SAPSAP's (SAP) business is humming along nicely with its core businesses consistently posting double-digit revenue growth. Revenues from the its two main revenue streams – software and support – increased by 26% and 10%, year over year, in the second quarter, while its total revenues were up 14%.

We look at how some of its new initiatives, such as HANA and Business ByDesign, are performing, below. We expect these to support future top-line growth and help fend off competition from the likes of Microsoft (MSFT), Oracle (ORCL) and Salesforce.com (CRM).

We have revised our Trefis price estimate for SAP to $62 per share, which is slightly ahead of the current market price.

Innovation to Drive SAP's Revenue Growth

SAP recently launched several new products that are seeing high adoption rates. We believe these new products will be integral in driving SAP's growth in the coming years.

1. HANA (High Performance Analytic Appliance)

HANA is an in-memory computing solution that speeds up data storage and retrieval significantly. HANA has seen some strong demand and had the fastest growing pipeline exceeding €400 million by the end of Q2. With the success of HANA, SAP should be able to maintain its lead in the Business Intelligence software market, which accounts for just under 15% of our price estimate. We expect SAP to have a 26% share of the BI market by the end of the forecast period.

2. Business ByDesign

SAP has traditionally been a leader in the enterprise-resource-planning software market, also known as ERP, but it has been losing market share slowly. It hopped on to the on-demand bandwagon rather late, compared to Oracle and Salesforce.com. However, it has been gaining some traction with its recently released Business ByDesign on-demand solution, and has already signed up 550 major customers. This should help stem the decline in SAP's ERP market share.

Resource-planning software and customer-relationship software account for 36% and 20% of our price estimate, respectively.

Other new products, including Sybase Unwired, a mobile enterprise architecture on which businesses can deploy their applications, also should help improve sales of existing core business solutions by augmenting them.

Check out our complete price analysis of SAP.

Trefis is an online investment research platform targeted towards individual and professional investors. Trefis also includes a community of users that can create and share their models and analysis on trefis.com.

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