IT budgets, artificially boosted by the fall in employee travel and the need for work-from-home solutions during the pandemic, are coming under pressure again as the world reopens, and SAP\u2014which also owns online expense management service Concur\u2014is seeing the shift in the numbers.\n\n\u201cWe were benefiting, in particular in the first part of the pandemic, from obvious savings in travel, facilities, car fleet, and other areas that were not so much in demand. But this is already behind us in the second half-year. We have actually already returned to much more normalized spending behavior,\u201d SAP CFO Luka Mucic said during a conference call to discuss the firm\u2019s results for the fourth quarter of 2021.\n\nDespite this shift, SAP is optimistic about demand for its enterprise software and related services, with cloud revenue up 17% year on year to around \u20ac9.4 billion (US$10.7 billion) in 2021, slightly outpacing the decline in revenue from licensing and support of its legacy products.\n\nIn comparison, in its most recent quarterly results, enterprise software rival Oracle reported cloud revenue (IaaS and SaaS) of around $2.7 billion for the three months to November 30, up 22% year on year and approaching $11 billion in annualized revenue.\n\nSAP wants to accelerate the shift away from legacy products to more than double its cloud revenue by 2025.\n\nCEO Christian Klein said more CIOs have been renewing their contracts with SAP since its introduction of the all-in-one, cloud-based RISE offering a year ago brought it closer to customers.\n\n\u201cWe are much, much closer, and we saw this already has a very positive impact on renewals,\u201d Klein said during the same conference call.\n\nMigration motivation\n\nEver since SAP introduced its cloud-based ERP suite, S\/4HANA, in 2015 it has been encouraging customers to migrate from the legacy Business Suite 7 offering built on its older ECC technology and typically run on-premises.\n\nIn recent years, it has multiplied the incentives for CIOs to make the move: In February 2020 customers\u2019 reluctance to migrate forced SAP to extend support for ECC through the end of 2027\u2014two years\u2019 extra support, with a surcharge of 2 percent of the annual license fee. And a year later SAP introduced RISE, which Klein describes as \u201cbusiness transformation as a service,\u201d with the goal of making it easier for customers to contemplate a move to the cloud.\n\nIf you\u2019re still one of SAP\u2019s 30,000 on-premises ERP customers, expect a call from the RISE reps soon.\n\nSAP\u2019s customers are answering the call to the cloud. 5,000 of them are running S\/4HANA there so far: In the US and Europe, it\u2019s the larger organizations that are driving the shift, but in Asia, Latin America, and elsewhere its small and mid-size customers that are the first to make the move, company executives said.\n\nFor SAP, moving customers to the cloud isn\u2019t an end in itself, but a means to increasing the share of \u201cmore predictable revenue\u201d in its revenue mix. This revenue from recurring, subscription-based contracts, un-swayed by the big-bang sale of a new software license, now accounts for 75% of SAP\u2019s total, up from 72% a year earlier. Its target is 85% by 2025.\n\nAnd once it has ERP customers in the cloud, the sales reps will be calling again, seeking to upsell customers on other services.\n\n\u201cBecause of the integrated nature of our modular cloud ERP, for every dollar spent on the core ERP we have an upsell opportunity of $3 for our platform and for additional line of business solutions,\u201d Klein said.\n\nSupply chain financing\n\nThose solutions will soon include supply chain and accounts receivable financing from working capital management specialist Taulia, in which SAP has agreed to buy a majority stake. Taulia offers software for making the processing and payment of invoices more efficient and backs that up with a service that offers early payment of invoices in return for a fee.\n\n\u201cOur customers will be able to finance billions of transactions with favorable terms and improve their cash flow,\u201d Klein said.\n\nIf the acquisition pays off, SAP won\u2019t be the first big company to make money out of money. Ford Motor often makes more in a quarter from its financing activity, Ford Credit, than from sales of the automobiles it finances, while GE Capital, at its peak, accounted for more than two-thirds of parent company General Electric\u2019s profits.