SAP Eyes $75B Opportunity In Cloud Procurement

Cloud-based technology has earned significant attention among businesses as a way to organize and secure corporate information and operations. The industry often struggles to turn a profit, experts say, but one of Europe’s largest software conglomerates has maintained its direction toward utilizing cloud technology in the B2B procurement market – one the company believes could be worth billions.

Germany-based B2B SaaS developer SAP recently launched its new Business Network unit, an operation its director, Steve Singh, told Reuters could lead to billions of dollars in profits by aiding corporate procurement through cloud services. “There is a $75 billion opportunity,” he told Reuters.

SAP’s new division will target multinational corporations that spend billions every year on purchasing goods and services, reports said. Experts predict that the rise of subscription-based purchases will also boost the industry, and SAP is looking to tap into the subscription services and recurring fees sector.

The company is relocating much of its operations to cloud-based services, and those recurring procurement fees could help SAP gain the financial padding it needs to continue its business model restructuring, reports said.

In addition to cloud-based procurement services, SAP is also exploring the development of a network of B2B suppliers for high-volume buyers. By targeting multinational companies, reports said, SAP can also benefit from the hotel and travel industries.

Recent months have seen SAP spend nearly $20 billion in acquisitions of cloud-based services, and the company has nabbed the top spot in the B2B Software-as-a-Service market. ECommerce service Ariba and travel and expense management firm Concur have all joined the SAP conglomerate.

Together, SAP’s recent business moves have all been part of a strategy to secure a stronger lead in the B2B cloud-based procurement market. According to reports, SAP aims to secure an underlying operating profit of up to 9 billion euros by 2020; its operating profit in 2014 was 4.33 billion euros.