Several years ago, when I was writing for an audience of CFOs, the financial software industry went through a wave of particularly active consolidation when first Oracle paid $3.3bn for Hyperion, then SAP shelled out $6.8bn for Business Objects and then IBM acquired Cognos for $4.9bn. All were big-ticket acquisitions as the enterprise software industry finally nailed down the business intelligence and performance management space.
Now, it seems, it’s the turn of sourcing and procurement. SAP’s planned $4.4bn (note the word planned) acquisition of Ariba, follows IBM’s acquisition of Emptoris earlier this year and - should it go through - provides the German software group with a significant foothold in the cloud commerce space. (Ariba has long been touting its vision of cloud commerce, and provides a platform through which organisations can manage their business-to-business transactions online. Similarly, IBM has been pushing its Smarter Commerce initiative.)
But the interesting battle is between SAP and long-time enemy Oracle, itself a strong player in the cloud sourcing and procurement space and with a huge number of clients it shares with, crucially, Ariba.
There is already speculation that a counter offer for Ariba may well be tabled by Oracle. Andrew Bartlolini, chief research officer at Ardent Partners, believes that there is a greater than 50% chance that another company will come forward - and there aren’t too many suitors that have the necessary firepower... Bartolini offers an interesting and concise analysis of the proposed acquisition here.
For CPOs, this deal has more than a passing interest. Many will be users of Ariba and many will be users of SAP and for those who are users of both, the news can only be a good thing as greater integration of the products is pursued. But for those who are users of Oracle and Ariba, the news may come with a slightly more sinister tone. Large organisations can spend millions of dollars and many months installing enterprise software solutions, and more besides on integrating add-on modules such as e-sourcing and contract management. In the medium to long term, and if SAP does acquire Ariba, it will certainly have implications for those Oracle users who also use Ariba tools.
But the bigger question is, will Oracle spoil the SAP party?
David Rae is editor of Procurement Leaders. To subscribe to the magazine, click here.