SAP Cites Telcos as Fastest-Growing Customer Group

German software giant SAP says the telecom sector has been the fastest growing of the vertical markets it serves over the past 12 months.

The enterprise resource planning (ERP) specialist does not break out revenues from different sectors but tells Light Reading that operators in more developed markets are being drawn to SAP AG (NYSE/Frankfurt: SAP)'s technology as they look to "monetize" the big data and Internet of Things opportunities.

SAP has been positioning itself as the perfect analytics partner for service providers ever since it launched its HANA in-memory database management system in 2011.

The company claims that HANA's business intelligence capabilities can help operators to improve customer engagement and operational efficiency as well as come up with new business models based on the data their networks generate.

"For years the industry focused on subscriber growth but this year marks a big change," says Rick Costanzo, SAP's executive vice president and general manager of telco industry and mobility solutions. "Most forward-looking operators are wrestling with data growth on networks but agree there are valuation and monetization opportunities to be had based on analysis of real-time and contextual information."

Costanzo's remarks do not prove that HANA is taking off but may shore up confidence in the technology following reports last year that enterprise customers had been reluctant to upgrade to the platform from older systems.

According to a survey carried out by the Americas' SAP Users' Group, which represents various SAP customers, three quarters of more than 500 respondents said they had not made investments in HANA because they had not been able to justify the cost of doing so.

SAP claimed to have generated about €633 million ($708 million) in revenues from HANA in 2013, missing a forecast that it would make between €650 million ($727 million) and €700 million ($783 million), and did not break out HANA revenues in its 2014 annual report.

Overall sales rose from €16.8 billion ($18.8 billion) in 2013 to €17.6 billion ($19.7 billion) in 2014.

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Although SAP has publicized details of what Costanzo describes as a "multi-faceted" partnership with Germany's Deutsche Telekom AG (NYSE: DT), and has also flagged tie-ups with Telefónica and Telekom Slovenije , it remains highly secretive about most of its customer dealings in the telecom sector.

Even so, Costanzo says the company is working with "most of the big" operators in the EMEA region and all of the top 100 telcos in the world "and not just in the ERP space."

One unidentified but "very large" operator in North America has been able to make dramatic improvements to its churn performance by investing in HANA, he claims, while a "large European organization" has seen benefits from HANA in the areas of revenue assurance and fraud prevention.

There is a strong likelihood that organization is none other than Deutsche Telekom. DT's T-Systems International GmbH IT business has formed an especially close partnership with SAP.

The two players have developed a HANA-based traffic management system for Hamburg Port Authority, which oversees one of the busiest ports in Europe.

Cited by Costanzo as a prime example of big data monetization by an operator, the technology provides updates on traffic delays and parking spaces that can be used by drivers to reduce traffic congestion and shorten delivery times.

Last week, SAP released a new tool called HANA Vora, which Costanzo describes as a "query engine" that will allow HANA customers to analyze data from Hadoop, the open-source platform for data storage and processing.

"We've taken a pragmatic view and realized that lots of people are using Hadoop and that it's not really competing with HANA," he says. "HANA excels at real-time analytics while Hadoop excels at vast amounts of data storage -- we've always had some integration between them but this is a more formalized and prepackaged solution and we think it delivers great value."

Costanzo says that SAP already has some "brand spanking new" partners for HANA Vora and that some of its telco customers have been working on the integration of HANA with Hadoop for "quite some time."

— Iain Morris, , News Editor, Light Reading