SAP CEO McDermott to Unveil Six-Year Plan in JanuaryAaron Ricadela and Cornelius Rahn
SAP SE plans to detail a six-year plan in January as the world’s largest maker of business applications seeks to address investor concerns about slowing growth.
The plan will include targets for traditional software and cloud-computing sales, as well as profit for each year through 2020, Chief Executive Officer Bill McDermott said today at a conference organized by Morgan Stanley in Barcelona.
“You’ll see exactly what our plan is to grow the core, to grow the cloud, and to grow the operating income,” said McDermott, who had shared the top job with Jim Hagemann Snabe until May this year. Snabe has moved to Walldorf, Germany-based SAP’s supervisory board.
SAP, which competes with Oracle Corp., Salesforce.com Inc., and upstart companies such as Workday Inc. in software that runs businesses’ finance, personnel and manufacturing, may increase sales by 4 percent this year and 7 percent next year, compared with more than 10 percent annual growth in 2010 to 2012, according to data compiled by Bloomberg.
The company is selling more of its software through an Internet-delivered cloud model, which has the effect of deferring revenue into future years.
“I expect cloud to grow really fast,” McDermott said.
SAP cut a key profitability forecast at the beginning of the year, and its stock has dropped 12 percent this year.
McDermott said SAP will take a breather from acquisitions. In September, it agreed to buy Concur Technologies Inc., a maker of software that helps companies manage expense reports, for $7.4 billion and SAP has made smaller deals this year.
“We are going to step it down,” the CEO said today. “We have what we need.” SAP has announced more than $20 billion of deals since McDermott became co-CEO in 2010. “If we do something it will be tuck-in in its orientation, and it will probably put you to sleep,” he said.
The shares rose 0.5 percent to 55.02 euros at 12:40 p.m. in Frankfurt.