SAP SE (SAP - Free Report) recently announced that SAP SuccessFactors solutions for human capital management (HCM) were deployed by Eversheds Sutherland Ltd, a provider of legal service worldwide.
Eversheds Sutherland is of the opinion that adoption of HCM solutions will enable it to drive digital HR transformation globally. The implementation of SAP SuccessFactors solutions has achieved an HR platform which offers better insight throughout the company’s legal operations and improves efficiency of HR processes.
With the solution, Eversheds Sutherland is well poised to help store employees, managers, HR and corporate office to better manage data. It will also aid in deriving meaningful insights and decision-making capabilities. With the aid of this solution, the company will be able to provide finest-in-class user experience for employees.
We believe incremental adoption of SAP’s SuccessFactors solutions on the back of robust visibility and traceability features is expected to favor the top line.
Adoption of SAP’s Solution: A Key Catalyst
SuccessFactors Employee Central, which forms the backbone of the company’s Human Capital Management offerings, now comprises around 3,000-employess across the U.K., France, Luxembourg, Middle East and Asia. Robust market traction of these solutions remains a key growth driver for SAP SE. Additionally; the company is well poised against its key HCM peers, even in markets outside the United States.
Moreover, SAP’s SuccessFactors Employee Central surpassed the 3,200-customer mark in first-quarter 2019.
Management is optimistic on conclusion of SuccessFactors’ migration to SAP HANA platform. This move is anticipated to enhance SuccessFactors solution with integrated predictive analytics and other capabilities. Notably, SAP SuccessFactors suite is available across 96 countries in 42 languages.
The company is also anticipated to strengthen presence in the customer relationship management market against peers including salesforce.com (CRM - Free Report) , Oracle (ORCL - Free Report) , among others.
Additionally, continued market traction of the SAP S/4HANA platform is aiding the company significantly. SAP HANA Cloud Platform and its partners have been gaining rapid popularity, assisting clients in extending functionalities, building new applications, and integrating across cloud and on-premise platforms, in turn fueling growth.
It has been acting as a catalyst since its introduction. The company constantly upgrades existing products and launches fresh ones to gain customers.
Cloud still remains an expanding market with high growth prospects. In a recent report, Gartner projected the public cloud market to reach $411.4 billion by 2020. According to International Trade Administration, the Chinese cloud market is likely to touch $20 billion mark by 2020 at a CAGR of 40%.
We believe that SAP, with its ongoing initiatives, is well poised to capitalize on the opportunities. In fact, the cloud computing is likely to be one of its major growth drivers in the long run.
The company has been focused on expanding cloud business to become one of the leading players in the category. Further, SAP has a competitive edge over its cloud competitors as its processes are designed to be industry-specific and can be customized to meet corresponding business requirements.
However, the company’s stock has yielded a return of 11.7% in a year, underperforming the industry’s growth of 22.1%. Continued investment in a standardized converged HANA-based cloud platform and expenses incurred for new technologies resulted in a revenue mix-shift effect between its cloud and on premise business.
Zacks Rank & Other Key Picks
SAP currently carries a Zacks Rank #5 (Strong Sell).
A better-ranked stock in the broader technology sector is Cirrus Logic, Inc. (CRUS - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Cirrus Logic has a long-term earnings growth rate of 15%.
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