According to researchers, Siemer & Associates, the Software-as-a-Service (SaaS) market is projected to grow 16.8% this year to $16.7 billion. The researcher believes that the growth in the market is driven by increased adoption of CRM, ERP, HR SaaS tools and the need for mobile apps for corporate applications. Another report estimates the SaaS market to be worth $22 billion by the year 2015.
The industry’s growth projections are reflected in the performance of their key players. Recently SAP (NYSE:SAP) announced their Q2 performance where revenues grew 8% over the year to € 4.1 billion (~$5.3 billion). EPS of € 0.73 (~$0.95) was above the market’s expected earnings of $0.91 for the quarter.
By segment, revenues from software & cloud subscriptions revenues grew 7% over the year to € 1.16 billion (~$1.52 billion). Support revenues increased 11% to €2.2 billion (~$2.9 billion) and revenues from software and software related services grew 10% to €3.3 billion (~$4.30 billion). Growth was driven by the Americas where revenues grew 18% over the year. SAP also managed to report a 3% growth within the EMEA markets despite the continuing economic crisis in the region. Asia Pacific Japan revenues, however, fell 7% over the year despite strong performance by the India and Southeast Asian countries.
For the current year, SAP expects to end with revenue growth of 10% over the year compared with 11-15% growth projected in the earlier quarter. SAP attributed the decline in revenue projections to a slowdown in the Chinese economy.
SAP Pushes HANA to drive growth
SAP continues to push HANA’s growth. Recently they announced the availability of HANA solutions with three additional original equipment manufacturers (OEMs). As part of the agreement, AlertEnterprise, Clockwork and PROS will now offer their customers access to real-time in-memory technology platform, SAP HANA.
They also entered into reseller agreements with Intel and Hortonworks to resell and support the IntelDistribution Apache Hadoopand the Hortonworks Data Platform with SAP HANA. Through the agreement, organizations will now be able to purchase big data solutions supported by SAP while leveraging capabilities of technologies such as SAP HANA, Apache Hadoop, and other SAP Business Intelligence tools such as BusinessObjects. By integerating with Apache Hadoop, SAP plans to be able to provide insights across all kinds of data – stored cold data, petabyte-level warm data and even real-time and streaming data.
SAP is also ensuring that all their new products and existing products run on HANA. Yesterday, SAP announced the introduction of SAP HANA platform into solutions that will power the SAP’s offerings of manufacturing and research and development (R & D) solutions. Known as SAP Overall Equipment Effectiveness Management (SAP OEE Management) application, the upgraded 6.0 version aims to offer end-to-end project management which SAP is calling as the “idea to performance” approach. SAP believes that by including HANA into their project management offerings, managers will now be able to see a complete view of all aspects of the projects within their portfolio, gather data real time, identify and address any red flags.
SAP recently also acquired predictive analytics technology solutions provider, KXEN, with plans to integrate HANA with KXEN’s offerings. San Francisco-based KXEN is known for their analytic tool, InfiniteInsight, which helps automate end-to-end modeling process thus helping with the development of more accurate predictive models. It assists in increasing the speed at which analytics are performed while ensuring more accurate analysis of the customer life cycle process. KXEN will be able to successfully complement SAP Predictive Analysis, SAP’s analytic software. SAP would also be looking to integrate KXEN with their own enterprise business intelligence capabilities along with the SAP HANA platform to enable organizations to analyze big data and engage users across the enterprise.
As I said earlier, platform eco-system is a hot trend. SAP has managed to create a successful offering within analytics in the space through HANA. Since its release two and a half years ago, HANA now has over 2,000 customers and over 1,100 implementations and has generated more than $1 billion in revenues. During the current quarter alone, HANA software revenues grew 21% over the year to €102 million (~$135 million). SAP expects growth to continue and is estimating that HANA will generate €650-€700 million (~$865-$930 million) for the year.
Last month, SAP announced the acquisition of hybris GmBH, a leading player in e-commerce technology. Germany based hybris offers Commerce Suite, an open, multi-channel platform which helps in product content management and unified e-commerce processes that help organizations connect with their customers in real time basis across multiple devices and delivery channels. SAP hopes to integrate hybris to expand their e-commerce platform offerings by leveraging mobile, cloud and big data innovations. Terms of the deal not disclosed.
SAP’s stock is trading at $72.64 with a market capitalization of $86.62 billion. It touched a year high of $84.66 in March this year.