SAP‘s (NYSE:SAP) cloud business, HANA and the mobile division, has outperformed in the past few quarters with triple digit revenue growth. Last quarter, HANA revenue was $106 million (€83 million) and mobile revenue was $62 million (€48 million), both doubling y-o-y.  HANA, the in-memory analytics application, is key to SAP’s long-term strategy and the company will eventually feature the product in its core offerings. SAP recently announced roll-outs of enterprise applications coupled with in-memory computing and has unveiled its first product in the line, SAP 360 Customer. This is the first large-scale transactional system to run HANA. 
The SAP 360 Customer offers CRM application, Customer OnDemand cloud offering, Jam social software platform and several mobile solutions, and is clearly targeted at gaining market share in the cloud-based CRM market dominated by Salesforce.com.
According to the ERP giant, the key winning point of this offering is the ability to process information in real-time, which is likely to generate immediate insights into customer preferences and behavior. The platform allows you to analyze both internal company data and external data such as posts on social networks. Though absolute revenues are insignificant compared to revenues from the rest of its businesses, the high growth and the potentially large market it opens up for SAP makes this a key revenue driver.
SAP Cloud And Mobile vs. Salesforce
SAP’s relatively new cloud and mobile businesses reported revenues of about $165 million (€128 million) in Q3, and while much of this can be attributed to cross-selling to existing customers to access CRM and ERP data on the move, it measures up well against $730 million in revenues that Salesforce.com earned in the latest quarter.
The products of the two companies are not exactly the same but they do play in the same CRM space, with Salesforce.com wielding significant clout in the cloud based CRM market and SAP in the on-premise business. With the entry of SAP 360, SAP is trying to integrate its hugely popular analytics platform with CRM, and we expect it to boost its share in the cloud-based CRM market in the long run.
Outlook For 2012 Refined To Include Ariba And SuccessFactors
Backed by a record Q3, the company has refined the full year outlook to include Ariba’s expected revenue and profit contribution from the acquisition date of October 1, 2012, to the year end. It now expects full-year 2012 non-IFRS software and software-related service revenue to increase in a range of 10.5%-12.5% from the 2011 level of €11.35 billion ($14.6 billion). SuccessFactors and Ariba are likely to contribute to 2.5% of total earnings this year. SAP expects full-year 2012 non-IFRS operating profit to be in a range of €5.05-€5.25 billion ($6.5 to $6.75 billion).
Cloud Based Management Apps Becoming Popular
To strengthen its cloud-based product portfolio and compete with the likes of Salesforce.com, SAP is set to unveil more of its Business Suite products and cloud-based enterprise performance management (EPM) applications that run on top of the HANA platform. The pricing of the apps will be subscription-based and will depend on the complexity of the management app and the customer’s size. 
The cloud based management apps such as EPM OnDemand include capabilities to investigate and fix errors related to expenses, allowing for real-time analysis of P&L and capital project planning. The company expects to release more products in the future with a design focus on smartphones and tablets and also plans a roll-out for Windows 8-powered tablet computers. The focus on mobility is to cater to the sales force, which is always on the move and for professionals such as retail managers who spend a lot of time away from their desks and need mobile access.
We currently have a $74 Trefis Price Estimate which is slightly above its current market value.Notes: