SAP: Focused on Cloud for Growth

As the cloud technology is now maturing, we observe many organizations moving their application to cloud environment. Various software companies are now more focused on cloud deployment of their software and provide it as a SaaS (Software as a service) to end user. The global market of cloud services is relied upon to grow 18.6% in 2012 to $110.3 billion, accomplishing a CAGR of 17.7% from 2011 through 2016. The aggregate business is relied upon to develop from $76.9 billion in 2010 to $210 billion in 2016. Such a growth figure and market size instigated various software giants to join the cloud bandwagon to power its top and bottom line

SAP (SAP), is an established name globally, and a leader in the ERP (Enterprise Resource Planning) software solution provider, with Oracle (ORCL) the closest competitor. With a paradigm shift from in-house implementation to cloud, SAP also joined the race by providing ERP solution in a cloud environment. The strategic move of the company to focus on cloud was illustrated with SAP HANA, which is now gaining momentum and increasing its global footprints. SAP HANA has been a channel for the company to boost its top line. The company also provides various turnkey software solutions pertaining to other growth market like data mining and data warehousing.

Strong quarter

The company recently released its second-quarter results; revenue could beat the consensus estimates, but it did beat the earnings estimate. Consolidated revenue was up by 5%, to records $5,660.1 million as compared to same quarter last year. But revenue could not beat the consensus anticipated revenue of $5,768 million. Although earning was up by 10%, to $1.04 as compared to last year same quarter and was way ahead of the consensus estimate of $0.88.

Segment wise revenue ($ in millions)

Segment	Q2-2014	Change(YoY)
Cloud Subscriptions & Support	$329.8	39% (Up)
Software & Support	$4,413	6% (Up)
Services & Software Related Services	4,742	8% (Up)

SAP HANA continues to record growth For SAP Business Suit

SAP HANA has been like a steroid for SAP business suit, which now records over 1,000 customers at the end of the second quarter. With just over a year since SAP HANA was launched in the open market, SAP Business suit powered by SAP HANA witnessed an exponential growth in customer base. SAP HANA provides enhanced features to SAP Business Suit, mainly SAP financials that processes customer queries over voluminous database at higher speed with the power of SAP HANA. The cloud enabled CRM solutions powered by SAP HANA has been embraced by the diversified business segments like insurance, utilities and retails.

Acquisitions to enrich cloud portfolio

Sap has been known for its strategic acquisitions and constantly strengthens its product portfolio. SAP is now targeting to acquire SeeWhy; with this acquisition, SAP will integrate SeeWhy's solution with its e-commerce platform "Hybris" and the bundled package will provide enhanced online marketing solutions. This further endorses SAP focus on cloud market.

Furthermore, SAP already acquired FIeldglass for $1 billion to put weight on its cloud portfolio. Fieldglass specializes in providing a vendor management system that provides a new experience enabling the organization to manage their suppliers is more streamlined manner.

Simplified licensing policy

Licensing policy at times is an impo