SAP has officially staked its claim in the cloud space with the acquisition of SuccessFactors, a leading provider of cloud-based human capital management solutions, for US$3.4 billion.
According to SAP, the acquisition will accelerate its momentum as a provider of cloud applications, platforms and infrastructure, and by combining the solutions owned by both companies, will establish an “advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business process”.
SuccessFactors is believed to operate the largest scale of paying cloud users with 15 million subscription seats and a scalable platform that can support organisations of all sizes. With more than 3500 customers in 168 countries, SuccessFactors reported 77 percent revenue growth year-on-year for the third quarter 2011. It generates more than 80 per cent of new sales from applications that did not exist five years ago.
The transaction was unanimously approved by the SuccessFactors board of directors, with SAP’s $40 per share offer representing a 52 per cent premium over both the 2 December closing price and the one month volume weighted average price per share.
Upon completion of the transaction, Lars Dalgaard, founder and CEO of SuccessFactors, will lead the cloud business of SAP in addition to continuing his CEO role with SuccessFactors, which will remain independent and be named ‘SuccessFactors, an SAP company’.
SAP says the SuccessFactors solutions are highly complementary to SAP’s core HCM offerings as well as its cloud assets, including SAP Business ByDesign and SAP’s line of business cloud offerings for large enterprises such as SAP Sales on Demand.
“The cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally – managing people and talent,” said Bill McDermott, co-CEO, SAP.
Dalgaard said the acquisition will accelerate the company’s roadmap by 10 years.
“Expanding relationships with SAP’s 176,000 customers with our speed to value, friendly user interface, on mobile devices and the web, and seamlessly delivering more SAP solutions in the cloud will be legendary, as organisations adopt the cloud to improve their business. SuccessFactors has proven we have the technology and people to deliver the world’s biggest cloud deployments in terms of users and countries per customer, and also the most applications per customer from the same flexible scalable cloud platform. The business world is ready for enterprise-class cloud applications and together, we can deliver incredible new innovation for global businesses.”
