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Software AG extends SAP alliance to analyze digital supply chains

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Software AG has extended its alliance with SAP into the realm of digital supply chains by enabling its TrendMiner analytics software to be deployed on S/4HANA Cloud from SAP.

TrendMiner analyzes sensor data that has been collected from a factory floor and stored in a time-series database. Instead of requiring organizations to hire data science teams to analyze that data, TrendMiner provides business end users with an application they can use themselves to improve overall product quality, Software AG CEO Sanjay Brahmawar said.

Software AG acquired TrendMiner in 2018 as part of a push to enable organizations to analyze data in near real time without having to build a data lake. TrendMiner pulls sensor data directly into its application that can then be analyzed alongside data residing in an enterprise resource planning (ERP) platform, such as S/4 from SAP. “We’re integrating analytics as a service,” Brahmawar said.

While some organizations may be able to build data lakes and hire data science teams, Brahmawar said business users will generally prefer to take advantage of the benefits of data science to drive better business outcomes using a self-service application.

During a Capital Markets Day event held this week, Software AG revealed its plan to accelerate a Helix transformation initiative the company launched two years ago by bringing forward between €30 million and €40 million (roughly $36 million to $48 million) in investment this fiscal year that was originally planned for next year.

The company is in a position to make that move after seeing bookings increase 24% in fiscal 2021 during an economic downturn brought on by the COVID-19 pandemic. Revenue for fiscal 2020, however, was €671.1 million ($810.5 million), down 1.6% from the previous year. Fourth-quarter revenue was €201.0 million ($242.8 million), down 3.3% from a year ago.

Software AG is targeting a “connected enterprise” market opportunity that it expects will be valued at $28 billion by 2023. Segments of that market include an integration and application programming interface market that is expected to grow at a compound annual growth rate (CAGR) of 10% to reach $13.5 billion by 2024; an internet of things (IoT) and analytics market that is expected to grow at a CAGR of 26% to reach $9.8 billion by 2024; and a business transformation market that is expected to grow at a CAGR of 10% to reach $4.9 billion by 2024.

The senior leadership of Software AG told investors the company plans to deliver €1 billion ($1.2 billion) in revenue by 2023, with a 25% to 30% operating margin. Part of that plan includes inorganic growth stemming from mergers and acquisitions the company expects to make now that its balance sheet is more stable.

Software AG is not the only provider of software eyeing the connected enterprise opportunity. SAP, for example, may partner with Software AG in some scenarios, but it has its own Intelligent Enterprise initiative. Oracle and IBM have their own variants on the same modern enterprise theme. Digital supply chains are a major area of focus because the COVID-19 pandemic exposed how fragile many of the supply chains that organizations depend on really are when factories in, for example, Wuhan, China are forced to shut down.

There’s no doubt data science coupled with various forms of AI will transform how organizations operate in the years ahead. Less clear is to what degree organizations will want to build those capabilities themselves. In a lot of instances, the data science capability an organization is trying to create is likely to show up in a packaged commercial application before that organization completes the project. That doesn’t mean organizations shouldn’t invest in AI and data science technologies. However, it does mean organizations should give some thought to how and where they focus those build efforts, given the fact that packaged application providers will be making advanced AI capabilities readily available as part of an existing subscription license that most organizations already automatically pay for.

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