Backed by HP, SAP Jumps on the Cloud Bandwagon

October 10th, 2011 by Trefis Team
-13.36%
Downside
254
Market
220
Trefis
SAP: SAP logo
SAP
SAP

SAP (NYSE:SAP) is one of the largest enterprise software players, but it has been present largely in the traditional on-premise software market. It competes with heavyweights like Oracle (NASDAQ:ORCL), Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM) as well as Salesforce.com (NASDAQ:CRM), the new leader in cloud based software. SAP announced a partnership with HP (NYSE:HPQ), to provide cloud based delivery of SAP applications via HP’s enterprise cloud platform. [1]

We currently have a $62 Trefis price estimate for SAP, almost all of which is driven by its CRM, ERP and other enterprise software. Our price estimate stands nearly 20% above its current market price.

Check out our complete analysis for SAP

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Major Shift to the Cloud by Enterprise Software Makers

There has been a visible shift to the cloud by most enterprise software players. Oracle recently embraced the cloud with Oracle Public Cloud, to capture market share in the growing cloud computing market which is expected to be worth nearly $150 billion by 2014. ((Gartner Says Worldwide Cloud Services Market to Surpass $68 Billion in 2010, Gartner))

The first application by SAP to be offered on HP’s cloud infrastructure will be its Customer Relationship Management (CRM) offering. Many corporations now prefer cloud based software to traditional software, thanks to its ease of deployment, cost effectiveness and flexibility in scaling. With this partnership with HP, SAP can offer cloud based enterprise software immediately while all the heavy lifting is handled by HP.

Kevin Ichhpurani, SAP Ecosystem and Channels senior vice-president said:

Through expanded cloud delivery options via HP, we can provide global users with secure, reliable access to essential business applications while helping companies contain hardware and management costs.

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Notes:
  1. SAP, HP join hands to provide cloud-based delivery of SAP applications, CBR [↩]