SAP to buy Ariba for $4.3 billion – a game changer in B2B

SAP to buy Ariba for $4.3 billion – a game changer in B2B

Posted by Pete Loughlin in e-invoicing, e-Procurement, News 23 May 2012

It’s been predicted for years but now it’s happened. SAP are to buy Ariba for $4.3 billion.

Reported in the FT late yesterday, the $45 per share offer sits at 20% above Ariba’s current valuation and it confirms SAP’s aggressive ambitions in the B2B and cloud space.

According to the FT, Bill McDermott, SAP co-chief executive told an analyst conference call that Ariba was the most successful global trading network in the world.

“We are taking another bold step in our strategy to achieve leadership in the cloud,” he said. “With this acquisition, SAP will also become the clear leader in on-demand supplier relationship management or SRM.”

There’ll be much comment in the coming days on the significance of this acquisition and the FT is already making a cloud story of it but I think this has greater significance and it has less to do with cloud and more to do with SRM and P2P.

SAP’s SRM technology is already amongst the leaders and as Jason Busch has reported recently, their new user interface is highly credible amongst it’s peers. 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 acquistion 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.

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  • Michael May 23, 2012 at 9:56 am /

    Pete,

    I have to agree that this looks like a game changer if you put all the different e-invoicing activities together.

    But the history of SAP’s bigger acquisitions cannot prove that merging all these offerings together will happen in an efficient way. I would not be surprised if it takes at least one year until they have figured out and implemented a new joint organisation. Of course there will be no innovations in the meantime, all development activities will focus on integration of the different solutions. In addition, the e-invoicing part of this trade is especially hampered because a) it is not the biggest part of Ariba and b) the “weaker” solution yet stronger organisation (SAP) will fight for their internal assets.

    So, in my opinion, it could be a game changer BUT they need to execute fast and make the right decisions. And this is not really backed up by a proven track record of SAP in such situations. All this in an environment where the next 1-2 years will be crucial in the market.

    Michael

  • Pete Loughlin May 23, 2012 at 10:00 am /

    Anyone remember Commerce One?

  • Michael Bruening May 23, 2012 at 12:12 pm /

    An interesting blog post by Christian Lanng on this topic:
    http://tradeshift.com/blog/sap-acquires-ariba-our-thoughts/

  • Seb May 23, 2012 at 4:48 pm /

    I agree this acquisition does not paint a clear picture, the language used and terminology point to new age. But underneath neither business has secured a successful model to attract the masses or operate in the cloud. Both organisations are about fee’s and value for whom? History has shown that this joining of two entities will take time and confuse many. Two old business models fusing together isn’t dynamic, the sum of 1+1 does not equate to the greater 2 here. Merely 1.2

  • john mardle May 25, 2012 at 12:57 pm /

    Very interesting post, particulraly when the P2P angle is played out as this is where the banks with SCF want to play in their future business models.

  • Volker Kunkelmann May 28, 2012 at 8:03 am /

    What Software AG will do now? Will they buy SAP ?

  • Jessica May 31, 2012 at 3:44 am /

    This was an interesting move, I’m very curious to see how this will play out in the next few months.

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