The largest online retailer Amazon.com, Inc.’s (AMZN) Amazon Web Services (“AWS”) has been certified by SAP AG (SAP) to run SAP Business Suite software on the AWS Cloud. AWS is a cloud-based storage service.
Amazon’s AWS cloud platform, supported by SAP’s various business applications, will meet the needs of business communities to speed up the innovation process, while at the same time reducing costs. Amazon has introduced a pay-as-you-go model for the AWS platform, which will allow enterprises to pay only for the resources they use.
Following its expansion activity in Australia, Amazon has nine data center hubs across the world including three data centers in the Asia Pacific for AWS.
The AWS can support SAP’s software including SAP Enterprise Resource Planning (SAP ERP), SAP Customer Relationship Management (SAP CRM), SAP Product Lifecycle Management (SAP PLM), SAP Supply Chain Management (SAP SCM) and SAP Supplier Relationship Management (SAP SRM) applications.
Implementing SAP software in a business is very expensive. Further, installing software and hardware, and then providing the requisite training significantly raises the cost of ownership. A company therefore finds it difficult to switch to another SAP vendor as the cost rises. Also, all SAP packages may not fit a company's business model; thereby the need for customization further increases costs.
Gartner estimates that cloud infrastructure services will reach $8.1 billion by 2013, increasing at a CAGR of 35.6%. Hence, opportunities are present for Amazon to scale up its AWS cloud platform further.
Amazon’s third quarter revenue was $13.81 billion was up 7.6% sequentially and 26.9% from the year-ago quarter. This was better than guided and more or less in line with consensus expectations. Excluding unfavorable currency impact, revenue increased 30% year over year.
Currently, Amazon has a Zacks #4 Rank, which implies a Sell rating. However, SAP AG has a Zacks #2 Rank implying a Buy rating in the short term.
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