SAP buys Ariba: a bird’s-eye view of the buzz so far

May 24, 2012  |  Merger, Acquisition, Funding

Eat and get eaten. Soon after Ariba bought B-process, Ariba itself became a prey for SAP. The same SAP that earlier had also taken over Crossgate. Yep, SAP is swiftly becoming a real giant in the field of information exchange. And they’d better if they are willing to spend a massive 4,3 billion dollar.

So after the news came out, we received tons of e-mails, tweets, notifications, alerts and so on. Soon after our e-mail inbox quickly got out of breath. In the meantime the pond with commentators started croaking on this big deal. So take a look at a few commentators up until now (in random order of course wlEmoticon smile SAP buys Ariba: a birds eye view of the buzz so far).

Forrester (our favourite)

  • I’m not convinced that this acquisition makes strategic sense.
  • The tremendous duplication of products will not generate the kinds of revenues that SAP is expecting.
  • I think revenues from sales of Ariba’s non-network products (or from SAP’s products) will suffer as a result of the SAP acquisition, while revenues from the Ariba Network will not grow as much as SAP expects.
  • At best, the deal will be a one-plus-one arrangement in which the combined revenues of the two businesses will be the same as if they had remained separate.
  • At worst, the loss of product revenues due to integration of two competing product lines and potential organizational conflicts between the legacy SAP SRM business and the new Ariba business and the slower-than-expected growth in network revenues because of resistance to Ariba’s pricing model will mean less revenues for the combination than if they had remained separate.

Read Forrester’s full article here.

SpendMatters

  • In the case of Ariba, SAP used the internal code-name “angel” when discussing the deal.
  • Yet Ariba and SAP are not alone in the network game.
  • SAP will clearly be a dominant force for indirect procurement enablement for buyer/supplier connectivity.
  • E-invoicing is easier to see a rationalizing path – SAP will likely kill off their partnerships in this area and adopt Ariba.
  • If Ariba does prove to be SAP’s angel, then will it also prove Oracle’s P2P devil?

Read SpendMatter’s full article here.

Sharedserviceslink.com

  • SAP bought Ariba for 10 x revenue.
  • This means other service providers could use this as a benchmark for  the amount they might sell for.
  • SAP bought Crossgate in 2011, is buying Ariba in 2012… who might they buy in 2013 to own the entire market?
  • Ariba has put a huge focus on Europe for the last three years.
  • This purchase is the ultimate for Ariba as SAP is the ERP-chief in Europe, opening up massive potential for Ariba.
  • e-Invoicing is a service. SAP is stepping into a new type of business here. It will be interesting to see how SAP respond to the ‘service’ part of the offering.

Read Sharedserviceslink.com’s full article here.

Purchase Insight

  • It’s been predicted for years but now it’s happened.
  • Sure, SAP gets a powerful on demand platform but it’s the supplier network that is the real prize I suspect and this move is a game changer for the e-invoicing market especially.
  • With the acquisition of Crossgate last year, SAP acquired great strength in the Latin American burgeoning e-invoicing market  and now, with the acquisition of Ariba including the b-process (France) and the Quadrem network covering the southern hemisphere through it’s mining interests, there isn’t a territory that SAP won’t dominate in the e-invoicing space.

Read Purchase Insight’s full article here.

eWeek.com

  • The real significance is in the software Ariba distributes and the network it operates to complete procurement transactions, analysts say.
  • Ariba operates in two key areas. The first is an array of cloud-delivered applications to manage the procurement process in a company, automating such tasks as e-procurement, electronic invoicing, spend analysis, contract management and supplier management. The second part of the business is a transaction network between buyers and sellers where procurement purchases are actually made.
  • Simply put, the procurement apps are the shopping process of comparing products, negotiating terms and deciding what to buy, while the transaction network is the check-out counter.
  • SAP, combined with Ariba, creates a formidable foe for Oracle.

Read eWeek.com’s full article here.


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