SAP (NYSE:SAP) is the global leader in supply chain management software and currently commands close to 25% of the $9 billion market. In 2011, it had nearly 20% of the market but has been growing inorganically with acquisitions such as Ariba. It acquired Ariba in 2012 for $4.51 billion, and at the time of acquisition, Ariba had nearly 5% of the market. It followed up this acquisition by acquiring SmartOps, a leading provider of inventory and service level optimization software.
SmartOps is a developer of sophisticated algorithms that use predictive analytics to help manage the complexity of global multi-stage supply chains. SAP claims that SmartOps’ predictive algorithms will be further enhanced by its HANA platform and plans to integrate these technologies to create a real-time SCM system. 
- SAP Earnings: Cloud Offerings Propel Growth, As Adoption Rate For S/4HANA Rises
- SAP Earnings Preview: Cloud Service To Ensure Sustained Growth Momentum
- Cloud Services Continue To Drive SAP’s Upward Trajectory
- SAP Earnings Preview: What Are We Watching
- SAP Earnings Takeaways: Cloud Subscriptions Fuel Growth
- SAP vs Salesforce : Which Utilizes Its Marketing Spend More Efficiently?
Real Time SCM Will Drive SCM And Analytics
SmartOps’ algorithmic approach to SCM and popular products such as its Inventory Optimization Suite will be enhanced by SAP HANA, SAP’s in-memory analytics platform and this will allow consumers to process high volumes of data in real time. This will enable SAP to deliver its existing SCM sales and operations offerings with real-time processing capabilities, which is likely to drive SCM sales. SAP will also benefit from products such as SmartOps’ Enterprise Demand Sensing, a cloud-based analytics solution, which will be integrated into SAP’s Demand Signal Management software.
We currently have a $73 Trefis price estimate for SAP, which is about 10% below than the current market price.Notes: