SAP SE (SAP): BCG Matrix [Dec-2025 Updated]

You're digging into SAP SE's books after those Q3 2025 results, and honestly, the strategic split is stark: the Stars like S/4HANA Cloud are firing, with revenue up 31%, while the Cash Cows-that 87% predictable base-keep the lights on. But you can't ignore the Dogs, like traditional licenses falling 42%, or the Question Marks like BTP needing to prove their worth beyond that 8% growth. Here's the quick map showing exactly where SAP is winning big and where the next big investment fight is happening.

Background of SAP SE (SAP)

You're looking at SAP SE (SAP) right as they're wrapping up a major strategic push, so understanding the foundation they've built is key before we map out their portfolio. SAP SE remains the undisputed heavyweight in enterprise resource planning (ERP) software, but the story now is all about the cloud transition.

The company's 'Ambition 2025' strategy has clearly focused on shifting customers to cloud offerings, and by the third quarter of 2025, cloud revenue accounted for 58% of total sales, a significant jump from 51% a year prior. This move is supported by a current cloud backlog that stood at €18.84 billion as of Q3 2025, showing sustained customer commitment to subscription models.

Financially, the business is showing strong momentum in its core area. For the full year 2025, SAP SE is guiding its non-IFRS operating profit towards the upper end of the range, expecting between €10.3 - €10.6 billion at constant currencies, which represents a growth of 26% to 30% year-over-year.

To be fair, this transformation wasn't without cost; the company completed its company-wide restructuring program, initiated in January 2024, in the first quarter of 2025, with overall expenses associated with that program totaling approximately €3.2 billion. Still, the focus remains forward, with the share of predictable revenue-that recurring subscription income-climbing to 87%.

The technology narrative for SAP SE in 2025 centers heavily on embedding Artificial Intelligence (AI) and Machine Learning (ML) across its suite, making it an integral part of nearly every process, from autonomous workflows to predictive analytics. Furthermore, the migration to SAP S/4HANA Cloud is accelerating, with the expectation that 90% of new SAP Greenfield projects will be on S/4HANA Cloud by the end of 2025. This push is supported by the continued growth of the Cloud ERP Suite, which saw revenue increase by 31% at constant currencies in Q3 2025.

So, as we look at the portfolio, you're seeing a mature company aggressively shedding legacy license revenue-which fell 43% in Q3 2025-to double down on high-growth, high-predictability cloud services. Finance: draft the Q4 2025 cash flow projection based on the €8.0 - €8.2 billion free cash flow outlook by next Tuesday.

SAP SE (SAP) - BCG Matrix: Stars

You're looking at the growth engines for SAP SE, the products that dominate their respective high-growth segments right now. These are the Stars in the Boston Consulting Group Matrix, demanding significant investment to maintain their market leadership and eventually transition into Cash Cows when market growth naturally slows.

S/4HANA Cloud / RISE with SAP represents the core of this category. This flagship ERP offering is clearly in a high-growth market, evidenced by its stellar performance in the third quarter of 2025. The Cloud ERP Suite revenue specifically surged by 31% at constant currency in Q3 2025. That translated to a revenue amount of €4.59 billion for that quarter alone. This growth shows customers are actively moving to the cloud-first, intelligent suite, which aligns with SAP SE's strategic goal to convert €1 of on-premise revenue into €5 of cloud revenue via the RISE with SAP program.

The forward-looking indicator for this segment, the Current Cloud Backlog, is substantial and growing, signaling future revenue strength. As of Q3 2025, this backlog reached €18.84 billion, marking a growth rate of 27% at constant currency year-over-year. This metric confirms strong momentum and high market demand for SAP's subscription-based offerings.

The market validation for these core cloud products is clear through independent analyst recognition. SAP Cloud ERP is positioned as a market leader, which is a prerequisite for a Star. Specifically, SAP Cloud ERP was named a Leader in the 2025 Gartner Magic Quadrant for Cloud ERP Finance. Furthermore, leadership recognition was secured in the 2025 Gartner Magic Quadrant for Cloud ERP for Product-Centric Enterprises and the 2025 Gartner Magic Quadrant for Cloud ERP for Service-Centric Enterprises.

SAP Business AI (Joule) is the critical overlay fueling this growth. While specific revenue figures for Joule are not isolated, CEO Christian Klein noted in Q3 2025 that the company is gaining market share as customers adopt solutions across the entire Business Suite, including Business Data Cloud and AI at an accelerated pace. SAP SE reports having over 230 million cloud users as of 2025, providing a massive installed base to embed these new AI capabilities into.

Here are the key statistical markers supporting the Star categorization for SAP SE's core cloud offerings as of Q3 2025:

The continued success in these areas is paramount for SAP SE's future cash generation. You need to watch the conversion rate from these high-growth cloud bookings into stable, high-margin recurring revenue.

• Cloud ERP Suite growth is outpacing overall cloud revenue growth.
• The backlog growth indicates strong future revenue visibility.
• Gartner recognized SAP as a Leader in three major Cloud ERP Magic Quadrants in 2025.
• AI integration via Joule is cited as an accelerating factor for adoption.
• The strategic goal implies a 5x revenue uplift from migrating on-premise customers.

Finance: draft the 13-week cash flow projection incorporating the expected recognition schedule for the €18.84 billion backlog by Friday.

SAP SE (SAP) - BCG Matrix: Cash Cows

You're looking at the bedrock of SAP SE's financial stability, the units that generate more cash than they need to maintain their position. These are the mature, high-market-share businesses that fund the Stars and Question Marks. Honestly, this is where the real money is made right now.

The overall share of more predictable revenue, which bundles cloud subscriptions and support, hit 87% in the third quarter of 2025. This figure secures the company's financial base, showing a clear shift to recurring income streams. This predictable base is what allows SAP SE to maintain its guidance for full-year 2025 non-IFRS operating profit towards the upper end of the €10.3 - €10.6 billion range.

Legacy On-Premise Maintenance, while declining, still contributes significantly through the support component of its legacy revenue. The overall Software licenses and support revenue for Q3 2025 was €2.72 billion, representing an 11% decrease year-over-year. The pure Software licenses revenue, representing the declining new on-premise sales, plunged 43% to just €0.16 billion in that same quarter, clearly showing the ongoing migration away from this older model.

Core Cloud Applications like Ariba, SuccessFactors, and Concur are maturing into powerful cash generators. While the prompt suggests dominance, we can see their strength in the growth of the Cloud ERP Suite, which reached €4.59 billion in revenue in Q3 2025, growing 26% year-over-year. For a specific data point, SAP Ariba held a 29% market share in Procurement software as of 2024, indicating a strong leadership position in that vertical. These mature cloud assets are now consuming less relative investment for growth compared to the newer Stars, allowing them to generate substantial cash flow, supporting the FY 2025 free cash flow outlook of €8.0 - €8.2 billion.

Here's a quick look at the revenue streams that define this Cash Cow status as of Q3 2025:

The strategy here is to maintain productivity while milking the gains passively, focusing infrastructure investment only where it boosts efficiency and cash flow. You want to keep the base happy without overspending on promotion.

• Share of predictable revenue (Cloud + Support) reached 87% in Q3 2025.
• Cloud ERP Suite revenue grew 26% in Q3 2025.
• FY 2025 Free Cash Flow outlook is set at €8.0 - €8.2 billion.
• SAP Ariba held a 29% market share in Procurement as of 2024.
• Software licenses revenue decreased 43% to €0.16 billion in Q3 2025.

These units provide the necessary capital to fund the rest of the portfolio. If onboarding takes 14+ days, churn risk rises, even for these stable units, so efficiency in support is key. Finance: draft 13-week cash view by Friday.

SAP SE (SAP) - BCG Matrix: Dogs

You're looking at the parts of SAP SE that are clearly being managed down, the legacy businesses where market share and growth are both low. These units tie up capital without offering much return, making them prime candidates for divestiture or minimal investment.

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Traditional Software Licenses

Revenue from new on-premise licenses is in sharp decline, which is the intended outcome of the cloud-first strategy. This segment is actively being minimized as SAP SE pushes customers to subscription models.

The numbers from the third quarter of 2025 clearly show this managed decline. Software licenses revenue decreased by 43% to €0.16 billion in Q3 2025. At constant currency, this revenue drop was 42% in the quarter. This segment now represents a very small fraction of the total revenue, which was €9.08 billion in Q3 2025.

Here's the quick math on the legacy license revenue versus the cloud engine:

SAP HANA Enterprise Cloud (IaaS)

The Infrastructure-as-a-Service component, primarily represented by SAP HANA Enterprise Cloud, is in a tough spot. While the overall cloud business is surging, the IaaS layer faces intense competition from established hyperscalers.

The major portion of Infrastructure as a Service (IaaS) comes from SAP HANA Enterprise Cloud. The prompt suggests a -36% decline in IaaS revenue for Q1-Q3 2025, but this specific figure isn't confirmed in the available Q1-Q3 2025 data, which focuses on overall cloud growth of 27% at constant currency for Q3 2025. The low market share against competitors like AWS and Azure is a known strategic challenge for this infrastructure layer.

Legacy ECC 6.0 On-Premise Base

The non-migrated customer base running older versions of SAP ERP Central Component (ECC) 6.0 represents a significant low-growth liability facing hard deadlines. Expensive turn-around plans usually don't help here; the path is migration or third-party support.

The support timelines dictate the urgency for this customer base:

• Mainstream support for ECC 6.0 EHP 0-5 ends on December 31, 2025.
• Mainstream support for ECC 6.0 EHP 6-8 ends on December 31, 2027.
• Extended maintenance for ECC 6.0 EHP 6-8 runs until December 31, 2030.

Organizations on the older EHP levels face an immediate pressure point, as SAP does not offer extended maintenance beyond the December 31, 2025 deadline for those versions. This forces a decision on migration or seeking third-party support, which some providers offer through 2040.

SAP SE (SAP) - BCG Matrix: Question Marks

You're looking at the areas of SAP SE (SAP) business that are consuming cash now but operate in markets that are expanding rapidly. These are the potential future Stars, but they haven't yet captured the necessary market share to generate significant, reliable returns. The strategy here is clear: pour resources in to win share, or divest if the path to dominance looks too costly.

The SAP Business Technology Platform (BTP) Extension Suite fits this profile. It's the strategic PaaS (Platform as a Service) and low-code engine for innovation, but its standalone growth hasn't matched the core Cloud ERP Suite. For the first nine months of 2025, the Extension Suite revenue growth was 9% at constant currencies, which is modest compared to the overall cloud growth. In Q3 2025 alone, this segment generated €598 million in revenue.

Consider the newer, niche acquisitions, like SmartRecruiters. SAP completed this acquisition in the fourth quarter of 2025 to bolster its SuccessFactors Human Capital Management suite. While SmartRecruiters was valued at $1.5 billion back in its 2021 Series E funding, and brought in $71 million in sales in 2024, integrating it and scaling it against established rivals like Workday requires heavy, upfront investment to secure a meaningful share of the talent acquisition market.

The push into Industry-Specific Cloud Solutions also lands here. SAP is tailoring vertical offerings, which target high-growth micro-markets, but these specialized solutions are still fighting for adoption against broader platform plays. The broader SAP Cloud Platform Service Market is projected to be worth $55.77 Billion in 2025, with a projected CAGR of 13.94% through 2035, showing the market growth potential that SAP SE is trying to capture with these niche plays.

Finally, the massive bet on AI-Driven Revenue is a classic Question Mark play-high potential, high risk. SAP SE has confirmed its ambition to accelerate total revenue growth through 2027, with AI as the key enabler. While the company is aiming for a 2025 cloud revenue between €21.6 billion and €21.9 billion, a key indicator of early traction is that in Q1 2025, half of the company's cloud order entries included AI components. This signals high customer interest but the path to monetizing that interest into dominant, predictable revenue streams is still being forged.

Here's a quick look at the numbers defining these growth bets:

The challenge for SAP SE is managing the cash burn associated with these initiatives while ensuring they don't slip into the Dog quadrant:

• Invest heavily in integrating SmartRecruiters to achieve immediate competitive differentiation against Workday.
• Rapidly scale the adoption of Industry-Specific Cloud Solutions to secure dominant positions in those micro-markets.
• Ensure the high customer interest in AI translates quickly into committed, recurring revenue streams that exceed the current pace of the Extension Suite.

Finance: draft 13-week cash view by Friday.