May 22, 2012 – SAP AG announced a $4.3 billion buy of cloud collaboration provider Ariba from subsidiary SAP America, a week after the German-based enterprise software vendor rolled out a new cloud strategy and offerings at its annual user conference.
SAP stated that the deal would lead to combination of Ariba’s buyer-seller collaboration network with its own business-to-business collaboration in the cloud. In a presentation on the deal, SAP presented how they believe their enterprise applications for cloud, mobility and analytics, as well as databases running on top of its in-memory platform HANA, could connect to and expand Ariba’s cloud business networks. SAP also reiterated the “accelerated” movement toward cloud services and solutions from leaders at its Sapphire Now conference last week in Orlando. There, SAP also introduced a series of cloud offerings for specific industries with ties to the vendor’s ERP software.
Ariba is based in Sunnyvale, Calif., with 2,600 employees running a cloud network that runs commerce transactions for more than 730,000 companies, according to SAP. The Germany-based SAP’s America division headquarters is in Newtown Square, Pa. and it’s led by co-CEO Bill McDermott. McDermott and co-CEO said in a release on the deal that they felt it capitalizes on interactions found in cloud computing, which they see as “redefining business network innovation.”
The basis of the move addresses issues of cloud customer service and interactions across multiple channels, two areas that Ventana Research's Mark A. Smith pointed to as lagging in his takeaways from SAP's user conference last week. Saugatuck Technology's Bruce Guptill, assessing SAP's cloud rollout from last week, wrote that the megavendor is making a big bet that more enterprises are planning to shift their processes to on-demand and as-a-service deployments.
"For SAP's core business strategy to work, cloud IT and business have to be at least as important and widely used as we think it will be," Guptill wrote. "If buyers and users give up on cloud, SAP loses and loses big."
SAP plans to pay for the deal from free cash and a $2.4 billion Euro ($3.07 billion USD) term loan facility. Ariba’s board of directors has unanimously approved the decision, and the deal is expected to close in the third quarter of 2012, according to an SAP release. At the completion of the deal, all cloud-related supplier assets of SAP under Ariba, with a management team to remain in place at Ariba except for CEO Bob Calderoni, who will be nominated to the SAP Global Managing Board. (For a PDF presentation on the Ariba deal, click here.)
In November, SAP made a $3.4 billion purchase for human resources SaaS provider SuccessFactors.