SAP (NYSE: SAP) is one ERP player that has successfully adapted itself to the changing market landscape. After proving its mettle within the Cloud/Big Data market with HANA, the company is now gearing up to target the Internet of Things (IoT) segment.

SAP’s Financials
SAP’s third quarter revenues grew 8% over the year to €5.4 billion (~$5.9 billion) compared with the market’s forecast of €5.3 billion (~$5.8 billion). Operating profits came in at €1.64 billion (~$1.79 billion), falling short of the market consensus of €1.65 billion (~$1.8 billion). Adjusted EPS of $1.02 was also short of the Street’s forecast of $1.05 for the quarter.

By segment, revenues from Services revenues were up 6.6% to €920 million (~$1 billion). Cloud and Software business, which includes Cloud Subscriptions & Support and Software licenses & support, grew 8% over the year to €4.5 billion (~$4.9 billion). Within the segment, Cloud Subscriptions & Support revenues grew 28% to €769 million (~$857.9 million), while Software licenses and support reported revenues grew 4.6% to €3.7 billion (~$4.1 billion). By region, revenues from the Cloud and software segment grew 8% in Europe, the Middle East and Africa, 9% in the Americas, and 8% in Asia Pacific.

For the current year, SAP increased the outlook for earnings to €6.5 billion-€6.7 billion (~$7.1-$7.3 billion).

SAP’s IoT Growth

According to a recent report by Machina Research, the total number of IoT connections are estimated to grow 16% annually over the next ten year period from 6 billion in 2015 to 27 billion in 2025. The total IoT revenue opportunity is projected to grow to $3 trillion in 2025 from $750 billion in 2015. Given the market opportunity, SAP is increasing its focus on the segment. Last month, it announced plans to invest $2.25 billion in the development of its IoT offerings.

As part of this focus, SAP recently announced the acquisition of Plat.One, a developer of a platform used for creating, deploying, and managing IoT applications. The Plat.One platform has been developed for large-scale implementations, and offers IoT and machine-to-machine application development tools, along with data and device management capabilities. Terms of the deal were not disclosed. Post the acquisition, SAP will integrate its IoT capabilities including device lifecycle management and connectivity, and IoT edge capabilities into SAP HANA Cloud Platform.