SAP, Accenture Extend Ties to Work on Intelligent Analytics

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Enterprise application software, SAP SE SAP extended ties with professional services provider, Accenture plc ACN, by inking a deal to jointly develop state-of-the-art digital solutions. The development will be conducted on SAP's latest digital innovation system – SAP Leonardo. This is in line with the company's concerted efforts to bolster its foothold in machine-learning and Internet of Things (IoT) space to stoke further growth.

Focus on Intelligent Analytics

Per the latest agreement, the two companies will work closely to develop digital technologies including additional machine learning, analytics and IoT. These solutions will be delivered by Accenture Digital and powered by SAP Leonardo. SAP believes that combined with Accenture's digital knowhow, its digital technologies expertise – including robust in-memory computing – will facilitate the digital transformation journey of clients. 

SAP and Accenture's one and a half years old partnership aims to accelerate the core development and go-to-market capabilities of cloud-powered SAP S/4HANA. The companies have already begun developing solutions for the utilities and oil and gas industries. The latest venture highlights their efforts to foray into the intelligent analytics domain.

Accenture's Payables Optimizer and Advanced Inventory Management will be integrated with SAP Leonardo to slash capital costs and boost supply chain management. Further, the company will offer more than 50 of its proven enterprise analytics applications, Industry X.0 platform and Industrial IoT expertise to boost customer experiences.

IoT Investments Look Impressive

SAP's intention to fortify its IoT foothold became quite clear when the company announced an investment of a whopping $2.2 billion for the expansion of its IoT portfolio. Carrying efforts forward, last month, the company expanded its SAP Leonardo, which can now integrate machine learning, IoT, Big Data, analytics and blockchain on SAP Cloud Platform.

Earlier this month, SAP extended ties with Fujitsu Limited to launch advanced enterprise resource-planning ("ERP") solutions based on artificial intelligence ("AI") and IoT. The stock has had an impressive run on the bourse over the last six months, returning 21.2% and outperforming the Zacks categorized Computer-Software industry's average gain of 13.5%.

Encouragingly, the stock has witnessed an upward estimate revision, which reflects bullish sentiment. In the last 60 days, the Zacks Consensus Estimate for full-year 2017 earnings has trended up from $3.66 to $4.03. Going forward, the company has earmarked a budget for further bolt-on acquisitions to boost its IoT portfolio.

SAP has revealed plans to launch a new 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. As a matter of fact, in light of sustained rapid growth in the cloud, robust software momentum and operating profit expansion, the Zacks Rank #3 (Hold) company raised its 2020 ambition 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.

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Stocks to Consider

Some better-ranked stocks in the broader sector include Cohu, Inc. COHU and Amkor Technology, Inc. AMKR. While Cohu sports a Zacks Rank #1 (Strong Buy), Amkor holds a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Cohu has a striking earnings surprise history, with an average positive surprise of 121.2% for the trailing four quarters, beating estimates all through.

Amkor Technology beat earnings estimates in three out of the trailing four quarters at an average of 43.1%.

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Accenture PLC ACN: Free Stock Analysis Report

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