SAP is Also Counting on the Cloud and Analytics

Analysts believe that despite the increased adoption of cloud-based services, even by the year 2020, on-premise ERP software would continue to have a bigger market share. On-premise ERP solutions are expected to account for 57% of the ERP market. But cloud-based ERP would be the fastest growing solution with a CAGR of 10% during the period 2014 to 2020. In another report, Gartner estimates the worldwide CRM market to be a $36 billion market by 2017 with nearly 47% of the market being cloud-based.

SAP’s Financials
SAP’s (NYSE: SAP) fourth quarter revenues grew 16% over the year to €6.35 billion (~$6.95 billion). EPS of €1.07 (~$1.17) fell 1.8% from a year ago.

By segment, revenues from Services revenue grew 7% to €965 million (~$1.06 billion) and Cloud and Software segment grew 18% to €5.38 billion (~$5.89 billion). Within Cloud, Subscriptions & Support revenues grew 81% to €632 million (~$692.2 million) and Software licenses and support revenues grew 12.8% to €4.75 billion (~$5.2 billion).

SAP ended the year with revenues of €20.8 billion (~$22.77 billion), up 17.8%.

For fiscal 2016, SAP expects cloud subscriptions and support revenues of €2.95 billion-€3.05 billion (~$3.23 billion-$3.34 billion) and cloud and software revenues to grow 6%-8% to €17.23 billion (~$18.86 billion) with an operating profit of €6.4 billion-€6.7 billion (~$7 billion-$7.33 billion). For the year 2017, SAP expects sales to grow to €23 billion-€23.5 billion (~$25.2 billion-$25.72 billion) and an operating profit of €6.7 billion~€7 billion (~$7.33 billion-$7.67 billion).

SAP’s Cloud Focus
SAP continued to add offerings to deliver on its cloud focus. Earlier this month, it entered into an agreement with Vodafone to launch the Internet of Things (IoT) foundation bundle for SAP HANA. As part of the collaboration, organizations will be able to leverage Vodafone’s IoT connectivity platform to connect and manage devices, collect and shift data from the devices into the SAP HANA platform, and subsequently use this data to support predictive maintenance. Additionally, the service will incorporate Vodafone’s device connectivity management to help with the aggregation of data from SIM-based IoT devices’ status, rate plans, usage, and billing, and through an integrated dashboard will allow SAP users to manage global IoT deployments.

Last month, SAP also announced the acquisition of Roambi, a California-based provider of mobile analytics. Roambi is a provider of mobile-centric analytics and data visualization tools. With the acquisition, SAP will be able to deliver to its customers mobile access to analytics. Roambi was built with a focus on delivering to a mobile and social world where data can be used to tell stories and can be analyzed freestyle. Through the acquisition, SAP will be able to deliver to its customers an easy-to-use analytics solutions that can retrieve relevant data anywhere, anytime. Terms of the acquisition were not disclosed.

It also added an upgraded Integrated Business Planning 6.1 application for response and supply to its cloud-based planning suite. The application will allow organizations to plan based on demand priorities and quickly adapt to demand upsides and supply constraints. The application is built on HANA and allows for faster, more accurate decision making based on advanced analytics like the what-if scenarios.

Its stock is trading at $80.23 with a market capitalization of $96.12 billion. It touched a 52-week high of $81.21 in December last year. The stock had fallen to a 52-week low of $62.57 in September last year.