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SAP Forges Ahead with Product Launches: Will It Help?

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Riding high on its strong cloud business, enterprise application provider SAP SE (SAP - Free Report) recently came up with two new cloud offerings, SAP Hybris Service Engagement Center and SAP Geographical Enablement Framework.

This came close on the heels of a string of launches last week at the SAPinsider, where the company rolled out products like SAP Cloud Identity Access Governance, SAP HANA smart data integration, SAP HANA smart data quality, SAP Data Services, SAP Information Steward software and the SAP Agile Data Preparation application.

Product Details

SAP Hybris Service Engagement Center: This is an omnichannel cloud customer engagement solution that will aid clients to deliver contextual and relevant service experiences regardless of channel or device. This offering further expands the company’s service solutions in the SAP Hybris portfolio and will help organizations in combining unassisted and assisted service with digital commerce during and after the buying process.

The company believes this solution will take call centers to the next level by resolving issues stemming from the ongoing proliferation of interaction channels and customer touch points. Notable benefits would include higher agent productivity, accelerated online buying decisions, lower return rates and reduction of operational costs.

SAP Geographical Enablement Framework: This offering will help business enterprises supplement business applications with geographic data from geographic information systems (GIS), such as Esri ArcGIS. Also, continuous collaboration between SAP and Esri will help clients to obtain contextual insight from business and spatial data. In addition, this can also be used in conjunction with SAP BusinessObjects Cloud and SAP BusinessObjects Lumira software to enrich data with geographic information and map visualizations.

Strong Headwinds

Despite the product launches and thriving cloud business, SAP’s prospects looks murky. A host of factors like stiff competition in the IT services industry, persistent weakness in multiple end-markets like Latin America and Brazil along with escalating research and development expenses pose significant headwinds. Also, there is an inherent seasonality in client’s technology spending, which exposes the company’s sales to risks of quarterly fluctuations.

As a matter of fact, earnings estimates of the company have been going down prior to its second-quarter results.  Over the past 30 days, brokers have revised earnings estimates downward from $3.61 to $3.52, reflecting a bearish outlook. In addition, inherent seasonality in technology spending has largely hurt this Zacks Rank #4 (Sell) company’s software revenues and may continue to do so in the to-be-reported quarter.

Better-ranked stocks in the industry include CommVault Systems, Inc. (CVLT - Free Report) , Citrix Systems, Inc. (CTXS - Free Report) and Exa Corp. , each sporting a Zacks Rank #1 (Strong Buy).

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