In SAP's ( SAP ) recent earnings call, the company highlighted new technologies behind the growth in its Business Intelligence (BI) division. One such new product named HANA (High Performance Analytic Appliance) speeds up data storage and retrieval to unprecedented speeds.
As the market leader in Business Intelligence (BI) software, SAP threatens to widen its lead over Oracle ( ORCL ) and IBM ( IBM ) in the coming years. We estimate that SAP's share of the global BI market will increase to 24% over the forecast period. The Business Intelligence unit makes up nearly 13% of the current Trefis price estimate of $53.29 , which is close to the current market price of $52.91. If instead SAP were to grow to 35%, this would add another 6% to the stock price.
SAP Gaining Share in the Business Intelligence Market
The business intelligence market has consolidated in the past 2-3 years as larger players like SAP, Oracle and IBM have acquired smaller rivals. SAP acquired Business Objects for $6.8 billion, IBM acquired Cognos for $5 billion and Oracle acquired Hyperion for $3.3 billion.
As of 2009, SAP controlled 22% of the market followed by Oracle with 15%. In its earnings call, SAP management pointed out that BI business revenues were twice that of Oracle's in Q3 2010 and growing fast. If SAP's momentum continues, we believe there is upside to our market share estimates included in the chart below.
Innovative products to further drive SAP's market share
One way SAP is driving growth is with breakthroughs in technology. SAP unveiled HANA at a recent business conference. HANA achieves unprecedented higher performance speeds and uses a different method of storing and retrieving data by storing it on computer's CPU rather than reading and writing on storage disks.
We believe that if SAP continues to bring new products like HANA to market, this will help it distance its lead in business intelligence.
Correction : An earlier version of this article quoted the Trefis price for SAP as $51.94 instead of $53.29