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SAP's Upgrade2Success to Aid Transition from HR to the Cloud

Zacks Equity Research

As a first in a planned series of offerings in the year, SAP SE SAP recently announced a program, Upgrade2Success, to aid on-premise customers in transition from SAP ERP Human Capital Management (“HCM”) solutions to the cloud. The Upgrade2Success services and tools will allow customers to discover as well as attain additional business value at low risk by enabling them to move and expand their HR processes to the cloud.

The program’s comprehensive set of services and tools enables smooth digital HR transition at a low risk. The transition to cloud-based SAP SuccessFactors solutions will simplify HR with standardized and streamlined business processes, and allow IT resources to focus on business-value creation as well as innovation. This will also enable the organizations to stay updated with technology innovations with updates delivered each quarter.

Existing Business Scenario

SAP has been concentrating on expanding cloud business to become one of the leading players in the category. The company has a competitive edge over peers as its processes are designed to be industry-specific and can be customized to meet corresponding business requirements. The company’s human capital management applications are gaining tremendous popularity with several international organizations. Cloud subscriptions and support revenues are anticipated to surpass software license revenues in 2018, consequently supplementing the company’s financial performance. Further, the company’s new class of solutions that power the next generation of business applications — SAP HANA — has been boosting growth since introduction. Driven by solid market traction of cloud business, the company has raised mid-term outlook, signaling brighter days ahead.


However, dull prospects of the global IT industry in recent quarters, along with flat customer spending projections have adversely affected performance. Also, many of the company’s emerging markets have faced fiscal imbalances and general economic slowdowns over the past few quarters, which adversely impacted purchasing power. In light of such headwinds, shares of this Zacks Rank #3 (Hold) stocks have yielded a return of 9.8% in the last six months, underperforming 18.2% growth recorded by the industry. Currency fluctuations in many of its key markets are also affecting financial performance.

Stocks to Consider

Some better-ranked stocks from the same space include Analog Devices, Inc. ADI, AMTEK, Inc. AME and ASML Holding N.V. ASML. While Analog Devices sports a Zacks Rank #1 (Strong Buy), AMTEK and ASML Holding carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 16.3%.

AMTEK has outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 4.1%.

ASML Holding has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 14.8%.

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