SAP is betting that its future lies in the cloud. While the company still books just 5% of its global revenue from cloud services, SAP is putting the cloud at the center of its growth strategy, unveiling new business models and initiatives aimed at increasing the cloud consumption of its applications. To facilitate this, SAP is making it easier for clients and partners to embrace the cloud. For example, its cloud extension policy allows customers to reallocate existing license seats to a cloud subscription. Clients can unlock the stored value of unused licences and put it to work, giving end users access to meaningful applications in the cloud.
What It Means
SAP has a number of cloud services on offer, and the changes the company is making to pursue its high-growth strategy in Asia will not only transform SAP’s business model, it will also change how its partners do business. Client organizations in Asia will also have to adapt and:
Telstra hosted its annual analyst event in Sydney on October 23 and 24. In his keynote address, CEO David Thodey compared Telstra’s customer advocacy journey to a triathlon that the firm has just begun, which we believe it a fitting analogy for Telstra’s progress on the path it has set for itself. The company is clearly in the race and making progress, but still has many miles to go.
While the company shared a broad spectrum of initiatives, our main observations are that Telstra:
Has made clear progress since our check-in last year, but its transformation remains a work in progress. Telstra is no different than other incumbent telcos working to transform beyond traditional — and declining — sources of revenue. Its dominant position in Australia is secure, but its prospects in new market categories inside and outside of Australia are less certain. We do not believe that Telstra is particularly innovative compared with service providers in the US or Europe, but we do believe that it has a viable transformation strategy and is making progress. Its progress in the Australian media and entertainment industry, including its Foxtel investments, is impressive — it has built a large IP-based digital media file exchange platform to serve global broadcasters and content providers.
Carrier Ethernet aims to provide users with a wide-area service to connect sites, in the same way that asynchronous transfer mode (ATM), Frame Relay, and X.25 services from carriers have done in the past. While end user demand for carrier Ethernet services in Asia is relatively small, it’s growing year over year and is having an impact on service providers’ bottom lines: Carrier Ethernet services currently account for 8% to 10% of service providers’ total connectivity revenues in the region.