's ability to grow. And I guess, I could understand because up until that point, the growth story wasn't quite reflecting what we were intending. The reality is we are growing faster or at worst, in line with our competition. Look at the revenue growth. And please understand this. This is not just RISE. You saw the slide from Christian, clearly RISE has been a showcase of growth, but the growth is across every part of our portfolio, the biggest technology platform growing at extended pace, both with RISE and independently, as Thomas mentioned. Every one of our cloud categories in 2021 were growing double-digit pace. So the reality is the cloud growth of SAP is not one dimensional, it's multidimensional. It's allowing the vision that we had when we launched the Intelligent Enterprise in 2019, we're bringing it to a reality. It's happening at customers today. So why are we so confident of our future? Because the reality is we feel like we're just scratching the surface. The potential is so much greater, and I'll talk a little bit about the potential that is in front of us. Part of that potential is the differentiation of SAP. I often get asked by customers, and sometimes by analysts, "Hey, SAP, well, you're strong in ERP, or where are you on the CRM market, or where are you at in HCM?" The reality is we consider ourselves in a category of one. We are a category of one. We are the only organization that can fulfill the promise of transformation. Other companies, other cloud companies, they will be able to transform a part. They will be able to do a piece of the puzzle. But it is only SAP that can do that end-to-end. And more so, we're the organization that is focused on the journey, not just the destination. You will hear about many in the technology industry talking about a so-called nirvana of when you get there, when you come to us, this is what it looks like. But they offer no guidance or insights in the journey. SAP's history, our legacy, our foundation, was helping customers on the journey to be able to run business processes at scale and innovate to help their businesses run better. And we are doing that today, right now, in the cloud. If you look down a little bit further about the journeys, and you heard a little bit from Christian earlier about the different journeys that our customers are on, I want to give you a little bit more color as to how that actually works. But let me give you a few data points first. Number one, our business sees enormous potential in our ability to be able to cross-sell and upsell. 45% of our cloud customers, we've got multiple cloud solutions already today. They're not just acquiring one solution from SAP. To achieve the outcomes, to achieve the transformation, they are already acquiring multiple cloud solutions. Not because they're trying to say, "Hey, I want different pieces of SAP." They're trying to solve a business problem. They're transforming their business to solve a challenge, and that requires multiple pieces of SAP technology coming together in harmony: data; workflows; processes; all integrated to achieve that outcome. And even more so, 20% of those customers have more than 4 solutions. There's 2 ways you can look at this data. You can say, "Oh, well, there's -- that's already a significant progression, which it is." I would argue that the upside potential for us as an organization, to be able to get penetration, greater share of wallet, increase the ratio from 2:5 -- 2.5:1 to 3:1 or even more so, the upsell and cross-sell opportunity is immense. But it doesn't happen in the same way. It is very rare for a customer to come to us and say, "We want to buy it all in one go." Why? Because they can't consume it that way. But what they will do is embark on a journey, whether they're doing cloud ignition through transformation, through extension and differentiation. But a real example is Microsoft. Several years ago, Microsoft came to us and they needed to transform, they needed to be able to improve and evolve the way they manage device, digital supply chain. So they leveraged IBP, Integrated Business Planning, to be able to plan how they can run their devices, how they can manage the supply chain more effectively. That quickly then translated into, well, if I'm now able to fulfill that supply chain plan, I've then got to have our workforce plan to administer it. They then went and said, "Okay, we've now got that in place. We need to quickly move to how do we enable our workforce to fulfill what we promised through our supply chain." SuccessFactors, Employee Central. They then said, "Well, there's analytics and insights that we're trying to get, that cover across multiple areas through planning and analytics, which means the workforce, the supply chain data, the financial data." They want to be able to get a single view, a single lens of that information in one go, the next phase of transformation. And today, they're embarking on RISE with SAP, continuing to roll out and transform their financial and other operations singly with our organization. The message is the transformation is not about trying to compete head-to-head with these different products. Yes, we have competition out there, but the natural extension, the advantage we have of the data flows, the process flows, the workflows and the automatic out-of-the-box integration that our technology provides, makes it so much easier to go on a journey with SAP, then try to run a best-of-breed head-to-head competition on each of these. It makes no sense. And here's the difference that we do. I no longer compete the way the -- our competition, they want us to compete in only the CRM category or only in the analytics category or only in the planning. We don't compete that way. We compete by starting with the outcome in mind and then what are the capabilities we need to deliver to that outcome and then hold ourselves accountable for the journey to achieve that outcome. Category of one, it is amazing, the opportunity that this has created. Christian presented a little bit earlier about the total addressable market. I am very confident of our cloud growth and the trajectory that we're on. And I'm confident not only because of the capabilities that Thomas just described in terms of the technology, the innovation that we've built, the progress that we've made to be able to have best-in-class capabilities, orchestrated together to solve real critical business problems for our customers in the cloud. But there's 2 things that are happening in our business that are making a huge difference in our confidence, in our growth, which is why not only, Christian, can you and Luka sleep at night on the pipeline, I can sleep at night on the pipeline as well. And trust me, that's the thing that I look at every morning. I definitely look at the pipeline. 2 things that are happening. The first is, is that the total addressable market continues to expand. I've been in this industry for a significant period of time. I remember the most difficult competition that I used to have was not with our competitor, it was the opportunity cost of doing something else. If you're competing for a retailer, it would be to go and open a new store, to expand to a new line, to go and do other things with their capital and their operating expense to be able to do things to drive their business. We are in a unique place as an industry, is that no one questions digital transformation. No one questions the willingness and the need, the need to be able to drive transformation through use of technology to help them either withstand disruption or take advantage of opportunity. Hence, that increase. But even more so, we're able to penetrate and then get bigger share of the addressable market itself. So we've got the best of both worlds. We've got a bigger addressable market that keeps on growing, but we're also getting greater penetration of the market that's already there. So the opportunity for SAP to be able to grow in the future is not just the brilliance of our technology and the continued expansion. There are market dynamics that are giving us opportunity. What we are obviously trying to do is to seize upon that opportunity. I want to highlight partnerships being a true differentiator and something that you've seen relatively recently, but it is an important part of our strategy. The opportunity in partnering with Icertis has expanded our value proposition to our customers when it comes to contract lifecycle management and the ability to be able to memorialize those agreements. The reality is, is as broad as our category of one is and the capabilities that we have. We don't do everything. And I guess, in the past, we were guilty of maybe trying to build everything because we love engineering stuff, and we're pretty damn good at it. We're now looking to our partners to how to help expand and meet the end often in last-mile capability, often to be able to get to that last reach. And so you'll see, whether it be through industry cloud, or in business partnerships or in new innovations, supply chain, with NTT in the insurance industry, co-innovation that we built together, constant examples. And you will see that happening more and more because it allows us to be able to better meet the transformation needs of our customers. We don't force them to isolate to what we have, we give them an end-to-end outcome, and we facilitate that not only through SAP technology, but through our partners. RISE. I sometimes get asked this question. You saw the growth that we have been doing on the order bookings. You've seen the growth in terms of net new customers. There's a few things to bear in mind. First of all, RISE is 15, 16 months old now. We have had huge expansion of the mid-market, of net new customers. We saw that in the early part of the journey. But I often got asked the question, "Hey, Scott, is RISE relevant for large enterprise? That's where you're strong, SAP, having seen so many of the customers." Well, big companies now take a bit of time to evaluate and make sure that RISE actually does fit their business. Here's the good news. You can see on the list, recent wins, leaders of industry, of their respective industries, are choosing RISE with SAP because they're doing it for 2 reasons: innovation and scale. They need to be able to scale their business and trying to do that themselves through their own environment, the ability to be able to scale and standardize, standardize their operations, standardize their processes, clean core of operation, the ability to have the agility to upgrade, to always get the latest patches, all of those capabilities give them scale. But it also provides a platform of innovation. The BTP is that enabling platform. So they can expand and grow and innovate with SAP, with their partners on a platform that leverages the data layer, the process layer and the integration lies all in a way that is easy to use and consume. And I've mentioned before, the cloud journeys are different. Each one of these companies are on a different cloud journey. Some have already gone to S/4, but they're wanting to go to the cloud properties of SAP. Some are at a very old version of ECC, and they're trying to consolidate 10, sometimes 100 instances of SAP into a consolidated single platform. They've got all sorts of different backgrounds, but the outcome that they're trying to get to is the same, but their journey through there is different. RISE gives that flexibility. It gives a best-in-class cloud service that we know how to do because we deal with all of our other business applications, but it gives it in a way with RISE that understands that mission-critical systems, that have been heavily customized to their unique requirements, needs to have a tailored journey to get there. And we build the capabilities and the expertise and the industry knowledge that we have to achieve that. And then, last but not least, is the journey of transformation, means that we change our engagement model. I've been on record, I've spoken to many of you before about the transformation of our business from going from a product out to a customer in. To do that, it requires us to be focused on value for our customers, customers' lifetime value. How do we measure that? We measure that through the outcomes. Is the outcome what we -- what they signed up to, i.e., do we deliver upon the promise? Was it done at the speed, i.e., velocity that they expected? Time to value is critical. And with the experience of engagement of working with SAP and our ecosystem, enabling that positive experience to do that. If we get all 3 right, the cross-sell and upsell will take care of itself because it's a natural movement rather than a forced one. And so what you'll see from SAP as we go forward is the demand is already there. I'm not doing hard selling of this. What we're doing is managing the journeys and helping engage through that rather than trying to force companies to go down this road because they're already signed up. They're just saying, "Hey, understand where we are and help us through that change." Which then leads me to the customer journey. We've talked a lot inside of SAP about customer lifetime value. I guess the point that I would make is that seamless journey from discovery, selection, deployment, driving outcomes, all the way through to extending those capabilities, that leads to upsell/cross-sell. That leads to a greater share of wallet. That leads to incremental value for SAP, but it's centered on their success equaling our success. And by doing that, it gives us other opportunities for efficiency. One of the things that I look at is how do I then be able to bring the scale of SAP in the hands of the customers without requiring feet on the street? Other industries have done this exceptionally well. The use of digital hub, the ability to be able to provide service engagement information, together with the marketing team of Julia, to be able to inform, guide and share with customers through a journey that is a low cost to serve. When you've got an ability to be able to manage this operation in a life cycle, whether you're the biggest company on the planet or the smallest or sort of showcase 2 of those this morning, the pizza shop and Google. It's a nice distinction between -- now they both have transformation journeys, and we are relevant in both cases, and it's centered on customer lifetime value. But the way we serve them may be done in different ways. Hopefully, that makes a bit of sense about why we're confident of our growth, why we believe it's a sustained growth, why we feel our relevancy for our customers is higher than it's ever been before. But don't take my word for it. I'd like to welcome on stage in a moment a leader that I've had the opportunity to work with over the past 15 months. Penelope Prett, who is the CIO for Accenture. She is the leader of CIO, IT operations, business applications. But in Penelope, it's a leader that is absolutely driven and focused around how to enable Accenture to drive scale and efficiency for hundreds of thousands of employees working on tens of thousands of customers around the world, 120-plus countries, not only in a professional services context, but increasingly leveraging different businesses, assets, IP, technology as a part of their portfolio to achieve their business goals. She's had a 25-year career at Accenture, and she's one of the most dynamic leaders that I've had the privilege to work with. Penelope, please join me on stage and share your story.

Good to see you again, Scott.

Welcome. Good to see you. Grab a seat.

Thank you.

Okay. I think I've set you up pretty well, right?

You did very well. Thank you for that.

So Penelope, let me give you the easy at bat to start off with. Tell us a little bit about Accenture? How is it going? How is business moving at the moment?

Well, I think you actually did a pretty good job of that, Scott, right? Our growth is excellent. We are diversifying our business. We are acquiring companies to add capabilities to what we can bring to our customers. It's truly delivering on the promise of human ingenuity and technology. And as a CIO, my responsibility is not just to think about how to keep the water stable and everything up and running, as you said, but what is the next thing that I'm going to do to materially power that growth. And when I think about that, right, and we think about things that we already do with SAP, such as close our company books for a global Fortune 500 in a handful of days, how do you top that? And that's what brought us to the RISE and SOAR dialogue, right?

It did. So a little bit about RISE. What were the opportunities that you saw? And I know in the discussions that we had, you evaluated, you looked at this. What were the opportunities, but also the areas that you felt that Accenture would either focus on or benefit from?

So I think you hit a lot of them when you spoke, Scott. But when I think about what I want to bring Accenture to enable it for the next wave of whatever is coming, I think about 3 core capabilities I really have to watch as a CIO. Number one, we have to be flexible. If nothing else the last 2 years have taught all of us in this room, that there are things you cannot plan for, but you have to be prepared to handle. So having an IT landscape that is flexible, that can adapt to what's changing in market as we see new places we want to penetrate, new sources of revenue we'd like to go after, being able to serve that is absolutely critical to me successfully serving Accenture as my company. Number two, being fast, right, very agile, but fast. Like you said, first market mover means something in today's world, and I have to be able to provide capabilities and insights at the speed at which my business wishes to grow. And perhaps the third and most important thing is we all live in a time of a war on talent, right? You're all experiencing this the same as I am, and making sure that you can provide very vibrant and delightful career experiences for the people who join your organizations and let them do things that get them up every day and keep them engaged with and bound to your enterprise. That's an incredibly important part of being successful in today's world.

When we talked -- I mean, when we looked at the RISE journey for Accenture, all of those capabilities, the flexibility of the scale, the relevance, all it came up. But what's the next part of the vision? And I think you were really leading us in your expectations. But when you think about the future for Accenture and the role that SAP plays as a partner and as a technology foundation for your business, what's the next expectations in the journey?

Well, I think there are 2 very important things that we have to do together, and they are joined as a journey, but they are separate things when we think about what we want out of them. The first one is the whole RISE premise, which you and I are working together. And if you think about that concept, when I talked about the need for flexibility, agility and a workforce that is bound to me and enjoys what they do every day, you really have to think about how to shape your IT landscape to get there. I think we all accept that the cloud is here to stay at this point, that compressed transformation is the order of the day. And the companies who lean into that and embrace it create a competitive advantage for themselves. And so when I think about what I want to do with this job, I want to partner with someone who's going to be able to take over a lot of the services that I currently provide so that I can consume those services as an end-to-end product, right? Seamlessly from my organization, maintaining the same level of high performance, but then that's going to allow me to take the talent component that is so precious to me and focus it on how to capture the next wave of value for my company, pairing more closely with my business partners, examining the market to see what's happening out there and which direction we should be going. And that's kind of the value how we look at the RISE side of the equation. But then you and I have to take it further, Scott, and we have to SOAR off of RISE. And what do we mean by that? This is an opportunity to reinvent ourselves as a business, right? And by using BTP and the SOAR journey to examine every aspect of how we operate our business, to be limited in the art of the possible only by our own ability to think creatively, we go through a process where we unleash the idea machine from our people. And we start to think about how we can structurally change our business this process of moving to a SaaS version of SAP in ways that can unlock even greater performance than we've already got out there, right? So I think about the 2 as separately, but they're part of an entire journey. Once we get through this initial planning part with you, there's a world to explore. What are you going to put in your landscape, right? What are we going to integrate on our end? And there's also a very vibrant ecosystem about this. You mentioned Icertis, right? There's a very vibrant ecosystem out there that, together, we can look to tap to bring in additional capabilities to bolster what we each do very well. So the possibilities here are limitless, Scott.

And the way you describe it, that standard SaaS template being able to then use the standardization. But as you talk, I always think about that innovation agenda that drives the flexibility that you require. There's many companies that have been or trying to go for the journey. In fact, at this event, as you know, Penelope, there's literally thousands of companies that are evaluating their journey, their ability to transform. This isn't the start for you because you've been on this journey for some time. Are there recommendations that you would have advice to your peers that as they're about to embark on this, not only with RISE, but on the journey with SAP that you would suggest as they look to their transformation of their business?

Well, the first piece that I usually share when I talk to other CIOs who are contemplating similar things is we talk about the need to simply move, right? Technology is changing so fast. The velocity can be intimidating. And it's very easy to sit there and consider, consider, consider and never actually move. So the first and most important thing in this brave new world we live in with this rotational velocity of technology, market is changing all the time, is that you have to be willing to move to experiment to discover. Number two, you really want to get with a partner like SAP, that can help you create an environment where that innovation and experimentation is enabled. And we talked about the need for flexibility and agility, Scott, but think about it, right? If I am consuming capabilities from you, and we put them into a pattern, put them into a configuration, we look and see what's going on. Do we like the outcome? Yes. No. Yes. No. No, not this one. Okay. Break them apart and try again. If I were to do that from an ownership mentality, instead of a consuming mentality in the partnership with SAP, I have to procure infrastructure. I have to set up environments. I have to go get different skill sets. I have to do this, I have to do that. It limits the velocity and the range of things we can jointly consider to drive Accenture's business. So there's all kinds of opportunity up in here, but the first and most important step is that you have to move. The other thing that I usually talk about when I talk to other CIOs, we live in a time of revolutionary change, right? Simple organic evolution is not enough, and you are watching companies that in the past grew more slowly -- leapfrog because they were really willing to embrace brand-new technology sets and brand new ways of thinking, going into and coming out of the pandemic. SAP's broad range of capabilities enable us to do just about anything we want to do with our business. It is being bold in that creative process and finding ways to have that dialogue with your business. About the upward end of the art of the possible and how that can unlock value for your business that feeds into that market growth, it's limited only by how fast we can go and how broad we can think. So be bold in how you think about it.

Christian, I'm going to ask Penelope to join me every time I'm going to meet the customer from now on. That's for sure. But in all seriousness, I mean, what you describe is what you're actually doing in the business. And I don't underestimate the reality is that boldness to move. And then I love the way you describe it, not to own, but to consume. And then always be trying to innovate and change it in a different way. That is enabled through the cloud. That's enabled through the technology and allows your -- the power of your people, the capability you have to do the things that are most impactful for you rather than operating what you've previously done. Penelope, thank you so much. You're obviously, as a company, a wonderful partner. But as a leader, you've been instrumental in the way SAP thinks about our technology road map. And I think I can speak on behalf of Thomas when I say that we welcome the ongoing insights that you provide to us because we know that if we can solve it for you, any other major company, particularly in the professional services, but in other industries will benefit from the path that you're trailing with us. So thank you so much, and thank you for joining us today.

I appreciate it, Scott. And I love what we're doing together, and I'm happy to talk about it any time.

Thank you so much, Penelope.

Thanks, Scott. Appreciate it.

Awesome. Okay. With that, my dear friend and colleague, Luka Mucic, is about to join us on stage.

Thank you very much. Yes. Good afternoon. Thank you very much, Scott. It's great to see all of you here at SAPPHIRE. Now for me, as you all know, it is actually going to be my last SAPPHIRE as the CFO of SAP. It remains an absolute privilege to serve this great company, and it's a great honor to continue to interact with all of you, our investors and analysts. I will miss both a lot, but the one thing that I can promise to you is a blazing finish in the last 11 months in my current role, hopefully, starting with the stage performance right here, today. Now what I want to do with you this afternoon is give you the financial lens of our cloud transformation journey, where we are at the moment, what we have already accomplished, but also what is very important, what is yet to come. Now where do we stand at present? You all will remember the pivotal moment of October 2020, where we refined and refreshed and reset our strategy and our midterm ambitions. There were five key objectives that we had in mind back then. We clearly want to double down on making the promise -- the long-held promise of having a modular integrated Intelligent Enterprise suite in the cloud, a reality. We wanted to do that by focusing on true organic innovation and investing appropriately into it. We wanted to make sure that in the process, we streamlined our portfolio, focusing on the key vital categories in the market where we have a strong right to win and then really double down and giving this all that we have. Very importantly, we wanted to move our core ERP business to the cloud at great speed. And very importantly, we decided to invest into the growth and into the key ingredients for outsized returns also on the profitability front for 2 years, 2021 and 2022, to then yield the outsized returns as of 2023. Now since then, I will argue that we have executed remarkably well, at least at in some categories ahead of plan, quarter after quarter. You have seen that in the cloud, our top line momentum is clearly coming through. 2021 was already strong on the current cloud backlog. You saw the acceleration of revenue growth as we went through the year, but 2022 clearly will further accelerate. And we have an opportunity to do more of the same also in 2023 and beyond. S/4HANA is clearly leading that growth, but it's also reinvigorating growth with RISE with SAP across the entire portfolio. We were also always clear that in 2022 our total revenue, and in particular, the operating profit performance, would still be dampened by the investments and also by the headwinds of the cloud transformation. But we are now very close to an inflection point in 2023. I will talk about that in a minute. As we moved into 2022, we continue to execute on the operational front like clockwork, I would say. Our cloud growth has continued to accelerate. We were always clear about, in particular, Q1 being a tough compare on the bottom line due to the strong software license result in Q1 last year as well as the fact that we were still fully in the pandemic. But actually, without the impact of the war in Ukraine, we would have executed ahead of our own internal planning in Q1 as well. Now the war in Ukraine has led us and many other businesses to make difficult but right decisions, as you know, and we will withdraw our direct presence in Russia. And that has an impact. It had already an impact in Q1. It will have an impact on the bottom line of up to 350 -- approximately EUR 350 million for the full year, with a significant portion of that coming through in Q2, as I flagged on our Q1 earnings call. But -- and that should give you a lot of confidence in the underlying fundamentals and our commitment to the business transformation to yield the returns as of 2023. We have guided for a reiteration of the profit outlook that we have given at the beginning of the year. Our cloud business will continue to accelerate, and we will definitely look at double-digit growth in 2023 on the bottom line. Now the reiteration of the guidance, I just want to reflect this as well, is also including the assumption of a moderate gain on sale of a smaller divestiture that we are planning. This will likely come through in Q4 of this year. Now with this, I want to come to the 2025 ambition. You all know this picture. Therefore, I don't want to spend too many words on it. But just to reiterate, that we are now entering the sustainable accelerated growth phase of our cloud transformation, the second leg, if you want. We will see already in 2023, a return to double-digit profit growth, and this will be closely followed latest by 2024 with a double-digit growth on the total revenue side as well. This acceleration is actually a mechanical consequence of the cloud transformation of the headwind of the on-premise upfront software revenue is dissipating because the size is shrinking, and at the same time, a faster growth in high-margin product revenues versus lower margin services growth. I want to drill into some of those aspects now, starting on the revenue and the top line. So first of all, our target number one for 2025 is to prepare total revenue growth to more than EUR 36 billion by 2025. There are 2 key pillars of that growth that will define our success. One is obviously continued rapid growth in the cloud. The second one is the continued resilience that we expect for on-premise support business, which, in combination, will drive the predictable revenue share significantly, materially up come 2025. Let me talk a little bit about the ingredients of this, starting with the cloud. I'm not sure whether you recognize this, but actually in 2022, we are reaching already a very important inflection point. For the first time in 2022, our cloud revenues will be the single biggest source of revenues in our P&L. They will exceed our software support revenues already this year. By 2025, the cloud business will have become the dominant source of revenues. More than 60% of our total revenues will come from the cloud. More than twice our combined on-premise software and support revenue. Now when you look at the components, obviously, during the COVID pandemic, our Intelligent Spend Group assets were really affected by the pandemic, in particular, Concur. But this has already started to turn around in the second half of 2021. And now the Intelligent Spend assets are already back to healthy double-digit growth. And we fully expect that this will continue, and that they will continue to catch up. Our other SaaS/PaaS assets have been healthy from a growth perspective throughout the entire pandemic. But now based on also the success and the hyper growth of S/4HANA and the reinvigoration of the cross-sell opportunities that Christian and Scott talked about, it's actually at a best-in-class growth at scale. Compare this to growth rates of other scale cloud application vendors in the market, I don't think that you will find anyone who's growing in this space faster than we do in our SaaS/PaaS portfolio outside of Intelligent Spend. Finally, there is one part of our cloud business that we consciously deemphasize, that's our Infrastructure as a Service business. But that's good from a margin perspective and actually not an inhibitor to continued very strong growth in the cloud. On the on-premise side of the house, of course, we expect that the rise of RISE with SAP will continue to lead to accelerating declines in our on-premise license business. The good news about that is that already very soon, starting next year, it will have a size that will not represent a headwind anymore, that will inhibit us from increasing the profitability in the company. Software support, however, will remain extremely resilient. Yes, it will start to decline, but not because we face any churn, any churn to the competition or to retirement of our solutions, the churn that we are seeing is actually the very healthy one that comes at currently 2.5x plus in many cases of conversion factors from software support to cloud. Services, a word about that, is back to growth. You have seen that in 2022, and we expected that it will continue to grow at a healthy rate. And for a service business, our services margins certainly are best-in-class and leading in the market. However, it will certainly not keep pace with the fast growth in our product business, the combination of cloud as well as software support. So what will this mean for the total revenue composition by 2025? A lot of good things. Our cloud share will be materially up, our higher margin product revenue share, relative to the lower margin services revenue share, will be materially up. And through that combination, our CAGR, despite the fact that we are increasing scale of growth on the total revenue front, will actually move up while the predictability of our revenues will go up as well. Now let me move a little bit closer into the cloud business and double-click on it even further, based on my favorite T-shirt theme that I introduced last year at the virtual SAPPHIRE Conference. You see here, for the first time, a little bit of a look into the crystal ball of how we see our cloud business unfolding over the course of the next couple of years. A couple of important remarks about this. We unfortunately had to upgrade our T-shirt sizes. So we had to introduce a 3XL size, which means a cloud solution that drives for more than EUR 5 billion in cloud revenues. Our S/4HANA cloud solution will be the first of our cloud solutions that will reach this 3XL T-shirt size by 2025. Importantly, we kept the promise that it would wear an XL T-shirt size of more than 1 billion already when we come back here to SAPPHIRE this year that has been achieved. Come next year, I predict that it will be the single biggest cloud solution in our portfolio already in 2023. Almost all of the other solution areas that we have will need a bigger T-shirt size as well. Spend management actually will be pretty close to having to wear a 3XL T-shirt size by 2025, too, but I think they will not quite get there. They might fall a little bit short of that. Human capital management will be an XXL T-shirt size of more than EUR 2.5 billion. Customer relationship management will move up to an XL T-shirt size. I can't share the T-shirt size for Qualtrics because they have not themselves officially given a 2025 ambition. But it's safe to assume that they will run out of their current size as well and will need a certain upgrade. The most important aspect that I want to stress here as well, piggybacking on what Thomas shared, but also Christian shared is the importance of the business technology platform as a central part of our strategy. And this business will, therefore, be a very important growth engine for SAP. It will be a very sizable XXL business come 2025 as well. The one area that we will keep on the slim fit diet is our Infrastructure as a Service business. So it will continue to stay around the EUR 1 billion mark as it is today as we're not looking to grow it anymore. Before I move to the bottom line, I want to give you a quick heads up that we are also planning, as I indicated to some of you separately already a change in adjustment of our disclosures as of Q2. Because we've had this combined SaaS/PaaS versus Infrastructure as a Service disclosure for quite a long time, but our strategy has continued to evolve and therefore, we believe that it's now important to give you visibility in some of the core areas of our strategy, in particular, our Platform as a Service business. We will evolve the disclosures. Internally, at SAP, we run our business now across 5 key solution areas. 4 are the Intelligent Enterprise suite application areas: S/4HANA, Intelligent Spend, human experience management and customer experience management. And then we have the Business Technology Platform solution areas, and we want to align our external disclosures to this way of representing our portfolio as well. So we will, going forward, split out SaaS/PaaS and Infrastructure as a Service separately. And we will provide you both with the revenues as well as the gross profits and the gross margins for all of those cloud service models separately. Of course, the separate breakout of S/4HANA from a revenue and CCB perspective will continue as well. The one thing that we will probably not carry through beyond the end of this year is to just continuously update the S/4HANA customer accounts because we will comfortably exceed the 20,000 customer mark by the end of this year. I think there is no question that the upgrade cycle for S/4HANA itself is well underway. Now it's about the volumes and now it's about the quality of the penetration and the breadth of the penetration, and you will get that through the revenue contribution of S/4HANA that we will continue to disclose. So this will start as of Q2, and I think it will give you a very valuable view on how we progress on our strategy to be a platform provider, to be also a platform for the ecosystem to build a lot of value-adding applications on. With that, I want to quickly come to the operating profit, where clearly our mission is to achieve more than EUR 11.5 billion by 2025 in absolute terms. That's what we are driving for. This represents a 13% CAGR between 2022 and 2025. And on our path, the double-digit growth will actually accelerate year-over-year. So what are the levers that we are going to pull in order to achieve this? One is one that I covered already, that's the revenue mix, which will turn from a headwind to a tailwind because software licenses will become so small that they are not a true headwind anymore. While at the same time, our product revenues will continuously exceed our services revenue growth. And within cloud, the Infrastructure as a Service mix will be reduced. More importantly and very significantly, we will be driving a significant expansion of cloud gross profit, and we also see opportunities for additional operating leverage. To quickly cover the operating leverage, as we are approaching 2025, we will see our aggregate OpEx expense ratios start to come down again. In sales and marketing, after a significant consolidation and reduction over a period of 3 years now, we are currently investing in additional capacity because we see the tremendous opportunities in the market and drive for a really outsized order entry growth. However, after 2023, our sales and marketing ratio will start to trend down again as a function of the significantly increasing renewal share of our cloud revenue profile because the commission rates that we have to pay on that renewal part are actually much lower than the part for net new business. On the R&D front, we obviously saw a spike of investment. I covered that in line with our organic innovation strategy and in particular, a significant investment in the integration of our different assets as part of the Intelligent Enterprise suite. This is now largely completed. So not only do we expect that we will not further exceed the roughly 17% of revenues that we are planning as an R&D ratio for 2022, we actually believe that, over time, we have scope to slightly reduce it without harming, of course, the continuous need to invest in innovation. And then finally, as Christian has said, of course, our ambition remains to also gain further efficiencies on the G&A front, even though we are already pretty efficient in this space with around 4% of revenues, as you have seen in Q1 as well. Now let me cover the really most important piece of achieving the profit ambition, and that's the cloud gross profit. As the cloud will become the dominant revenue stream by 2025, as we have discussed, this is, of course, key. And when you take a look at our ambition, it actually implies to drive for more than EUR 17.6 billion in cloud gross profit. That's 2.7x the amount of gross profit in the cloud that we have achieved in 2021. How are we going to get there? Well, simple math, it's a combination, obviously, of the revenue growth as well as expanding cloud margins. And we are focused on both elements. The revenue growth side, I think, we have checked that box already through what I said before. We're very confident about our continued cloud momentum. Actually, we're running ahead of plan for the last 5 quarters, and we have been beating our internal revenue plan in the cloud. So very confident about that side. Of course, we need to support this also by expanding the cloud gross margin as we have committed to the market when we unveiled our new strategy. And this comes through 2 factors. One is the revenue mix. And the other one is the delivery efficiency. On the cloud revenue mix, we have one element that is a benefit, that is a tailwind, and that's the declining Infrastructure as a Service share. On the other hand, we have a slight headwind that is coming through the increasing share of S/4HANA cloud because as part of the great success of RISE, we have currently a higher share of very voluminous private cloud contracts that we are taking on board than what we have originally assumed in our October 2020 plan. So if that continues, we would have actually a great problem to look at in a couple of years from now. We would have an outperformance of the revenue plan through continued outsized growth in S/4HANA private cloud, which would come at a very strong outperformance of the absolute cloud gross profit. But through a change in the mix, it might mean that we are falling slightly short on the cloud margin target. I don't have that kind of a crystal ball that I can tell you with a guarantee that one or the other scenario will come to fruition. What I can tell you is no matter what, S/4HANA cloud and the private cloud piece of it will be a very strong contributor to the absolute cloud profit that we expect. And either way, it will allow us to achieve or outperform that target. The next element is, of course, the work on the efficiency that we are planning. And this has, again, also 2 elements. One is the next-generation cloud delivery program that we have been talking about a lot over the course of the last 2 years, and the other one is the portfolio aspect that Thomas mentioned as well. So let me quickly talk about the converged cloud program because it came in 3 waves. As you know, a couple of years ago, we harmonized, first of all, the database layer and in some of our major cloud solutions. And then secondly, we made all of our main cloud solutions available to run on a hyperscaler or SAP internal converged cloud infrastructure. Since a few years, we have already deployed all new customers coming on board on this new infrastructure. The one thing that we are now accelerating is to actually move the majority of existing installed base customers who have been deployed originally sometimes many years ago on legacy infrastructures that we acquired sometimes through the M&A of the cloud companies that we acquired to this converged cloud and hyperscaler infrastructure. This is what takes now a mid-triple-digit million euro investment in 2021 and 2022 to accelerate this to be concluded in early 2023. This cost is a bit back-end loaded. So a higher share is occurring in 2022 than in 2021. And a higher share of that cost in 2022 will occur actually in Q2 and Q3 than in Q1. But upon finalization, within a period of 12 months, we actually expect to realize several hundred basis points of gross margin improvement in the cloud from the greater efficiency that we gained through this infrastructure harmonization as well as, of course, from loading off the project costs from the migrations. When we have achieved that, we will be able to drive for further continuous optimization, which will drive us in the direction of the 80% cloud gross margin target that we have set up for 2025. At the moment, we have an increasing visibility in our ability to complete the program a couple of months ago, the supply chain shortages and semiconductor shortages actually had us concerned a bit, but we are beyond that, and we see now that we don't face obstacles to the completion of the program from that perspective. And we are now finalizing the migration data center by data center, some like Toronto or Sao Paulo have happened already. The next is in line. So we expect that the vast majority of the migrations will be done by end of the year. There are some final closeout activities that we still need to complete in the first half of next year, in particular, the retirement and decommissioning of the legacy infrastructures after the customer migrations. And then we will have made room for the significant increase in cloud margins that I've talked about, most of it will happen in the second half of 2023. Not only is this good for the cloud margins, as Thomas has said, but it's also good for the resiliency. It's also good for the customer experience. So it will make us more competitive in the market as well. And finally, Thomas has already talked about the advantages of our portfolio strategy. I want to take a look at it now from a profit perspective because there, it's also extremely helpful. When we onboard partners to make their solutions available on our business technology platform, when we help our partners to position them with our ecosystem, we actually take a revenue share. And this revenue share comes at a very high profitability because, first of all, we don't have a cloud delivery expense associated with it. And also our sales and marketing expense is at a lower level than if we tried to position and sell a solution that we develop all by our own. Secondly, of course, we also have an OpEx leverage because we can focus our own capacity and our own attention to the solution areas that we decide to build out on our own. So I invite you to remember this, oftentimes, we talk about the portfolio evolution of SAP in a 2-dimensional way. Are you building organically? Or are you acquiring through M&A? The ecosystem is a third dimension that you will see SAP utilizing way more. And as part of this, we also consciously decide on a continuous basis whether there are areas in the portfolio that we want to deemphasize and perhaps put into the hands of a partner to make better use of them because we don't consider them as strategic. That is a continuous process of pruning the portfolio and that you will see SAP engage in also in the future. So which brings me to the free cash flow, where, clearly, we also have a midterm ambition out there, which remains in place. We want to achieve EUR 8 billion in free cash flow by 2025. This was a subject of a lot of debate at the beginning of the year because we obviously are moving our cash settled equity-based compensation plans to share settled, and there was some disappointment in the market that we did not want to one reflect this impact of several hundred million euros, quite a significant triple-digit million euro number in an upgrade of the free cash flow guidance. Let me be very clear on this. First of all, of course, we are extremely confident in reaching or also exceeding this free cash flow target by 2025. And of course, that confidence has been further underpinned by additional helpful factors, such as, for example, the development of currencies in the short term, which is going to be helpful to free cash flow as well. However, it's also a target that is 4 years out, and that at the same time, is one of the most volatile ones that can be most affected by one-off impact. You actually can see this in the years 2018 and 2019. We had significant one-off impacts, such as, for example, cash taxes or restructuring impacts or adverse currency impacts that we faced back then. And what we want to do is we set a target that is so far out is to really be sure with enough safety room that we will hit it. So we believe in this target very strongly. It will follow, of course, also to a good extent, the evolution of profitability. So we will see an acceleration in the free cash flow growth from next year on. However, 2024 and 2025, we'll see a stronger progress than 2023. At the same time, I want to recognize as well that in the operational readiness of us to sustain substantially accelerated free cash flow also in the years beyond, we have actually made great progress, in particular, on the working capital efficiency side and on the cash collection side, the DSO at SAP, even though we officially don't report about it anymore, has been materially reduced over the course of the last 2 years. So all of the operational ingredients of driving for that number and certainly having the opportunity to outperform it as well by a bit are in place. And then finally, of course, we also want to do something with that free cash flow. And one of the important factors is to properly make sure that we can share our financial success with our shareholders. You have seen us for many years now consistently increasing the dividend payout in line with a progressive dividend policy. This year is obviously a special year, the 50th anniversary of SAP, which we are celebrating with a special dividend of EUR 0.50 on top of the increased regular dividend and align with this our capital allocation priorities remain unchanged, but will, over time, offer more opportunities for additional cash returns. We will continue to invest properly in our organic growth. We will make sure that we repay debt when it is becoming due. And you have seen that deleveraging at SAP has made strong progress. At the end of Q1, we were left with less than EUR 1 billion of net debt. So this is making very, very good strides in particular in times of rising interest rates. I think it is good to have such a conservative policy in place. We will continue to pay an attractive dividend. And of course, if we have inorganic growth opportunities, more likely on the tuck-in side than on anything large, smart acquisitions like Taulia and Signavio in the past, then we can fund them as well through our cash flow. And finally, we obviously see an opportunity to drive for more cash returns through share buybacks also in the future. We will see a decline in financial leverage and the free cash flow relief from share-based compensation programs. And we will make sure that we will offset any dilution that will come from the conversion of our share-based compensation programs to equity settled for our shareholders. That's why you can expect to see not so tactical, but more regularly recurring share buybacks from SAP to make sure that we can counter this dilution. So finally, I want to spend 1 minute on something that is very close to my heart, and that's the nonfinancial performance of SAP because I truly believe that this is a strategic differentiator for SAP. We have been on a journey of being an ESG leader in our industry for many years since 2009, actually. Back then, we had 6% ESG investors. Now we have more than 40% ESG investors. And the journey was rewarding for us not only in the sense of being an example and recognized for many years in a row as the leading sustainable software company in our industry, but more importantly, by driving real outcomes for our customers. We have a great portfolio with the cloud for sustainable enterprises that you are seeing at SAPPHIRE all over the place. We have actually great customer examples, leading consumer products companies like Colgate, Unilever are using our products to move towards, for example, complete usage of recycled material for their packaging and many other scenarios. Per our calculations our customers that are most advanced in adopting our digital latest institutions actually drive for a significant better performance from an ESG perspective. And that is giving us a great opportunity as ESG is becoming way more -- part of a license to operate for companies across all industries. And we will continue to also make this a key steering aspect for SAP by not only disclosing and measuring and guiding for key nonfinancial indicators, but actually also making the incentives for the Executive Board dependent on those criteria, like employee engagement, carbon emissions and the customer Net Promoter Score. So let me conclude and take you back to the big picture. Let's assume we're all back in this room in 2025, perhaps me in a different role than today, and look back at the company that we hopefully all own altogether. What will we have seen? In 2021, and the first full year of adopting our new refreshed strategy, we clearly saw that our strategic move was paying off. Customers voted in favor of it with a tremendous growth in order entry in the cloud, which you have seen coming through in the CCB. That momentum has translated into the cloud revenue line in 2022, already with accelerating growth. And then in 2023 and 2024, we saw it coming through on the real heavyweight company level, high visibility KPIs, like total revenues and operating profit, moving back into double-digit growth territory. So end of 2025, we will all look back at several years of double-digit growth on the top line as well as on the bottom line. We will own a business that consists of 85% very high margin, more predictable revenue. And we will still be left with EUR 8 billion to EUR 9 billion in support revenues that can be converted to cloud revenues at high healthy multipliers for many years to come, propelling our growth in the double-digit space, also beyond 2025. I think that should be the basis for a very attractive valuation. And I can leave you with one last promise. When you are joining me, I will definitely stay a shareholder as well even beyond March 31, 2023. Thank you very much. [Break]

All right. Welcome back. And so we have now the privilege of the entire Executive Board of SAP with us on stage. So I hope you had a productive time so far. It's been a great experience. And we'll take questions from the room, but you have also the ability to ask questions online. So feel free to do so. We have hundreds of people online. We have some mics available. So we'll take the first question in a minute. But maybe -- and we have Thomas virtually, yes. We still have Thomas with us. Hi, Thomas. That's great. Already in the metaverse as I can see.

Well, the hybrid world. Anything is possible.

So before we take the first question, maybe breaking the ice. Julia, it's been a spectacular event for the past 2 days. We have now 2 days into the SAPPHIRE. We still have 1 day to go. So maybe some impressions from your side. You put that together, so that's pretty impressive.

Yes. Well, it's my first SAPPHIRE, so I consider it the best one. No, I think we're coming back in person, right? It's been a while. We had a chance to step back and think about how we want to do it differently based on where we are. And I think the whole design principle of the event was around connection and relationships. And I think I definitely feel like I've heard from the attendees that they've got that out of it or getting that out of it, still underway. So that's been great. I know there will be other outcomes as well, but that to me was the most important part of creating that connection and that relationship building again. So in the -- we'll see what the end results look like, but so far, so good.

Great. Thank you. So we have maybe, Adam, you're first row. So maybe if someone can bring a mic to Adam.

It's Adam Wood, Morgan Stanley. Maybe first of all, if I kind of think about how we can judge you on this journey from the winner in ERP, just broader platform vision solving end-to-end processes for customers? I guess 2 of the critical things that we'd need to see would be the BTP adoption and then also from a kind of stickiness and differentiation point of view with the industry clouds. There's been a lot of information dotted through the presentations on those 2 things. But could you maybe help us bring it together a little bit with some metrics around the scale of those 2 areas today, the attach rates that you're seeing at BTP maybe a year ago now to S/4 renewal rates that you see on those businesses? And maybe some insight into the industry clouds that are really doing well? And then maybe if I could ask kind of a shorter term one, probably for Luka. There's a lot of moving parts this year on the EBIT with the impact of Russia, Ukraine in Q1, Q2, the investments you're making on the cloud. Could you maybe just help a little bit with the seasonality that you'd expect us to see on the EBIT line through the rest of this year, please?

Yes, absolutely, perhaps if someone else...

Yes, I can talk on the BTP. So a couple of data points, and we talked a little bit about this at earnings as well. The reality is when we see the customers about scale and innovation, they are demanding both and the innovation runs on the platform. It's important to note that the platform is now the unifying platform for all of our technologies. So it's not just about RISE, but it's about all of the portfolio. Juergen and Thomas have been able to build that, which means the data, the processes, the integration, the workflows, all being able to build that all of the artificial intelligence and those other capabilities. So the expansion of the platform from a customer, from a growth perspective, I have 2 -- I call them load bearers of our growth. RISE with our S-4 and the platform. It is growing exceptionally quickly, both in terms of new order book, but also on the adoption and the consumption. And in fact, if you look at net retention rate, it is our best performed category, which means customers are using and consuming the platform more than ever as well as we're getting more upsell opportunities because what we do is we start usually with one use case, address that use case on the platform, and then we expand the use cases with other scenarios, which are short, sharp, easy engagements. And the other thing is our partners are using the platform to do the industry cloud extensions as well. So the optimism and I think back, Christian, 1.5 years ago when we were really driving the platform, we will really try to force it in terms of the adoption. Now the demand is coming in. We see the customer pool, which is what we obviously want to be.

Yes. And perhaps to conclude on that in terms of the metrics that we will provide about us, they are the ones that I kind of pre-announced around, obviously, the platform revenue growth as well as then also the profit contribution. And I think that will provide you at least with a good yardstick of how we are able to penetrate the customer base. Now in terms of the seasonality, let me expand on that a little bit and also cover the top line and the CCB because indeed, I mean, across all of those elements, of course, the war in Ukraine is playing a certain role. I think we have said all along that we want to drive in 2022 to an exit CCB growth in Q4 around the same level that we saw in Q4 last year, which was at 26% growth. And we were also clear that in Q1, we would see a slower start because of the tremendous, I would say, pent-up demand that we recognized in Q1 in 2021, which was going to be hard to even significantly outpace in Q1 of this year. Then of course, there was the impact of the war on the CCB that you saw in Q1. Having said that, the basic underlying premises have not changed. So you should expect in Q2 and Q3 a significant acceleration of that growth rate. So certainly, in Q2, we will see a higher CCB growth than in Q1. And then in Q4, we should land at the 26% roundabout that we have indicated already at Q4 earnings. On the revenue front, I think it's important to understand that what we saw on the CCB line in Q1 is now, of course, what we are going to see in Q2 on the actual cloud revenue line. So I would expect a small blip in the growth rates in Q2 as the Russia impact, so to say, comes in for the first time before it will be then overshadowed by the strong growth in the order entry that we have been driving in Q4, which then starts to get into the figures materially in the second half year. Therefore, cloud revenue growth will then reaccelerate as we move into the second half of the year. And then on the EBIT line, it's also important to understand, we were always clear that we would have a tough compare in Q1, as I said during my presentation as well. Pandemic impacts in Q1 last year, a very strong software revenue performance. So it was evident, and we actually did better than what we had initially internally planned outside of the special impact around the war in Ukraine. Now in Q2, we will face the full impact of the decisions to also start to retire our on-premise business, software support business. This will result in accelerated depreciation of sales commissions also for our on-premise business. We saw the much smaller impact of that in the cloud business in Q1 as part of the EUR 70 million. In Q2, we'll see the bigger impact of that decision on the on-prem business. So you should expect that this will have actually a majority of the impact that we expect for the full year will be recognized in Q2. And you should also impact the restructuring -- expect the restructuring impact to already be recognized in Q2. And then the second half year should be much better. In addition to this, in Q4, we would expect the divestiture to close, which would then mean that there would be a onetime gain that we recognized in Q4. Last year, we recognized the onetime gain from the Financial Services joint venture in Q3. So there is going to be slightly a different timing. And therefore, Q4 will be certainly with quite some margin, the most positive one from a profit perspective. I hope that helps to model.

Maybe, Toby, on the second row.

Toby Ogg from Credit Suisse. Two questions. Firstly, just for Luka, I just wanted to come back on the cloud gross margin pathway 2023 to 2025. Now clearly feels like the bulk of the volumes on S/4HANA are all coming through by single-tenant private cloud deployment. So with that in mind and with the lower gross margins in the single tenant, could you give us a sense as to what a lower band could potentially look like on that cloud gross margin pathway 2023 to 2025? And then secondly, just for Christian, on the RISE side and the RISE implementations, I guess, we're not far off now, some of those first customers actually going live under this construct. Could you just give us a sense as to how the progress has been for those advanced customers? And how confident are you that these first customer go lives are going to be successful?

Yes. So first of all, on the cloud gross margin, as I also indicated in some of the individual discussions that we were having, first of all, it's important to note that many of those deployments actually when they are fully ramped, we'll have a very decent gross margin. If you're running a 6-digit number of users on a single tenant, I mean, there are some public cloud solutions out there that probably don't have that number of users. So this is a story that in the long run will actually drive a very, very profitable cloud business as well. Now when it comes to the mix, there is, of course, uncertainty out there. But I can tell you, if we continue to over-deliver on the S/4 front, as we have done in the past few quarters, and if we would extrapolate that same kind of outperformance to let's say, 2025, it could well be that we would land 1%, 2%, perhaps below the 80% mark. But on the flip side, of course, we are also seeing that the rest of our portfolio once we have completed the next-generation cloud delivery program will actually land above the 80% mark. So it's a big question, of course, what the exact mix will be. The one thing that I'm absolutely certain about is if that happens and if S/4HANA cloud continues to outperform the way it is right now, then we will absolutely land at an absolute cloud gross profit that will outperform our expectation for more than EUR 17.6 billion. And therefore, in terms of the contribution of our cloud business to our operating profit and ultimately, therefore, then also the operating margin, that will be a great problem to have. So there is actually no risk connected in this. It's only the question how the derivative from a profit perspective will develop on the margin front. And I would say the swing there is probably up to a 2 percentage point value.

Yes. Thank you, Luka. And maybe to the second part of your question, look, out of the 2,000 customers we have after 12 months, 50% are already live. Just yesterday, we celebrated the HDL go live and also a pretty complex landscape, which has grown over the years. And definitely, the time to value is much, much better now than also in previous ERP upgrade cycles. And then you also have to understand that all of these customers and you have seen Penelope here on stage with Scott, I mean Accenture will end up in the public cloud. It just takes time, and it needs 2 parties because they now also need to standardize. And we will move very soon certain parts of the landscape right away to the public cloud, while others will stay high put. And each and every customer I'm talking to, it's a journey. Some of them will hop on immediately to 100% standard because their business model is not so complex, smaller size, different industry. But we even have now manufacturing customers who did where we did a fit to standard, like, for example, Schneider Electric with many factories around the world, and they will also move to the public cloud. But again, it's a journey. On the go-lives and the feedback so far, it's extremely good. The performance is better. The stability is better. They really feel well that they can outsource now big parts of the operations. Thomas and team do their very good job on the onboarding on the provisioning side. And then again, on Scott's side, together with Juergen and Thomas, we are then really helping them now on transforming their business models, doing the work on the process layer, doing the work on the core innovation side with the industry cloud. And we have now steady delivery calls where we monitor all of them, not only the technical side, but also the transformation side. And when you look at these customers, the 2,000, probably you have 20% who just do a lift and shift because they want to get TCO operations benefits. But 80%, they are immediately also going into this transformation work on the business process side. So I see actually that this is coming, and it works out very well.

Very good. Emile?

Two questions from me. First one, Christian, you talked a lot about the new customers you've been adding with S/4HANA. Many of them are kind of fast growing. I think you talked about the breadth of the portfolio. Can you tell us how you think about the kind of lifetime value of those customers between now and, say, in 5 or 10 years' time? How significant can they become? And how quickly you can realize that? The second one for Juergen. We've been hearing from partners that perhaps some of the industry cloud functionality is still taking some time to develop. So how do you think about optimizing some of the resourcing you have around putting it into more on the kind of cloud ERP industry cloud because Luka obviously saying that R&D will start to kind of taper off as a percentage of sales, do you feel the need that you may have to reinvest again? Or there could be some reprioritization of that spend?

I take the first one, and maybe I split it because Scott can also talk to this much better than I do. Look, I'm just personally involved in a RISE deal with -- it's not anymore a start-up out of Berlin. Now they are at the stage where they want to quote their business to more than one country. And now they are actually already at a turning point where they say, I want to go now to SAP to scale my business. And you also need to help me to, especially on the quote, on the order management. And then with the supply chain, how can I get this automation in place? Because now I'm at a point where I not only can focus on quotes but also at the scale and the automation. And that's the tipping point where they start to come in. Usually, yes, the entry point is often but not always. They're already a SuccessFactors customer. And now they are expanding it to S/4HANA truly 100% running in the standard. And then it goes from there. And then when you add further now, they need further scale on the procurement side, they need to adhere to new regulations also there in other countries. And this is usually where we are then taking -- grabbing a lot of market share. And I know there's always this debate and this brand trapping from some of our competitors, but the reality is as well that you have seen Ooredoo, it's one of the largest telcos in Qatar, 100% different ERP. Also, these guys are now coming over because with RISE, we want to build up from ground again, the mash-up data model, the mash-up business processes and also sometimes the lack of capabilities like as a telco wanting pay-as-you-go, bill every minute. That's actually the way to go in the telco industry. So we see disposed and it often starts with SuccessFactors and finance. But then we are expanding as these companies also globalize their business. Scott?

Yes. I think you explained it really well. So number one, cloud is the only choice. They will not go to any other platform. They implement super-fast on the ERP, but they're also the fast adopters of the platform, the question that was asked before about the use of the platform. They've got no pre-built environment, so they just take it out of the box and innovate straight out of the platform and then they could extend the capabilities. So we already get that cross-sell capability from the get-go. There's 2 scenarios that we see within the expansion. There's the natural expansion as their business grows and expands and goes international. I think it's a great example of why they often come with SAP because we definitely know how to deliver to regulatory environments. One is on the employee side that Christian mentioned. The other is on the commerce side because often, they're trying to do customer acquisition, and that's their first point of call and they're engaging with us on the commerce platforms to be able, but then they're like, all right, well, if I'm going to then do that, then how do I fulfill? How do I make sure that my sales orders that are unable to then get the supply chain, and that usually then pulls through pretty quickly. And again, the platform is the unifying part of the architecture. I've seen that on a large number of cases. So sometimes it's starting with the ERP, but quite often, it's on those others as on the edge solutions.

And I can take the second part of your question on BTP and industry cloud. Actually, we do a lot of excitement of partners around BTP. We had multiple partner events here, and there's really a lot of energy around the platform. We, ourselves, we are building our new applications on BTP and also our partners do that. And potentially, Thomas, you can also comment. But through the R&D part of the question, we decided to also make industry clouds a partner play. So we embrace our huge ecosystem of very capable partners, and you see them being super excited being it in profitability management, in ESG, in tax management. And they are also like providing solutions and content to our business technology platform and bundle that into industry cloud solutions. And that's why also we can be very cognizant with our R&D dollar investment, but still offer a huge priority of industry cloud solutions. Thomas?

And I think to make it really clear, I mean, the industry cloud is a huge success. We have more than 230 applications, which again leveraged business technology platform. And actually, majority is partnerships like you had mentioned, and are also unique because we really want to focus on our area and then embrace the ecosystem. To give you some sense because the question was also about how mature industry cloud solution is. Every industry cloud solution, which we built from the ERP perspective, and we have more than 20 already with GA, they have been with at least 10 co-innovation customers. So it's directly together with customers to prove the viability and the success of the product itself. And as it is cloud so we continue to innovate and that's the beauty of it, and we continue to do that together with our customers along the way and really grow. And that really delivers some innovation on the vertical edge, what we need really rethinking entire process because the key aspect is I mean let's be clear. I mean we are serving more than 25 industries with industry-specific processes already today, but we really want to reimagine the process for the next decades to come. And that's what we do with the industry cloud again, together with our customers and partners together and they are quite frankly, the feedback is phenomenal, also quite quickly how we engage with the customers to deliver this continuous innovation with cloud-native solutions, which we are doing.

Let's go Yes, Kirk.

Kirk Materne with Evercore ISI. Thanks for the time today. I guess maybe 2 questions. First one is maybe for Christian and Scott. When you think about where we are today versus maybe 3 to 5 years ago on the cloud, just in a cloud conversation, has the pendulum swung back to the core, meaning because of what happened in COVID with supply chains, does the -- do you start more conversations at the core or in the back office. I think 5 or 7 years ago, you would argue it maybe started at the edge. And I think that probably benefits you all given your position. So I was just kind of curious if that's what you're seeing happen given some of the macro events. And then secondly, I think, Luka, Christian and Scott all talked about them sleeping pretty well at night because of the pipeline. And I know because of the recurring nature of your business, you should feel better about the revenue side. But on the order entry side, can you talk about how programs like RISE give you more visibility into spending patterns with your customer, the consultative approach, how that changes maybe your ability to gauge when a customer wants to spend with you versus 5 to 7 years ago when it might have been one big bang upfront. And does that, I assume that feeds into your comfort level and your healthy amount of sleep. But if you could expand on that, that would be great.

Yes, I can answer the first question very quickly. I mean when I'm talking to the CEOs these days, I mean, you are, for sure, why it's a lot of now inflation, higher energy prices, especially in Europe, and how can we help to offset. So what comes into play is, of course, ERP, Taulia, the network. The second one, I mean, sustainability, I mean I had some customers here. Everyone is under such immense pressure to go to core, but then also go to carbon side, new energies. And also when you are not even utilities or oil and gas still, you have to prove that you are decarbonizing your business and your supply chain. And then, of course, the business model transformation continues with commerce. Scott is absolutely wide. And then, of course, with all the associated modules we have. And let's not forget, when we talk about core ERP, we talk about HXM. We talk about Intelligent Spend and we talk about S/4. That's our ERP. It's not like only S/4HANA and we are doing a pretty good job also on the go-to-market side and really also outlining that we have this end-to-end.

Categorically, the demand for the core has increased quite substantially. And for all the reasons that Christian has described, the reality is when it's disruption, you need to be really good at your core business processes to be able to withstand change, to be able to meet those regulatory and those other factors. So being able to deliver on the regulatory, find efficiencies and standardize in the way, you can't deal with inefficiency, but the inefficiency is not just a financial one. It also limits their ability to serve their customers in a more agile way. And I know Julia focuses a lot on the agility. So we've seen that increase demand and also the willingness to take on those bigger transformations. When you're doing it in your own environment where you're allowing yourself to heavily customize versus moving to the cloud and being forced to standardize, it's amazing how much more willing they're moving into that pipe. To answer your second question about what we saw 5 to 7 years ago, there's a few trends that I see. First of all, our pipeline in the breakdown, it's really interesting to watch when we used to have our pipeline and on-premise, we would have these big deals that would have hundreds of products. And we weren't quite sure how much they were actually going to get adopted. And so they were events of a deal. What you now see in the pipeline is the breakdown of the solutions that they want in different time lines. So that gives me one level of visibility that I can see the journey that they're on just through the insights about how they're indicating, whether it'd be early phase on discovery, they've gone through a marketing engagement, all the way through to a late stage whether in the late on the buying cycle. So first of all, the visibility. And then secondly, the sequencing some -- it's still you go out to in, into out. We get a bit of both on that, but you get the predictability on the CFO agenda, which we are, I would argue, the best at. You can see the flow where you standardize processes, then you're managing risk and compliance and then you're doing spend visibility and then -- so you can see the sequence of that in terms of the insights and that guides some of our sales place, that guides our engagements about when would be the right time because we've got the advantage to be quite sophisticated. So well, we've already solved that challenge. And we know the next one is this and then the next one is this. And that guides in the way that we do our engagement with the customers, which is different from before when we were trying to do it all in one hit.

And perhaps just a quick one because that's one that we have built in partnership also with Sabine and her team. So I think we have also become way more scientific around how we actually measure the pipeline at present, where we have worked for years now on capturing the data points, building predictive algorithms. And by now, we have even gotten the field to adopt those predictive algorithms and not only the Sustainability Control Tower. And I think through that, we have actually now a pretty good visibility into the risk profile, which certainly, we probably have been managing rather from the stomach perhaps 5 to 7 years ago.

That's a great point.

We have maybe, Michael, on you. Lena, maybe Michael, on this row. On the first row, right. It was behind. It's okay.

I'll ask a quick one then. Stefan Slowinski from BNP Paribas. Just I guess as a follow-up on the previous question around the demand environment. Obviously, when you look at financial markets, I know you don't run the business based on financial markets, but we've got NASDAQ down 30% and some of your competitors down 80% in terms of their stock prices. In the past, SAP has benefited in those kinds of environments because customers have maybe seen SAP as more reliable potential partner going forward. Are you starting to see that at all in your discussions with customers? Does that factor in at all to those discussions? And then, I guess, secondly, along those lines as well, are you managing the business any differently? Is it starting to get easier to maybe higher or to retain staff based on some of that volatility that you're seeing in the market? And anything else that it's changing in terms of how you run or how you see your business maybe on the acquisition front as well if it changes your views.

Yes, very quickly, and then please build on to what I have to share with Stefan. I mean, Stefan, first, when we would not have Russia and Ukraine, I would say we would just stick to the plan, which we also build out at the end of the last year despite the macroeconomics, definitely have changed. When I'm talking to many customers now these days, especially in Germany, I had a conversation this week. They are telling me, Christian, we have to cut certain investments in our budget to offset the higher energy prices to offset the war where they also get some headwind. But what they don't want to do is the investments into their transformation. And this is where we actually -- I just have seen not one so far customer who said we're going to delay our RISE journey, we're going to delay our S/4HANA investment. But of course, we are seeing that the macroeconomics overall, they are not just turning to the positive side. This is not news. And then second, what is also for us very important, of course, on the cost side, where we, of course, as a team now coming together is, I mean, we said that we have somehow an impact out of Russia. And we are sticking to our guidance. And somehow, we have to do something about that. That just is not coming just out of the cloud. And of course, we are now tightening also our investments in certain parts without hampering our growth abilities because that is, of course, still very strong, and this is what we are working on internally to really make sure we're going to hit our operating profit guidance despite now the headwind we are getting out of Russia.

Maybe if I can just on the customer side, what we're seeing, don't -- you're right, don't underestimate the power of the fact that it works. There's many debates that companies will have about their transformation role with SAP. But the one thing that I have never received is any debate about the technology works. And when you're in an uncertain environment, where you've got a lot of unpredictability, the safety and the knowledge of working with an organization that delivers that scale and it works, they trust on that fact, which is a responsibility that we have to uphold and continue to deliver to in a cloud world. But that's led to an increased willingness to move to SAP. Maybe it was in different priorities before maybe on their call, but then the willingness to do it at speed because they think that by doing so, that it will give them the predictability that they deserve. On the talent one, Sabine, you're probably better to answer. The one thing that I see is the talent market for technology is aggressive and it's not just in our industry. Every company that I deal with is a technology company. They're hiring technology talent. They look at the platform, and they're always going to partners to build on the platform, they're looking to do it themselves. So sometimes the very customers that we're serving are competitors for talent for technology skills. It's great for us in the industry because demand will continue to lift when they're investing in that capability. But it doesn't become any easier as an organization when you're trying to hire and retain and reward the best talent. Sabine?

Yes. Let me maybe pick up on that actually with a couple of comments. And as you said, Scott, it's very clear that competition for talent that's going to stay independent of like tightening of market possibilities and opportunities because most of the predictions are actually talking about massive shortages of skilled workforce going into the -- this -- well, the end of the decade. We're talking about probably about 85 million sort of missing workers in the workforce with the right skills which is actually why we are really doubling down on learning and actually learning not only for our employees, but actually providing learning opportunity for the broader ecosystem and actually even they are providing learning opportunity for students to make sure we're actually funneling talent into the broader ecosystem and actually making sure that people sort of coming out of the universities that are actually ready to actually -- that are understanding how to put SAP solutions and technology to work to solve business issues. And that's one of those where you'll be seeing a lot of work and a lot of very focused efforts from us. Just talking about our retention rates. I think one of the things we have to say at SAP is we feel actually really good in terms of our retention, even though we have the war for talent. Our retention rates are sort of in the sort of 92%. So we're actually much better than the industry average. And I think there's many things we can credit to culture. There's many things that we can credit to really sort of leadership development, enabling our people, their personal growth, their opportunity to learn. And we're very focused on keeping it that way. And we're very focused on also sort of bringing in additional talent sort of in the right spots as we as a company actually transform as well. And that's the other piece that certainly, you've seen some investments from our side like making sure we understand sort of the talent bench that's out there actually internally and externally and make sure we're finding the right great people for the right roles.

And just mini comment on top of that, it also has an impact on our portfolio. So that's why you see us already for quite a while doubling down on no-code technologies and capabilities because all our customers and partners have their challenge in the competition for talent.

Michael?

Yes. Maybe just a philosophical question. I mean, SAP is co-innovative with customers. You cross-sell third-party products on your card for many years. But these joint ventures with Delos, with Fioneer are slightly new. Can you talk about the scope? Would you be willing to do these in a much grander scale thinking of network of networks, would you be willing to partner more? And what's the risk of losing control if you're sort of pooling resources to save costs to a degree, I'm thinking back many years to Commerce One. Just some context on how you think of that risk reward. And then a separate one for Julia, just Julia and Sabine really, I mean, you've been at SAP for not 2 years, not 18 months yet. What are the biggest changes you've made? And I guess, Julia, marketing has never been a board seat for. So what are the significance of that and the sort of latitude of change that you've brought about?

Yes. Perhaps I can start and then please throw my colleagues to chime in. Look, I think the joint venture route is not one that I would say is a suitable one for the lion's share of partnership opportunities that we have because the joint venture is always a complex undertaking. And at the end of the day, where it makes sense is if you can combine complementary strengths under one roof in a model that helps us to scale faster than otherwise. This is true and was true for the financial services industry because we could work with a partner that has specific competencies and is able to provide in this joint venture structure an amount of patient capital that otherwise in our portfolio priorities against 25 different industries, we could not have sensibly provided. However, that is a very specific scenario. Clearly, in other industries, we have, for example, already a much broader scope of capabilities to which we can incrementally add. And their working through some of the edge capabilities in a classical partnership is something that would typically make a lot more sense. So I think you should not expect SAP now to branch out in dozens of different areas through the setup of joint ventures. I think the FSI space was a very specific one where the, let's say, the arguments for going down this route were particularly strong. That would not be the case in a lot of other industries, for example.

On the other part of the question, from a Board seat perspective, I would say, I think maybe the Genesis made me, Christian probably knows as well. But the delta between the value that SAP is providing and what people know about SAP is a pretty big gap. And so I think there's a real opportunity, and hence, I think an additional investment to say incredible capability, incredible value we're giving customers. And most people just believe we have -- we're an old ERP company. So closing that gap and shifting the perception and helping people really recognize this incredible portfolio we have is a huge opportunity for value creation and understanding of what we can do for the broader world in the community and even in sustainability. In the first year, focus has been a couple of things. One, shifting really into performance marketing, not just brand marketing, and that's really been in partnership with start-up how do we drive true end-to-end demand into sales and measure customer lifetime value from the minute they learn about SAP to the minute sales take it and run with it on that front. So building that muscle up in an end-to-end way. And then the second part of like a remit is around solution management. And that's making sure that as we think about our portfolio, what we're building, where we're focusing, where we're defocusing is based on very much a market-led orientation. We have great technology innovation. We have great customer signal, but balancing that with overall market demand, what's the competition doing? What are the big secular shifts and making sure we're placing our investments aligned with that. So those are the kind of 2 big focus areas.

And maybe picking up from there on my side, I would define my role actually as sort of focusing on our own transformation journey, both in terms of making sure we have the right talent, the right skills, providing the right learning opportunities into our ecosystem to all the way, making sure we're really clear and focused on what are the capabilities we need to build on the process side, on the technology side for us internally and how do we actually get on a -- like on an accelerated internal business transformation journey. The journey that so many customers of us are on. And obviously, our job is to be a set to really think ahead and sort of being like that role model and the thought leader around it. And that's the job. And in terms of the key things, I mean, clearly, it's certainly been around, again, talent, revamping, learning, looking at a lot of the cultural evolution and driving a lot of the clarity on the focus areas on the business transformation side.

And maybe also to Julia and Sabine, what we should not underestimate -- so also all the work -- the 2 board areas doing on the commercial side, because when we see we are completely unleveraged today on how we're going to bundle and commercialize our solutions because sometimes you can bundle them really well. When you talk about the services cloud, you can combine asset management with the professional services side as this is a natural connection oftentimes on the analytics side, where can we embed analytics to come to higher cross-sell rates. And this is also work what Julia and Sabine are driving inside SAP to also -- which is highly beneficial then also on the growth side of the house.

We have time for one last question.

Lucky me. Raimo Lenschow from Barclays here. And maybe it's actually a wrap-up question. As we kind of have been back here at the conference and kind of seen the customers talking about the system integrators. It does look like the sentiment has changed towards understanding rights better as not a lift and shift, but more a transformational project. But also on the SI side, there seems to be a lot more buy-in into this a lot more excitement around that. Can you maybe speak about the journey that the customers and the SIs had to go through to kind of get to this point?

Yes, I can quickly start. I mean, first of all, Sabine has bought and plays a vital role in that and the learning because for a partner who modified ERPs for many years on NET VIVA, it's also a transformation. Yes and you cannot expect you launch wise, and everyone just and say, "Hurray, we just waited for that." So it's also an enablement side of health. We're putting so much efforts in the training, in the certification and really help them. And of course, Juergen and team co-innovating API, so to really make it the best experience. On the partner reception someday, that was not maybe because it was me, but there was not one partner who said to me, they all started introduction, Christian. We built everything on BTP. I said, here we go finally. And on the -- you heard Accenture, you heard Deloitte, it's so important that they are with us on that. And you are wide, it was not perfect from day 1 on, but who is perfect with the ecosystem of 23,000 partners that takes time, but we are getting there. And absolutely, the ecosystem is with us.

Yes. I'd probably add 2 things on the ecosystem that we've seen. First of all, we've identified new revenue models for them that they didn't in the past. The industry cloud, the platform and our willingness to open that up and us actually be a route to market for them rather than the other way around. That's actually been a really interesting because they're seeing new ways of being able to derive revenue streams that don't rely on the amount of hours clocked in a transformation program. That's been led to their willingness to be more proactive because they understand that's a cloud model. And the second is an understanding and a patience that we're forcing not just SAP, the industry is forcing them to change their business model as well. And so it is not so much about RISE. The way I was always interacting was, well, how do I now come up with a new model? What's my role? How do I differentiate myself and that takes them time to go through that. And there was a bit of an iterative process that we've been through. So the mood has changed, but also this structure now they've now got clear business models. They now understand how they're going to monetize and differentiate and they're coming now back to us and saying, "Here's now what we expect of you to help us further expand upon" that new ways Christian mentioned before, the commercial models that Julia and Sabine are doing. Well, actually, that's not just with our customers. It's also our partnership models to commercialize to make it easier for them to leverage SAP technology versus maybe something else. So I think that acceleration, I feel like we've got some good muscle memory that we're running with now with the ecosystem.

Very good. Thank you. Thanks to the Executive Board for your commitment and your engagement with the investors and the financial community. I hope this was a constructive dialogue throughout the day and a productive time spent. It was a pleasure to have you today. We still have some activities to go, but we'll keep the dialogue. Thanks for the people online and all, let's say, the dialogue that we have to today. It was a pleasure having you. Thank you. And we are looking forward to talk to you again in July for our earnings. Thank you.

Thanks a lot, everyone.

Thank you.

Thank you.