SAP Collaborates With Centrica For Energy Internet Of Things

Germany-based enterprise-application software provider, SAP SE (DE:SAPG) (NYSE:SAP) has collaborated with energy and services company – Centrica (LON:CNA) – to deliver insights and connectivity through the Internet of Things (IoT). This follows SAP’s contract with Accenture plc (NYSE:ACN) last month to jointly develop state-of-the-art digital solutions.

The latest partnership will initially leverage Panoramic Power energy insights technology from Centrica’s Distributed Energy and Power business and SAP Leonardo. Panoramic Power is an energy management solution which provides businesses real-time visibility into facility and device-level performance. SAP Leonardo is SAP’s digital innovation system which integrates IoT, Big Data, analytics, machine learning and blockchain on SAP Cloud Platform using design thinking services.

The collaboration will enable business customers to optimize digital asset management and energy consumption. SAP Leonardo IoT capabilities connect production systems and assets with manufacturing and maintenance business processes, enabling companies to track, monitor, analyze and maintain fixed assets, as well as slash operational and maintenance cost, and increase uptime of assets.

SAP and Centrica will explore additional benefits in energy efficiency, optimization, compliance initiatives and machine learning. The companies also intend to explore additional benefits in optimization, energy efficiency, compliance initiatives and machine learning opportunities, and will also focus on developing energy IoT solutions for commercial and industrial customers.

SAP is serious about creating a solid foothold in the IoT space, which was emphasized by its intention to invest a whopping $2.2 billion to expand the IoT portfolio.

The stock has had an impressive run on the bourse over the past one year, returning 33.1% and outperforming the Zacks categorized Computer-Software industry’s average gain of 27.3%.

Going forward, SAP plans to launch a product line – SAP IoT – that will integrate huge amounts of data from things connected to the internet with machine learning and SAP's real-time database, S/4 HANA. In light of sustained rapid growth in the cloud, robust software momentum and operating profit expansion, this Zacks Rank #3 (Hold) company raised its 2020 sales target as well. SAP now aims to achieve non-IFRS cloud subscriptions and support revenues in the range of €8.0–€8.5 billion (previously €7.5 – €8.0 billion) in 2020.

The resiliency of SAP’s Cloud and Software business, presence of a large business network and dominance over critical client demand areas, namely customer engagement and human capital management remain strong growth drivers. Of late, the company has seen solid momentum in S/4HANA and other Cloud initiatives. Also, its recent focus on machine learning to fortify its Internet of Things (IoT) portfolio is likely to create revenue streams in the future.

SAP SE Price, Consensus and EPS Surprise

Stocks to Consider

Some better-ranked stocks in the same space include Exa Corporation (NASDAQ:EXA) and Red Hat, Inc. (NYSE:RHT) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Exa Corporation has an impressive average positive earnings surprise of 91.7% for the trailing four quarters, having beaten estimates strongly all through.

Red Hat, Inc. has a robust earnings surprise history, with an average positive surprise of 11.1%, driven by consecutive earnings beats over the trailing four quarters.

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