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SAP to Buy KXEN to Strengthen Analytics

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SAP AG (SAP) is planning to acquire KXEN, a leading provider of predictive analytics technology, to strengthen its analytics software capability. The deal is expected to close during the fourth quarter of 2013, but no financial details were disclosed.

Through this acquisition, SAP intends to launch new predictive capabilities across 25 industries (approximately), especially to data-intensive vertical industries such as telecommunications, retail, consumer products, manufacturing and financial services.

Thus, customers will be able to better access big data and the predictive analytics software will give them a predictive insight to understand present trends and have an idea about the future happenings. 

Further, SAP will gain a competitive advantage by being the first company to offer such innovative platform.   

The acquisition of KXEN is a strategic move by SAP and comes at an opportune time, as the market for predictive analytics software is currently estimated to be worth $2 billion and is expected to exceed $3 billion in 2017, according to Worldwide Business Analytics Software 2012-2016 Forecast and 2011Vendor Shares, Jun 2012.

Based in San Francisco, KXEN primarily provides predictive analytic tools and applications that automate the end-to-end modeling process, facilitating better delivery of highly accurate and robust predictive models. Its flagship product InfiniteInsight replaces the traditional model creation process, which is manual, repetitive and is subjective to human errors.

This product helps customers perform important analysis with speed and allowing them to derive accurate analysis of data in the customer life cycle process, that include acquisition, cross-sell, up-sell, recommendation, retention and next-best activity. In addition, InfiniteInsight also helps customers to gauge the business for risk, fraud and operations. The company has major operating locations in London and Paris.

KXEN’s InfiniteInsight perfectly complements the existing analytics portfolio of SAP, which includes SAP Predictive Analysis software. The combined predictive technology is believed to augment the core value of SAP applications, which is used for managing operations, customer relationships, supply chains, risk and fraud. This apart, SAP also intends to include the KXEN technology into cloud and on-premise SAP applications that are developed on SAP HANA, which include the SAP Fraud Management analytic application, SAP Smart Meter Analytics software and the SAP 360 Customer solution.

SAP AG is a market leader in enterprise application software. Its leading ERP software helps businesses by integrating their back office to boardroom, warehouse to storefront, desktop to mobile devices.

However, SAP currently has a Zacks Rank #4 (Sell). Other stocks in the software industry that are more promising at the moment include Dealertrack Technologies, Inc. (TRAK), Trend Micro Inc. (TMICY) and Advent Software, Inc. (ADVS). Dealertrack Technologies and Trend Micro carry a Zacks Rank #1 (Strong Buy), while Advent Software has a Zacks Rank #2 (Buy). 

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