SAP Strengthens Data Analytics Business to Boost Growth

German business software provider SAP SE SAP is taking a series of proactive steps to fortify its cloud business and grab a higher market share. The company's announcements that were made at CeBIT 2016, being held from March 14–18 in Hannover, Germany, highlight its strategy to reap maximum benefits from the data analytics business.

Hadoop, a Java-based programming framework sponsored by the Apache Software Foundation, facilitates deconstructing large data sets that has become the cornerstone of digitizing business enterprises. Proliferation of Big Data in every business sector, ranging from financial services to retail services, has unlocked tremendous potential for software development companies to capitalize on the growth trend of the Big Data software market that includes Hadoop, Big Data Analytics and Databases and System Software.

Key Highlights

The company announced its extended offering from the highly successful SAP HANA family –SAP HANA Vora – an "in-memory query engine" that is now commercially available for customers. SAP HANA Vora promises to bring unprecedented contextual analytics for enormous quantity of data stored in Hadoop, enterprise systems and other distributed data sources.

SAP HANA Vora has been engineered to bolster the Apache Spark execution framework to offer highly advanced interactive analytics on Hadoop. Boasting a host of impressive features, which include data correlation, ability for simplified management of Big Data and online analytical processing, SAP HANA Vora can be used to analyze data large volumes of operational and contextual data obtained from enterprise applications, data warehouses and data lakes.

In addition, SAP agreed to contribute a portion of the code for SAP HANA Vora to the Apache Spark open source ecosystem, a highly renowned open source community, for improving distributed storage and assisting distributed processing of large data sets. Encouragingly, leveraging on the technical prowess of SAP, a host of "open-sourced new features" has been added to the Apache Spark ecosystem. These features include enhanced data hierarchy capability, improving Spark's data source application program interface API and others.

Finally, the company also announced that its proprietary offerings, namely the SAP HANA platform and SAP HANA Vora, have been selected by CenterPoint Energy Houston Electric (CenterPoint Energy) to support the latter's distributed enterprise data framework. CenterPoint Energy, which provides power to more than 2.3 million customers, has partnered with SAP to reduce their data storage costs and enhance informed business decisions. After a successful pilot trial, CenterPoint Energy is now ready to standardize its practices on the SAP HANA platform and SAP HANA Vora.

To Conclude

As per market research reports, the global Hadoop market has a commendable CAGR of 58.2% between 2013 and 2020, primarily fueled by factors like rising demand for structured and unstructured data, and sophisticated Big Data analytics on the part of clients. Driven by solid market traction of its cloud business, SAP has raised its mid-term outlook, signaling brighter days ahead. With the continuous surge in software license revenue, SAP expects cloud subscriptions & support revenues and software support revenues to constitute 63–65% of total revenue in 2017. This apart, cloud subscriptions and support revenues are expected to surpass software license revenues in 2018, thereby supplementing the company's financial performance. 

Despite long-term growth prospects, factors like intensifying competition in the IT industry and inherent seasonality in clients' technology spending have been exerting pressure on this Zacks Rank #4 (Sell) stock's financials.

Better-ranked stocks in the industry include Citrix Systems, Inc. CTXS, CommVault Systems, Inc. CVLT and Epiq Systems, Inc. EPIQ. All three stocks sport a Zacks Rank #1 (Strong Buy).

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