SAP SE (SAP): Business Model Canvas [Dec-2025 Updated]

You're looking for the real story behind SAP SE's current strategy, and honestly, after two decades analyzing enterprise software, I can tell you it's a massive, calculated pivot to the cloud and Business AI right now. Forget the old license sales model-that stream is shrinking fast, down 43% in Q3 2025-because the future is all about the subscription backlog, which hit €18.8 billion by Q3 2025, driving that 2025 revenue forecast of €21.6bn - €21.9bn. This Business Model Canvas cuts through the noise, showing exactly how SAP SE is using its massive customer base and the RISE with SAP offering to force this transformation, which is a huge undertaking for their key partners and customers facing the 2027 deadline. Dive in below to see the precise structure of this multi-year shift, because understanding this is key to valuing the company moving forward; it's defintely a make-or-break moment for them.

SAP SE (SAP) - Canvas Business Model: Key Partnerships

You're looking at the ecosystem that helps SAP SE deliver its cloud-first strategy, so the partners aren't just vendors; they're co-delivery engines. Honestly, the scale of these alliances is what moves the needle on their $\text{€21.6}$ to $\text{€21.9}$ billion projected 2025 constant currency cloud revenue.

Hyperscalers for Cloud Infrastructure Hosting

The relationship with the major hyperscalers is foundational to the RISE with SAP and GROW with SAP offerings. Cloud revenue for the first half of 2025 hit 10.12 billion euros, showing the direct impact of this infrastructure reliance. The share of predictable revenue, which is heavily subscription-based cloud income, stood at 87% as of Q3 2025.

Global System Integrators (SIs) for Complex Migrations

The success of complex S/4HANA migrations is directly tied to the SI network. The global market for these services is estimated to grow from $16.50 billion in 2024 to $21.23 billion in 2025. SAP specifically highlighted partnerships with firms like Accenture in its Q2 2025 results statement. This channel is critical for driving the adoption of the core ERP suite, which saw revenue growth of 30% year-over-year in Q2 2025.

• Capgemini, Deloitte, NTT DATA are key players in this delivery ecosystem.
• The Global SAP S/4HANA Systems Integrator Services market is projected to be worth $18,910.7 Million by the end of 2025.

Strategic AI/Data Partners to Enhance Business AI Capabilities

SAP is embedding generative AI across its portfolio, with the Joule assistant being central. SAP pledged to equip 12 million people worldwide with AI-ready skills by 2025. The goal is to drive productivity gains of up to 30 percent with Business AI. This requires deep integration with AI/Data specialists.

• Databricks: Partnership via SAP Business Data Cloud unifies data for AI.
• Perplexity: Collaboration enhances Joule's ability to draw on structured and unstructured data.
• Mistral AI: Partnership formed to push generative AI limits at the enterprise level.
• Snowflake: New SAP Business Data Cloud Connect partnership announced at SAP TechEd 2025.

Alibaba Cloud for Certified Hyperscaler Services in the China Market

The strategic alliance with Alibaba Group focuses on the China market, with planned expansion to Southeast Asia, the Middle East, and Africa. Alibaba Cloud is a certified hyperscaler, allowing deployment of SAP Cloud ERP and SAP Cloud ERP Private solutions. SAP is exploring the integration of Alibaba's large language model, Qwen, into the generative AI hub within SAP AI Core for China.

Alibaba Group itself is deploying several SAP solutions, including SAP Cloud ERP Private for its own infrastructure, alongside SAP Business AI and SAP Ariba.

Value-Added Resellers (VARs) and Regional Partners

These partners are key for reaching the mid-market segment, which often requires more localized sales and implementation support than the large enterprise deals managed by the top-tier SIs. The overall cloud and software revenue for SAP is projected to be between €33.1 billion and €33.6 billion for 2025. The VAR channel helps secure the portion of this revenue derived from smaller and medium-sized customers.

Finance: draft 13-week cash view by Friday.

SAP SE (SAP) - Canvas Business Model: Key Activities

You're looking at the core engine driving SAP SE's current performance, which is all about shifting revenue to the cloud and embedding intelligence everywhere. Honestly, the numbers tell a clear story of aggressive transformation.

Research and Development (R&D) focused on embedding Business AI (Joule) into core applications

SAP SE is definitely pouring resources into making its software smart. For the twelve months ending September 30, 2025, Research and Development expenses hit $7.309B. That's a 3.52% increase year-over-year. To put that in perspective for the third quarter alone, R&D expenses were $1.920B. This investment fuels the Business AI push, with Joule, the AI copilot, being central. By Q1 2025, about 50% of SAP cloud orders included an AI component, which is a direct result of this focus. Furthermore, SAP signaled that over 70% of new innovations for S/4HANA in 2025 were expected to include AI. That's how you make the core ERP intelligent.

Accelerating the RISE with SAP and GROW with SAP cloud migration programs

This migration is the biggest lever for SAP SE's recurring revenue. In Q3 2025, total cloud revenue climbed to €5.29 billion, marking a 22% increase year-over-year. At constant currencies, that growth was 27%. The Cloud ERP Suite, which is the primary vehicle for RISE and GROW, generated €4.59 billion in Q3 2025, up 26% year-over-year. The company's full-year 2025 cloud revenue guidance is toward the lower end of €21.6-21.9 billion, which represents a 26% to 28% increase over 2024's figure of €17.14 billion. The current cloud backlog, which shows future committed revenue, soared to €18.8 billion, up 23% year-over-year. The strategic goal here is aggressive: convert €1 of on-premise revenue into €5 of cloud revenue via RISE with SAP. Still, the migration scale is huge; only approximately 40% of core ERP customers had completed or started their S/4HANA cloud migration by Q2 2025.

Developing and maintaining the S/4HANA Cloud ERP suite and the Business Technology Platform (BTP)

The S/4HANA Cloud ERP Suite is the product seeing the highest growth velocity, with revenue up 26% in Q3 2025. This platform is evolving into an intelligent, adaptive business platform, moving away from legacy constraints. Crucially, the Business Technology Platform (BTP) is the designated innovation engine. It's the foundation where custom developments and AI models are built, keeping the core S/4HANA clean for easier upgrades.

Managing a global partner ecosystem for sales, service, and solution delivery

SAP SE relies heavily on its network to reach the market; partners are not just an add-on, they are essential. The ecosystem includes over 25,000+ partner organizations operating in 140 countries. These partners are responsible for driving 80% of new customer wins and 90% of implementations. The customer base itself is massive, with nearly 92% of the Forbes Global 2000 and over 90+ of the world's largest 100 companies using SAP solutions across 180 countries.

Executing the 2024/2025 workforce transformation program to capture organizational efficiencies

The company executed a major restructuring to align skills with the AI and cloud focus. This company-wide transformation program, announced in January 2024, concluded as planned in the first quarter of 2025. The total expenses associated with this program were approximately €3.2 billion. Restructuring payouts totaled €2.5 billion in 2024 and €0.7 billion across the first nine months of 2025, with a final payout of about €0.1 billion expected in Q4 2025. The initial plan affected around 8,000 positions, covered mostly by voluntary programs and internal re-skilling. Despite the cuts, SAP expected to end 2024 with headcount similar to the nearly 108,000 full-time employees it had at the end of 2023.

The share of more predictable revenue, which is heavily weighted toward cloud subscriptions, increased by 2 percentage points to 87% in Q3 2025. Non-IFRS operating profit for Q3 2025 was up 14% year-over-year, reaching €2.57 billion.

• RISE with SAP conversion goal: Convert €1 on-premise revenue into €5 cloud revenue.
• S/4HANA Cloud Migration Status: Approximately 40% of core ERP customers have started or completed migration.
• Partner-driven New Wins: 80% of new customer wins are driven by partners.
• AI Component in Cloud Orders: About 50% of cloud orders included an AI component by Q1 2025.

SAP SE (SAP) - Canvas Business Model: Key Resources

You're looking at the core assets that power SAP SE's engine as of late 2025. These aren't just line items; they are the competitive moats that generate that massive recurring revenue stream you see in the backlog figures.

Proprietary Technology Foundation

The in-memory database, SAP HANA, remains central, but the strategic focus has clearly shifted to the Business Technology Platform (BTP), which underpins the cloud transition. While specific BTP customer counts for late 2025 aren't public in these reports, we know the platform is critical for integrating data and AI across the suite. The overall cloud business, which relies heavily on these technologies, is showing serious momentum.

Intellectual Property (IP) of the Integrated Suite

The value here is the deep, integrated IP within the S/4HANA Cloud ERP suite. This isn't just about having the code; it's about the embedded business processes that run the world's largest enterprises. The growth in this specific area is telling: Cloud ERP Suite revenue was up 26% nominally in Q3 2025, or 31% at constant currencies.

Massive, Captive Global Customer Base

This is where the scale really hits home. As of 2025, SAP serves approximately 425,000 customers worldwide. The depth of penetration among the largest global entities is staggering. Honestly, it's hard to find a major player not running on SAP.

Here's a quick look at the customer footprint:

• SAP customers generate 84% of total global commerce.
• 98 of the 100 largest companies in the world are SAP customers.
• 85 of the 100 largest companies in the world are SAP S/4HANA customers.
• Approximately 80% of SAP's customers are SMEs (Small and Medium-sized Enterprises).

Global Network and Partner Ecosystem

The network of certified consultants and the broader partner ecosystem is the necessary human layer that implements and supports this massive installed base. Without this network, the IP and software are just lines of code. This ecosystem is crucial for driving adoption of the cloud offerings, like RISE with SAP.

Future Predictable Revenue

The current cloud backlog is the clearest financial indicator of future resource utilization and revenue predictability. For Q3 2025, this figure stood at €18.8 billion. That represents a year-over-year increase of 23%, or 27% at constant currencies. Management is executing against this pipeline, updating the full-year 2025 cloud revenue outlook to be towards the lower end of the €21.6 - €21.9 billion range at constant currencies.

You can see how the key financial metrics tie directly to the strength of these resources:

Finance: draft 13-week cash view by Friday.

SAP SE (SAP) - Canvas Business Model: Value Propositions

You're looking at the core promises SAP SE is making to its customers as of late 2025. These aren't abstract goals; they are backed by massive investment and measurable results in the shift to the cloud and AI.

Integrated, mission-critical ERP for core business processes (Finance, Supply Chain, HR)

SAP SE continues to anchor its value proposition in providing the integrated, mission-critical Enterprise Resource Planning (ERP) backbone for the world's largest businesses. This is evident in the performance of its core cloud offering. For the third quarter of 2025, the Cloud ERP Suite revenue grew 31% at constant currencies, reaching €4.59 billion. This sustained growth shows customers are relying on the unified platform for Finance, Supply Chain, and HR processes. The overall shift to a subscription model is clear: by Q3 2025, the share of more predictable revenue stood at 87%. This contrasts sharply with the legacy business, where software licenses revenue decreased by 43% in Q3 2025 to just €0.16 billion.

The urgency to adopt this integrated core is driven by the sunsetting of older systems. Mainstream support for SAP ERP Central Component (ECC) ends on December 31, 2027. To put the scale of the remaining work in perspective, while approximately 37% of worldwide ECC customers had started their transition by early 2025, industry data from mid-2024 suggested over 60% of ECC customers had yet to purchase S/4HANA licenses.

Embedded Business AI and Generative AI (Joule) for automated workflows and insights

The intelligence layer is now inseparable from the core offering. SAP SE is pushing its generative AI assistant, Joule, to be omnipresent. By the end of 2025, SAP Business AI is on track to feature more than 400 AI features, adding to the over 1,900 existing Joule skills. This isn't just about chatbots; it's about deep process automation. For example, demand planners using the generative AI summary embedded in Integrated Business Planning can see productivity in forecast analysis boosted by 25%.

The integration strategy is aggressive. The bidirectional integration of Joule and Microsoft 365 Copilot was expected to be complete in Q3 2025, creating a unified AI experience across systems. This focus on embedded, context-aware AI is a primary driver for cloud adoption, as many of these features are exclusive to the cloud versions of S/4HANA.

Here's a snapshot of the AI integration:

• Joule Skills: Over 1,900 available as of late 2025.
• Total AI Features: Target of over 400 by year-end 2025.
• Copilot Integration: Bidirectional link with Microsoft 365 Copilot targeted for Q3 2025 completion.
• Productivity Gain: 25% boost in forecast analysis productivity noted in one use case.

Simplified cloud migration and adoption via the RISE with SAP all-in-one subscription model

The RISE with SAP offering is the primary vehicle for simplifying the move away from legacy on-premises systems. It bundles SAP S/4HANA Cloud, infrastructure, and transformation tools under a single contract, aiming for a 'one hand to shake' model. This simplification is critical given the complexity of customer landscapes; thousands of customers are already leveraging these cloud solutions.

The financial success of this strategy is reflected in the overall cloud performance. For 2025, SAP forecasts cloud revenue to hit between €21.6 billion and €21.9 billion at constant currencies, representing 26% to 28% growth. By Q3 2025, cloud revenue accounted for 58% of total sales, up from 51% the prior year. This recurring revenue stream underpins the company's stability, with the current cloud backlog growing 27% year-over-year in Q3 2025 to €18.8 billion.

Digital sovereignty and compliance solutions, especially for highly regulated European sectors

You're seeing a massive strategic pivot toward data residency and regulatory control, especially in Europe. SAP SE has committed a €20+ billion investment to its Sovereign Cloud initiative. This is a direct response to global data localization trends and regulations like GDPR. In November 2025, SAP unveiled the EU AI Cloud, which unifies its sovereign AI and cloud offerings, ensuring EU data residency and full sovereignty.

The market opportunity is huge, with the sovereign cloud market projected to reach €648.87 billion by 2033. SAP is backing this with concrete infrastructure spending, including €2 billion in Germany and €250 million in the UK. For highly regulated industries, running the Cloud ERP Private edition can deliver tangible ROI, with organizations realizing $8.9 million in annual benefits.

The value proposition here is control without sacrificing innovation:

Industry-specific cloud solutions that adhere to best practices and regulatory needs

Beyond the core ERP, SAP SE is delivering tailored industry solutions that bake in best practices and compliance requirements from the start. This is crucial for sectors where deviation from process standards is costly or illegal. For instance, the Cloud ERP Suite growth of 31% in Q3 2025 suggests broad adoption across these specialized needs.

The AI capabilities are also being tailored. The new Shop Floor Supervisor Agent proactively manages factory floor disruptions by analyzing issues and recommending actions, a clear industry-specific application for manufacturing. Furthermore, the Sovereign Cloud offerings, which include solutions like SAP Business Technology Platform (SAP BTP), are designed to support specific industry needs in regulated environments like defense and healthcare, ensuring continuous innovation cycles are compliant. The company's 2025 non-IFRS operating profit guidance is toward the upper end of €10.3 billion to €10.6 billion at constant currencies, showing that this specialized, high-value delivery is translating to profitability.

Finance: review the Q4 2025 pipeline conversion rate against Q3's €18.8 billion current cloud backlog by next Tuesday.

SAP SE (SAP) - Canvas Business Model: Customer Relationships

You're looking at how SAP SE manages its vast and complex customer base as the 2027/2030 deadline looms. It's a multi-tiered approach, balancing high-touch service for the biggest players with scalable, partner-driven models for everyone else.

Dedicated, high-touch account management for large enterprise and strategic accounts.

For your largest, most strategic customers, the relationship is direct and intensive. This segment is heavily focused on driving adoption of the cloud suite, particularly through the RISE with SAP offering. The commitment here is significant; in Q2 2025, SAP noted that its RISE with SAP customers already represent a combined 40% of the world's Gross Domestic Product (GDP). This high-touch segment is where SAP focuses its most direct engagement to ensure successful, complex transitions.

Partner-led service and support for mid-market and regional customers.

SAP is actively scaling its service delivery by leaning on its ecosystem. For the mid-market, specifically accounts with revenues between $100 million and $500 million, SAP is expanding a partner-led model, sharing sales and implementation responsibilities. This strategy leverages the scale of the ecosystem, which comprises over 25,000 partners globally. This partner enablement is key to serving the fragmented mid-market efficiently.

Self-service and community support via SAP Support Portal and SAP Community.

For immediate, lower-complexity needs, SAP is heavily invested in automation and digital channels. Today, over 82% of customer issues are addressed via self-service channels. Furthermore, the integration of AI is designed to deflect support tickets, with AI-powered solution recommendations eliminating the need for at least 10% of cases being created in the first place. The operational stability underpinning this is evident; for instance, SAP achieved 100% uptime for SAP Commerce Cloud customers during the peak sales event of Cyber Week 2024.

Customer-specific transformation roadmaps driven by the looming 2027/2030 ECC support deadline.

The migration from SAP ECC is the single biggest driver of customer relationship activity. The deadlines create distinct customer paths, which you need to map clearly. Here are the key dates and implications as of late 2025:

The reality is that many customers are behind; data suggests that about 50% of ECC systems will not qualify for the 2027 extension. For those on EHP5 or earlier, maintenance stops at the end of 2025, affecting roughly 13,500 users. Even with the extension, industry models suggest only 57% of all original ECC customers will have completed their S/4HANA transformations by the end of 2027. For the most complex, SAP introduced the "SAP ERP, private edition, transition option" under RISE with SAP, intended to support migration beyond 2030 for select customers.

Premium Engagement and Advisory services for complex, multi-year cloud transformations.

The complexity of multi-year cloud transformations, often involving costs cited around €700 million or more by customers, necessitates high-value advisory services. SAP's overall financial health supports this focus on premium service delivery. In Q3 2025, SAP's Cloud revenue reached €5.29 billion, growing 27% at constant currencies. Services revenue for that quarter was €1.06 billion, up 6% year-over-year at constant currencies. The increasing reliance on subscription models is clear, with the share of more predictable revenue hitting 87% in Q3 2025. These advisory services help customers navigate the shift, for example, by using tools like Signavio to orchestrate transformations, as seen with BHP creating €500 million in value.

You should review your current advisory spend against the 87% predictable revenue share SAP is building.

SAP SE (SAP) - Canvas Business Model: Channels

You're looking at how SAP SE moves its value proposition-especially the cloud offerings-to the customer base as of late 2025. The channel strategy is clearly weighted toward recurring revenue streams, which is where the bulk of the company's current financial story lies.

The direct sales force is heavily focused on securing the large enterprise deals driving the RISE with SAP strategy. This is reflected in the performance of the core cloud offering. For the third quarter of 2025, the Cloud ERP Suite revenue, which underpins RISE with SAP and GROW with SAP, grew by a massive 31% at constant currencies, reaching €4.59 billion.

This focus on the cloud transition means the traditional direct sales channel is managing a managed decline in legacy product sales. Software licenses revenue in Q3 2025 plummeted by 42% at constant currencies, landing at just €0.16 billion. That's a clear signal of where the direct effort is concentrated.

The Global Partner Ecosystem (GPE) is critical for reach and implementation, even if the direct sales team closes the initial strategic contract. SAP highlighted significant partnership activity in its Q2 2025 results, specifically mentioning deals with Accenture and China's Alibaba. The overall shift to subscriptions means partners are essential for the implementation and expansion phases following the initial contract.

The entire revenue structure shows the channel success: the share of more predictable revenue, driven by cloud subscriptions, hit an impressive 87% as of the third quarter of 2025. This is the outcome of the channel strategy working to convert the installed base and capture new business through cloud contracts.

Here is a quick look at the financial shift underpinning the channel strategy as of the latest reported quarter and the full-year outlook:

For the mid-market and new customers, the GROW with SAP offering is the digital channel entry point, bundled within the high-growth Cloud ERP Suite segment. The success in securing future business through digital commitment is visible in the backlog figures. The current cloud backlog stood at €18.8 billion in Q3 2025, growing by 27% at constant currencies, which is the pipeline feeding these channels.

While specific revenue attribution from hyperscaler marketplaces isn't broken out, the overall cloud revenue growth of 26% to 28% is projected for the full year 2025, indicating strong consumption across all cloud pathways, including direct cloud consumption via platforms like AWS and Azure. The company's strategy is clearly about driving consumption through these modern, subscription-based channels.

• Cloud ERP Suite (RISE/GROW) accounted for 87% of Q3 2025 Cloud Revenue.
• Current Cloud Backlog growth in Q3 2025 was 27% at constant currencies.
• Software License revenue fell by 42% in Q3 2025 at constant currencies.
• The share of predictable revenue reached 87% by Q3 2025.

Finance: finalize the Q4 2025 revenue projection based on the updated full-year cloud guidance by end of day Monday.

SAP SE (SAP) - Canvas Business Model: Customer Segments

You're looking at the customer base for SAP SE as of late 2025. It's a mix of massive, established players and smaller entities moving to standardized cloud offerings, all while a significant portion of the base is navigating a critical deadline.

Large Global Enterprises requiring complex, highly customized ERP systems represent the core of the high-value cloud transition, primarily targeted by the RISE with SAP offering, which bundles services for the installed base. The Cloud ERP Suite, which includes these complex enterprise deals, is showing strong momentum, with revenue growing by 31% in Q3 2025 at constant currencies. The overall cloud backlog, a key indicator of future committed revenue, stood at €18.84 billion in Q3 2025. For the full fiscal year 2025, SAP SE is guiding for total Cloud Revenue to land between €21.6 billion and €21.9 billion at constant currencies.

Mid-market companies (SMEs) targeted by the standardized GROW with SAP offering are a key focus for net-new customer acquisition. GROW with SAP is the standardized, ready-to-run cloud ERP based on SAP S/4HANA Cloud Public Edition. In a prior period (Q2 2024), 45% of new S/4HANA customers chose GROW, indicating its traction in this segment. The overall shift is clear: traditional software license revenue fell by 43% in Q3 2025, while cloud revenue now accounts for 58% of total sales.

Organizations in highly regulated industries (e.g., Public Sector, Defense) needing sovereign cloud solutions are a segment where SAP is actively closing deals, as evidenced by Public Sector wins noted in Q1 2025. However, this segment, along with industrial manufacturing, has also been cited as experiencing "elongated sales cycles" in Q2 2025, suggesting caution or longer decision timelines for complex, regulated deployments. The company's CFO noted keeping a close eye on public sector trends moving into the second half of 2025.

Existing legacy ECC customers facing the 2027/2030 end-of-maintenance deadline form a large, immediate migration pool. The hard deadline for mainstream maintenance for SAP ECC 6.0, Enhancement Packs (EHP) 0 through 5, is Dec 31st, 2025, with no extended maintenance offered past that date. This affects approximately 13,500 users out of an estimated 27,000 total ECC users. For those on EHP 6, 7, and 8, mainstream maintenance ends on Dec 31st, 2027, but extended maintenance is available through Dec 31st, 2030 at an estimated additional cost of two percentage points over existing fees. Estimates suggest that 50% of all ECC systems will not qualify for the 2027 extension.

Here's a quick look at the maintenance cliff edge for the legacy base:

The industry expectation is that only just over half (57%) of the original ECC customers will have finished their transformations to S/4HANA by the 2027 deadline. Still, as of Q2 2024, only about 37% of ECC customers worldwide had subscribed to S/4HANA licenses.

You'll want to track the following key metrics that reflect the success in capturing these segments:

• Cloud revenue for FY 2025 guided to grow between 26% and 28%.
• Predictable revenue share reached 87% as of Q3 2025.
• Half of all cloud orders in Q1 2025 included AI use cases.

Finance: draft 13-week cash view by Friday.

SAP SE (SAP) - Canvas Business Model: Cost Structure

You're looking at the major outflows that fund SAP SE's pivot to the cloud and Business AI, so let's focus on the hard numbers we have for late 2025.

Significant investment in Cloud Infrastructure and data center operations (OpEx) is implied by the aggressive revenue targets. SAP expects to generate cloud revenue towards the lower end of the outlook range of €21.6 - 21.9 billion for 2025 at constant currencies. For context on the scale of the cloud business driving this infrastructure spend, Q3 2025 Cloud Revenue was €5.29 billion.

High R&D expenditure to develop Business AI and the S/4HANA Cloud platform is a necessary cost to hit the 2025 non-IFRS operating profit target of €10.3 - 10.6 billion. This investment is designed to support the growth of the Cloud ERP Suite, which saw revenue up 26% in Q3 2025.

Sales and Marketing costs to drive cloud adoption and manage the global partner network are substantial, given the focus on converting the installed base. The company's share of more predictable revenue, largely subscriptions, reached 86% in Q2 2025.

Restructuring costs related to the 2024 Transformation Program are now largely realized. The total expenses associated with that program were approximately €3.2 billion. You specifically asked about the 2025 payout, and the figures confirm that restructuring payouts amounted to €0.7 billion for the first nine months of 2025, with approximately €0.1 billion expected in the fourth quarter of 2025.

Personnel costs for a global workforce are a major component, reflecting the shift in skill-sets toward cloud and AI. As of 2024, SAP SE employed 109,973 people. The restructuring announced in early 2024 targeted up to 10,000 positions by early 2025, with the majority addressed through voluntary leave or internal retraining.

Here's a quick look at the key cost-related financial markers and targets for SAP SE as of late 2025:

The shift in resource allocation is clear when you look at the cloud gross margin, which stood at 73.5% in Q4 of the prior period, showing the high-margin nature of the revenue stream they are spending to capture.

You should also note the impact of specific customer agreements on potential revenue realization, which affects the cost-to-serve model. For instance, the OneGov agreement with the GSA offers federal agencies discounts of up to 80% on license-based products and a 35% discount on cloud services like SAP Business Technology Platform.

The company's focus on efficiency gains from the restructuring is quantified by the anticipated contribution to the operating profit target. The transformation program was expected to yield efficiency gains of approximately €0.5 billion contributing to the 2025 non-IFRS operating profit goal.

The cost structure is heavily weighted toward maintaining the cloud and AI development pipeline, as shown by these key financial metrics:

• Current cloud backlog growth (Q2 2025): 22% year-over-year.
• Cloud ERP Suite revenue growth (Q3 2025): 26% year-over-year.
• Free Cash Flow ambition for 2025: €8.0 - 8.2 billion.

SAP SE (SAP) - Canvas Business Model: Revenue Streams

You're looking at the core of how SAP SE generates its income as of late 2025, and the story is overwhelmingly about the shift to recurring revenue. The company's financial profile is now dominated by subscriptions, which is a massive change from the old model of one-off software sales.

Cloud Subscriptions and Support (SaaS/PaaS) from RISE/GROW with SAP and Cloud ERP Suite is the engine room. For the full year 2025, SAP SE is guiding for this stream to land toward the lower end of its outlook range, projecting between €21.6bn and €21.9bn at constant currencies. This represents a year-over-year growth of 26% to 28% over 2024 figures. The Cloud ERP Suite, which bundles the flagship RISE with SAP and GROW with SAP offerings, is the fastest-growing component within this. In the third quarter of 2025 alone, Cloud ERP Suite revenue hit €4.59 billion, marking a 31% increase at constant currencies. The share of more predictable revenue, which includes cloud and support, reached 87% as of the third quarter, showing how solid the base is now.

Here's a look at the key revenue components based on the Third Quarter 2025 IFRS results, which clearly shows the transition in action:

Software Support Revenue from legacy on-premise installations remains a significant, though less dynamic, part of the mix. While the focus is elsewhere, this stream provides stability from existing customer bases running older, perpetual licenses. For the full year 2025, one estimate projects this revenue to see slight growth, moving to approximately $12 billion.

Software Licenses Revenue is the stream SAP SE is actively moving away from, and the numbers reflect that rapid divestment from the legacy on-premise model. In Q3 2025, this revenue stream decreased by a stark 43%, landing at just €0.16 billion. That sharp drop of 42% at constant currencies in the quarter is the clearest signal of the business model transformation underway. Honestly, you should expect this number to continue shrinking aggressively.

Professional Services and Consulting fees for implementation and optimization projects are intrinsically linked to the cloud transition. Services revenue in Q3 2025 was €1.06 billion, up 6% at constant currencies. This revenue helps onboard customers to the new cloud platforms. Another projection for the full year 2025 places Professional Service and Other Service Revenue around $4.8 billion.

Revenue from the Business Technology Platform (BTP) for integration and extension services is captured within the broader Cloud ERP Suite figures, but its importance is clear from the suite's performance. BTP is a key part of the value proposition for customers extending their core ERP. The overall Cloud ERP Suite revenue growth of 31% at constant currencies in Q3 2025 shows the enterprise demand for these integrated, platform-based services is very strong.

Finance: review the Q4 2025 backlog conversion rate against the full-year cloud revenue target by next Tuesday.