If you Google the words SAP and Ariba these days, you get almost three million hits. SAP America, Inc.’s takeover of Ariba, a provider of collaborative business commerce solutions, is creating quite a stir in the business world: SAP has “snatched up the competition,” says the German Handelsblatt publication. A blogger on the German business Web site WirtschaftsWoche speculates about further acquisitions. But analysts are keeping it all in perspective:
“A progressive move,” says Lünendonk.
Experts agree: It was a good move for SAP, and above all, it was forward-thinking. According to Mario Zillmann, head of Professional Services at Lünendonk, the step was an investment in the future. “SAP’s takeover of Ariba has showcased the importance of cloud services as a future growth area. In that respect, Ariba can be seen as the consistent follow-up to SAP’s acquisition of SuccessFactors, the HR software provider,” says Zillmann. Andreas Fey, partner in Deloitte’s Technology Advisory Services, adds, “This acquisition fits into SAP’s product strategy. SAP already has Supplier Relationship Management (SRM) functionality in its ERP portfolio. Ariba will help expand this offering significantly with cloud-based solutions. Ariba is the leading provider of Web-based sourcing solutions, and its software is used by many companies around the world.” So SAP is at a clear advantage here: “SAP can offer its existing customers enhanced functions and, with the addition of Ariba’s customer base, has won new target customers for the rest of the SAP product portfolio,” explains Fey.
“Process chains transcend company boundaries,” comments IDC.
For Zillmann, the crucial question is: How will the integration fare? Presumably well, expects Ruediger Spies, vice president with IDC Central Europe. “SAP and Ariba have a long tradition of collaboration. This proved to be quite beneficial in the acquisition – the companies know each other and most importantly, they know the technology.” he notes. And SAP knows how to leverage this, he continues. “Up until now, SAP scored points by optimizing process chains within organizations. Thanks to Ariba, they can now do this between organizations as well. This means that users who operate SAP applications at both ends of the Ariba platform now get everything from a single source.”
Andreas Zilch, executive board member at Experton Group, complimented SAP on its “brilliant move.” Zilch explains: “The move gives SAP control of the premier buyer-supplier network, which it can tightly integrate into its supply chain applications. This will give SAP a strong chip to play when dealing with Oracle.” The market will change, predicts Zilch.
Experton Group: Tight Integration with SAP Supply Chain Possible
He’s right, say the other analysts. SAP is strengthening its own position vis-à-vis Oracle and Microsoft. But here, too, we must remember not to jump the gun. “The balance of power on the global market will basically stay the same. It’s not the case that SAP is now pulling ahead of its competitors,” explains Frank Niemann, principal consultant for Software Markets at Pierre Audoin Consultants (PAC). Deloitte’s Fey likewise predicts, “There won’t be any noticeable shifting of power on the world market among enterprise software providers.”
Lünendonk: Huge Potential for Efficiency in Logistics Processes of Large Enterprises
Spies of IDC prefers to look at things from a user perspective: “We are seeing increased motivation among former Ariba customers to implement SAP software.” According to Hartmut Lüerßen, partner at Lünendonk, “The purchasing and logistics processes of large enterprises harbor great potential for efficiency gains, particularly in the automation and digital linking of their ecosystems, which are made up of suppliers, business networks, customers, and logistics companies. Large corporations and conglomerates invest enormous sums of money to reorganize these processes.” Lüerßen further: “SAP can now deliver a new and complementary solution for mapping cross-company business processes.”
To what extent should the Ariba acquisition be regarded as a break with SAP’s corporate tradition? The analysts disagree on this point. “I don’t see it as a break with its tradition of organic growth. SAP has always stressed it wants to make the most of every available opportunity, even of those outside its strategy for organic growth.” Frey holds a similar view. He recalls SAP’s 2001 takeover of TopTier Software and subsequent acquisitions. “So it’s actually been more than a decade since SAP’s growth was exclusively organic.” Fey points out.
PAC: Wise Break with Tradition
PAC analyst Niemann, however, sees “a definite break.” A wise one. “One has to realize that SAP would not have reached its planned targets through organic growth alone.” he stresses. “On the other hand”, he adds, “it seems as if SAP, like Oracle, has decided to replace ‘software as a service’ (SaaS) innovation with SaaS acquisitions. If this continues, it is going to become harder to distinguish one from the other.”