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SAP and IBM to Assist Digital Transformation of Clients

Enterprise application provider SAP SE SAP, in collaboration with information technology behemoth International Business Machines Corp. IBM, announced plans to innovate solutions that will help clients adapt better to business modernization in the digital era.

In particular, the companies are focusing on enhancing customer value by considering critical areas such as cognitive extensions, customer and user experiences and industry-specific functionality. All of these functionalities are to be built using SAP’s flagship next generation business suite SAP S/4HANA. In 2014, SAP and IBM entered into a strategic partnership to foster the development of SAP HANA Enterprise Cloud services to cater to erratic digital transformation demands. The recent collaboration extends that partnership by developing industry-specific cloud solutions.

Also, the newly established IBM Power Systems Center of Excellence for SAP HANA at Texas will help in client engagements for developing hybrid and on-premise offerings. Moreover, IBM’s digital agency will work together with SAP Fiori UX and SAP Customer Engagement for improving customer performance. The other noteworthy developments include developing cognitive solutions for SAP S/4HANA, preparing consulting models and blueprints for digital transformation.

Separately, SAP’s prominent business network Ariba, which supervises business-to-business commerce, has collaborated with Atlanta-based supply chain finance company PrimeRevenue, to create a multi-funder supply chain financing platform. This partnership will co-create a comprehensive platform that will bridge the gap between procurement and finance, helping buyers and suppliers improve customer relationships and cash flows. SAP Arbia and PrimeReview’s collaboration is expected to come to the rescue of data companies that are currently witnessing issues in their supply chain by helping them manage transactions and supply chain financing events with greater speed and efficiency.

We believe these strategic partnerships will strengthen the company’s robust ecosystem that includes collaborative, innovative and interactive network of partners, customers and individuals. Given the ongoing transformation contemporary businesses, it has become mandatory for organizations to reinvent new business models and they are increasingly turning to SAP to conduct this transition through continual co-innovations.

As a matter of fact, SAP has been primarily intent on expanding its cloud business to become one of the leading players in the category. The company has been continuously witnessing growth in its cloud bookings for three consecutive quarters while revenue growth was largely benefited by the surge in the cloud business. Driven by solid market traction of its cloud business, the company has raised its mid-term outlook, signaling brighter days ahead. With the continuous surge in software license revenues, SAP expects cloud subscriptions & support along with software support revenues to constitute 63–65% of total revenue in 2017.  

SAP currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Blackbaud Inc. BLKB and NetSol Technologies, Inc. NTWK. Both the stocks sport a Zacks Rank #1 (Strong Buy).

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