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SAP AG (SAP - Analyst Report) recently announced its plans to acquire SmartOps, a leading provider of inventory and service-level optimization software solutions. The financial terms of the deal, which is expected to close by the first quarter of 2013, remained undisclosed. As per the terms of the agreement, the employees of SmartOps will be joining SAP.

The acquisition of SmartOps is strategic move by SAP as it perfectly compliments the SAP HANA business. SmartOps’ existing Inventory Optimization Suite will perfectly match and increase sales and operations planning solutions based on SAP HANA, thereby allowing a "real-time supply chain" solution to be built on SAP HANA.

In addition, the acquisition builds on the existing SAP portfolio of multi-stage inventory optimization solutions that global businesses require in currently in a tough competitive scenario.

Today, companies around the world are faced with challenges associated with volatile markets and complexity of logistics management. Therefore, striving in this environment requires an understanding of the demand pattern of the products and an efficient supply network.

Hence, with SmartOps on board, SAP will be able to provide these vital solutions to the businesses. The demand for the supply chain software is growing and is expected to have a annual growth of approximately 8%, exceeding $9 billion by the end of 2013.

SmartOps primarily offers key operating parameters and ensures efficient and effective supply chain management (SCM) planning. Its solutions organize capacity, inventory, demand, lead time and product availability variables that facilitate customers to plan inventory and service levels, thereby freeing up working capital for innovation and growth.

Before the announcement of this deal, SmartOps and SAP already had business relations as both were jointly delivering best-in-class supply chain solutions to many large enterprise customers.

In the last reported quarter (4Q12), SAP reported year-over-year earnings growth of 7%. Profits during the quarter were driven by delivering specific industry solutions strategic investments in its flagship innovation SAP HANA.

Although SAP has a Zacks Rank #3 (Hold), its competitors like Symantec (SYMC - Analyst Report) and LM Ericsson Telephone Company (ERIC - Analyst Report) carry Zacks Rank #1 and Compuware Corp. (CPWR - Analyst Report) has a Zacks Rank #2.

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