SAP’s recent move to postpone an ambitious financial plan to take advantage of its cloud business was part of a deeper analysis by the vendor that found enterprise customers were not following up on statements that they planned to increase digitization spending during the COVID-19 pandemic.

SAP CEO Christian Klein explained during the vendor’s user group (ASUG) event this week that while customers told him they were in need of what SAP offers, the vendor was not seeing that translate into its bottom line. He stated that in looking into the company’s financial position he found that those customers were not “transforming and not investing into their future success” and “sticking more than ever to maybe too much on-premises business.”

“Then we had to make a tough decision because I knew that this is of course not positive news to our investors short term,” Klein said. “But I'm 100% sure of it, and I'm, as the CEO of SAP, I have to think about my customers first, I have to think about the employees, and I have to think about the mid- and the long-term success of this company.”

Klein’s initial assumptions were not misplaced. Numerous analyst reports and surveys have highlighted organizations wanting to increase their digitization efforts due to the ongoing pandemic.

SAP under its previous leadership announced plans to construct a path toward a 75% cloud gross margin by 2023. However, the vendor was forced to alter its projections following a rough third quarter. It explained that its previous “best estimates concerning the timing and pace of recovery from the COVID-19 crisis” have not played out as expected and that it was now cutting expectations for the full year. This included cutting its full-year cloud revenues by nearly 6% and its full-year total revenues by 2.5%.

Despite the change, Klein continues to reiterated SAP’s focus on remaining focused and cloud agnostic.

“For me it's very important that our platform stays agnostic so that we give our customers choice to run the data workloads on any kind of cloud infrastructure,” Klein said. “That's very important especially with large customers. We see often times that they are wanting multiclouds and we are not gonna want to go against that.”

Klein had previously acknowledged that while some of those hyperscalers are making inroads into areas where SAP currently offers services, there is still an expertise hierarchy in play.

“Now, the point in these partnerships is that everyone needs to be aware of what is the playing ground,” Klein said earlier this year about the possible overlap. “We want to go up the stack, we want to own that as we are very good at that. And they provide the cellar of the house with the cloud infrastructure.”

Klein also tackled a perception that SAP’s recent leadership changes have reduced the vendor’s focus on the North American market. Klein, who is German, took over as SAP’s sole CEO earlier this year, replacing a co-CEO arrangement he shared with Jennifer Morgan, who was the first American woman named to SAP’s executive board. That arrangement followed the exit of long-time SAP CEO Bill McDermott, who was also an American.

Klein stated that while the moves “created maybe here or there a bit of concern, but it’s a matter of fact that SAP is a truly global company.” He noted that SAP has more than 200,000 customers in North America, as well as more than 25,000 employees spread across more than 40 locations.

“Yes, the board is maybe a little German these days and this again will change,” Klein said, before citing a number of executives based in North America. “So when you exactly look at the level of management underneath the executive board I actually have more one-on-ones with the management team in North America. And we also will make an even stronger commitment to our customers in North America.”