Business software group SAP signs three-year cloud contract with Microsoft

New partnership will help large clients to move services into the cloud

Business software group SAP has reached a three-year deal with Microsoft to help its large enterprise customers move business processes into the cloud.

The partnership, dubbed “Embrace”, will help clients to run operations hosted at remote servers supported by the German software giant’s flagship S/4HANA database. It is designed to address customer complaints that it is too hard to move from SAP’s on-premises model to remotely hosted services.

The announcement comes after SAP’s long-time chief executive Bill McDermott stepped down for new co-chief executive officer Jennifer Morgan.

The partnership enhances SAP’s close relationship with Microsoft and its Azure cloud division. The Walldorf-headquartered company also works with Google and Amazon Web Services in the cloud, as CNBC reports.

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SAP’s cloud gross margins picked up by 5.4 percentage points to 69 per cent in the third quarter, compared with a 2023 target of 75 per cent.

In the third quarter, SAP reported a 10 per cent increase in revenue and a 15 per cent rise in operating profit, after adjusting one-off items and currencies, helping it to achieve an expansion of 1.7 per cent in its operating margins.

SAP is a multinational corporation that makes enterprise software to manage business operations and customer relations. It has regional offices in 180 countries.

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