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SAP AG (ADR) (SAP), Salesforce.com, Inc. (CRM), Oracle Corporation (ORCL): Software Stocks: Read This Before you Buy

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Recently, SAP AG (ADR) (NYSE:SAP) hosted its analysts’ day at CeBIT 2013, restating its confidence in its major growth pillars such as HANA, cloud, and mobile. The company seems to be confident about 2013, with the improvement in the overall spending environment in the economy.

Salesforce.com (CRM)

SAP AG (ADR) (NYSE:SAP) has around 2000 planned customer meetings this year during the event, which is up 100% from last year. Investors are quite happy with the announcements, and it reflected in the stock’s upside movement following the event. Let’s dig into the company’s recent initiatives and find out what opportunities they bring for an investor.

Attractive portfolio of products

Over the years, SAP has transformed from being just an application vendor to a software provider by enhancing its portfolio. The recently announced product suites give further confidence on its future growth trajectory.

SAP AG (ADR) (NYSE:SAP) has seen remarkable growth in its key innovation area i.e. SAP HANA. HANA had a great last quarter, with around $250 million of software revenue taking the total to $510 million for 2012. In January 2013, the company launched its ERP business package on HANA, which was about a year ahead of analysts’ anticipation. This move by the company, takes it one step further in its game-changing technology, HANA, which commands strong customer interest. I believe this will drive a new phase of investment in applications at its existing customers, as in 2012 most of the HANA deals were from the existing SAP customers. As per the company’s guidance, HANA revenue is expected to reach around $910 million in 2013.

If HANA was the growth driver for the last two years, its cloud business will be the same for its future. The company is on track with its 2015’s target of $2.6 billion of cloud revenue. SAP’s acquisition of SuccessFactors and Ariba in the last two years has made it a leading player in the cloud market, with four times more users than the nearest competitor. With this huge base of customers, the company is aiming at about $1.3 billion of cloud revenue in 2013.

The competition – who wins the race?

SAP AG (ADR) (NYSE:SAP) recently released ‘SAP 360 Customer’ to enhance its CRM (customer relationship management) solutions. This is a bundle of different technologies, namely social, cloud, mobile, and big data. With this move, SAP is trying to be different from other cloud vendors such as Salesforce.com, Inc. (NYSE:CRM) and Oracle Corporation (NASDAQ:ORCL) .

These three companies are the big players in the cloud-based solutions related to CRM and ERP (enterprise resource planning). Initially, these companies were on different levels of the processes, but over the time, they have started meddling in each other’s core territory. Consequently, all the three are currently focused on cloud based solutions as their biggest opportunity.

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