SAP''s upcoming Cloud Transition Kick Off event SAP is likely to unveil its ''new, new, new'' cloud strategy on January 27 at its ''RISE with SAP'' event (https://www.sap.com/about/events/rise-with-sap.html). This event (two days before SAP''s full 2020 results) may shed light on why SAP expects software licenses to collapse, despite Q4 results showing an ongoing recovery in license sales back towards trend growth. A return to trend should see licenses -3% in 2021, not -20% While we would normally expect Q1 licenses to return to +13% growth on the -32% comp, and for FY licenses to decline just 3% in 2021 if SAP were to return back toward trend growth, SAP is suggesting a 20% decline, which would be a re-acceleration downward from the -11% Q4 level (which was on a tough pre COVID comp). We believe the only way for this to transpire is if SAP forces through the change by incentivising its salesforce to sell, and customers to purchase, subscriptions rather than licenses. However, having lost its Global Head of Sales and Customer Success (Adair Fox-Martin) on Friday, that transition is likely only just beginning. Showing that it is serious about pushing through its Cloud transition, SAP hired a new Chief Marketing and Solutions Officer on Friday with Julia White joining from Microsoft, where she led Microsoft Office 365 Product Marketing during its Cloud transition, and was head of Azure Product Marketing. Klein making big changes, but near term visibility low SAP CEO Christian Klein is right to accelerate SAP''s cloud transition in our view; however, this creates little visibility near term for license / maintenance declines, and the eventual conversion to subscription sales (although the +13-18% FY cloud subscription growth guidance likely implies little conversion). We hope to gain some insight on 27 January when we expect SAP to outline its new cloud deployment options. While we expect Webscale partners to be high profile, we believe SAP will...