Exuberant mood in the digital industry

The business climate in the digital industry continues to improve, reaching its highest level in 30 months. The last time the industry was in a similarly positive mood was in November 2018. In April, the index for the current business situation rose by 5.6 points to 38.1. Business expectations for the coming six months also improved by 4.6 points to 25.5.

The Bitkom-ifo Digital Index, which is calculated from the assessment of the business situation and business expectations, rose significantly by 5.0 points to 31.7 points compared with the previous month. It is thus higher than before the start of the corona pandemic. According to Bitkom, this is because business in the digital industry was better than it had been for a long time. The accelerated vaccination campaign and the prospect of a further recovery in the German economy also made companies very confident for the rest of the year.

The Bitkom industry is proving resistant to short-term economic setbacks, as many other industries experienced several times during the Corona crisis. The pandemic is pushing digitization in all areas, and as soon as other sectors of the economy recover, Bitkom expects additional momentum in investments.

In view of the positive business climate, companies are increasingly looking for workers. The employment trend promises similar momentum to sales: The corresponding expectations increased significantly, by 6.0 to 23.3 points. This means that the majority of companies intend to hire additional workers in the coming three months. The price index, on the other hand, slipped slightly by 1.3 to 13.2 points compared with the previous month.

In the overall economy, sentiment remained virtually unchanged from the previous month. The ifo Business Climate rose slightly by 0.3 to 11.5 points. The business situation improved by 2.3 points to 14.4. Expectations decreased by 1.6 points, but remain in positive territory at 8.7 points.

SAP's business figures for the first quarter fit perfectly into this picture. The rapid growth in new cloud business increased the Current Cloud Backlog by 19 percent in constant currency to 7.6 billion euros. The Current Cloud Backlog of S/4 Hana Cloud increased by 43 percent on a currency-adjusted basis, underlining SAP's accelerated move to the cloud. This is due not least to the new transformation offering Rise with SAP, emphasizes Managing Director Christian Klein.

"Rise is already a game-changer. With more than 100 contracts signed in the first quarter, we have already achieved great success. And that's just the beginning. Remember: We only launched Rise at the end of January", he said during the analyst call on the quarterly results. "As we replace legacy systems, Rise is the ideal offering to really transform the business. So it's about our existing base, but also a high percentage of net new customers."

All signs indicate that Rise with SAP will accompany the community as the latest buzzword for some time to come. The German-speaking SAP User Group (DSAG) also sees it that way.

On the occasion of the publication of SAP's business development in the first quarter of 2021, Christine Tussing, DSAG's Chief Transformation Officer, comments: "Business transformation and the necessary adaptation of business processes are the central challenges and a first step on the way to the cloud. Even a purely technical migration will be opposed in many companies in part by highly customized systems and processes as well as in-house developments and third-party systems. The understanding of how a transformation towards the cloud and a smart enterprise can take place must be presented more clearly and tangibly to customers in many places. In particular also with regard to the various transformation options such as public or private cloud and the corresponding services."

She adds, "With regard to the Signavio acquisition, it remains to be seen what the end-to-end integration into existing business process intelligence solutions will look like and how customers can generate sustainable benefits here. We expect SAP to understand the transformation challenges of customers, to show clear paths and to provide holistic support. Because it is also clear that the actual process transformation must be carried out by the customers and, of course, with the help of the partners."