SAP SE (SAP) Takes Concerted Steps To Fortify ERP Business

In a bid to ramp up the sales of its cloud based Enterprise Resource Planning applications, SAP SE (DE:SAPG) (NYSE:SAP) , has recently announced extension of its partnership with Google, unveiled a live business and took steps to fortify its cloud platform. These announcements were made at Sapphire Now, the company’s annual user conference.

SAP Fortifies Cloud Business

In particular, the company expanded its innovation portfolio, SAP Leonardo, which can now integrate machine learning, the Internet of Things (IoT), Big Data, analytics and blockchain on SAP Cloud Platform. New developments include the SAP Leonardo Machine Learning Foundation and a Cloud Platform Blockchain service for developing application extensions and new solutions. Furthermore, to optimize asset management with IoT, the company has launched two new digital solutions. Also, the company joined hands with Deloitte to fortify SAP Leonardo ecosystem.

This apart, SAP has extended ties with technology giant Alphabet Inc.’s (NASDAQ:GOOGL) operating arm, Google, by including an additional certification of SAP technology and applications on Google Cloud Platform ("GCP"). SAP had previously entered into a partnership with Google in March, which allowed it to run its flagship products on GCP. The companies have certified the SAP NetWeaver technology platform on GCP, which will allow organizations to run SAP S/4HANA and the SAP Business Warehouse application on it.

Additionally, the companies announced general availability and certification of the SAP HANA database on GCP. Going forward, the companies said they have plans to integrate SAP’s business process expertise with Google’s machine learning services, including Translate and Speech APIs and TensorFlow, the open source library for machine learning. Other areas of work include machine learning, data transparency and custodian services, and workplace productivity.

In addition, SAP has also announced that its Cloud Platform will be offered as a multicloud environment, which will enable customers to develop and run various applications as per their choice of infrastructure providers. SAP Cloud Platform cockpit will now include Amazon.com, Inc.’s (NASDAQ:AMZN) Web Services, Microsoft Corp.’s (NASDAQ:MSFT) Azure, and Google Cloud Platform. Moreover, the company announced addition of APIs for SAP S/4HANA, SAP Hybris, and SAP Ariba to the SAP API Business Hub.

Solid Growth Prospects

SAP has established dominance over three of the most critical client demand areas, namely, efficient customer engagement, human capital management and interconnected commerce network, which, in turn, support its growth. The company follows an open ecosystem strategy, which enables it to better leverage its innovation capacity by extending it to partners as well. SAP has been primarily concentrating on expanding its cloud business to become one of the leading players in the category.

Over the past six months, shares of the company have appreciated 25.8%, better than the Zacks categorized Computer-Software industry's average gain of 15.8%. Recently, the stock witnessed an upward estimate revision, which reflects bullish sentiment. In the past 60 days, the Zacks Consensus Estimate for full-year 2017 earnings has trended up from $3.66 to $4.03.

Driven by solid market traction of its cloud business, the Zacks Rank #3 (Hold) company has raised its mid-term outlook, signaling brighter days ahead. Opportunities for growth in support revenues are lucrative, which, in turn, drives the company’s enthusiasm regarding the mid-term projection hike. Cloud subscriptions and support revenues are expected to surpass software license revenues in 2018, thereby supplementing the company’s financial performance.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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