James Goodman: And on converged Cloud?
Dominik Asam: Converged cloud is largely now done. So it is actually benefiting our gross margin. And I think from now on, the kind of increase in gross margin will be a little bit more modest. I think the best way to think about it is you start from Q2, the gross margin we have. And while there will be fluctuations quarter-by-quarter because of some seasonality, we then will kind of gradually go up to reach that overall cloud gross profit target, which we’ve — in our ambition for 2025, and I want to reiterate that the main thought for us is really to deliver that absolute new amount of cloud gross profit. We’ve also highlighted at Sapphire that the private cloud deals have slightly lower margin than public. But on the other hand, they give us a huge boost on volume, and we’re really have a good trajectory, we think, to hit that kind of gross profit target for 2025.
Operator: The next question is from the line of Ben Castillo-Bernaus with Exane BNP Paribas.
Ben Castillo-Bernaus: My question is on the embedding and the selling of the generative AI and the uplift that you mentioned, Christian, the 30% uplift, I think, in the fall. My question here is you’re embedding this in every new RISE project or migration rather than being sold as a sort of opt-in bolt-on? Is this a choice for customers? Or is this kind of mandatory part of the package? And I guess following that, customers who have already begun their RISE road map if you think go back to them and add this on retrospectively given the options? I’m just curious how the sort of go-to-market and the rollout of that happens in the time frame.
Christian Klein: I can start, and then Scott, please feel free to comment. I mean first, it’s very important also as I shared in my opening remarks, and this is also quite a bit of a change of our strategy. We are not offering AI — generative AI sustainability, capabilities and also quite differentiating capabilities in our LoB products in on-prem. And also when a customer decides to go to a hyperscaler and get hosted with still customizations and not aligned data models and doing this outside of RISE, then this offering is not available. And because we cannot apply AI with high quality — with high data quality in a hugely customized ERP on-premise system as AI is anyway only available in the cloud. That’s very important. Now on RISE, the customers have choice.
We give them our standard offering with RISE and the methodology on standardizing and simplifying business policies with using the customer code, building this one data layer, which is important. Otherwise, AI, the quality and the accuracy will fail. And then we actually then say, hey, you can get the premium offering as part of RISE where we’re then going to embed generative AI capabilities. And so to really, for example, improve decision-making or to improve also automation or to improve transportation management. So — and that actually comes on top to the existing customers, they, of course, also can now decide to buy the premium and actually consume it out of the box. And this is also something where we actually also expect, of course, also an uptick on the existing RISE installed base.
Scott Russell: Yes. Maybe let me add a little bit more at the macro context and then how that will apply for the customers. So I guess I just want to reiterate what Christian had mentioned in the beginning, digital transformation and the demand for the digital change in their core businesses for customers around the world continues unchanged. Demand level is very high. And we definitely see across that — all parts of the world in the regional performance. Customers are also seeing with RISE. We’ve now got a large set of customers that were the early movers that have now successfully transformed and are operating in our proof points in that success journey. Part of that digital transformation is to be able to drive value and early return on that investment, and that’s where the AI becomes an accelerator.
