By Anne Widjaja
SAP AG has announced the acquisition of Ariba, an international leading cloud-based business commerce network, for US$4.3 billion. The acquisition marks the expansion of SAP’s cloud strategy into the B2B trading market.
Ariba is the world’s largest trading partner community, with more than half of its 730, 000 client base listed on the Fortune 500. The network connects and automates more than $319 billion in commerce transactions. Headquartered in California with 2600 employees, Ariba combines industry-leading technology with a web-based trading community to help companies connect with a global network of partners.
As well as being a leader in cloud-based collaborative commerce applications, Ariba is also the second largest cloud vendor by revenue. With $444 million in total revenue for 2011, Ariba experienced 38.5 per cent annual growth in 2011. Its business network recorded 62 per cent organic growth in the same period.
The Ariba board of directors unanimously approved the acquisition decision. The transaction will be expected to close in Q3 2012, subject to stockholder approval and regulatory clearance. Upon completion, cloud-related supplier assets of SAP will be consolidated under Ariba.
Bob Calderoni, CEO, Ariba, said that the way networks now affect how we personally connect and share information, has also influenced how businesses collaborate with one another.
“Businesses are looking for the same connectedness, insight, and efficiencies in the processes and collaboration with customers, suppliers, and partners beyond the walls of their companies,” Calderoni said.
“By combining Ariba’s open global trading network and SAP’s solutions and analytics, we are ushering in a new era of business-to-business collaboration and driving new levels of productivity.”
SAP’s acquisition aims to combine Ariba’s extensive trading network with SAP’s 190,000-strong customer base, which not only has the potential to grow this trading network, but also can increase the volume and types of transactions conducted.
According to SAP, together the companies will create new business value for customers through:
– Delivery of end-to-end solutions that enable companies to achieve a closed-loop from source-to-pay, regardless of whether they deploy in the cloud or on premise, or both.
– Greater facilitation of participation and benefits of business collaboration to all companies, on any system, from any provider.
– The Ariba network’s performance will be improved by its delivery on SAP HANA.
– Relationship and transaction information from commerce activity in the Ariba network together with SAP analytics will provide real-time insights to trading partners.
– SAP customers will be able to easily connect to the business network through pre-built integration points.
– Organisations can gain 360-degree business intelligence and demonstrate that spending activities, contracts, and supplier interactions adhere to corporate compliance guidelines.
SAP’s entry into the B2B network space presents new opportunities for growth in fast growing B2B segments, and will also accelerate SAP’s rapidly expanding cloud strategy. The acquisition has followed SAP’s recent unveiling of its new cloud applications business roadmap, which features the development of apps for four new lines of business (customers, suppliers, employees and financials).
“The cloud has profoundly changed the way people interact. The impact will be even greater as enterprises connect and collaborate in new ways with their global networks of customers and partners,” said SAP co-CEOs Bill McDermott and Jim Hagemann Snabe.
“Cloud-based collaboration is redefining business network innovation, and we are catching this wave in the early stage of its evolution. The addition of Ariba will create the business network of the future, deliver immediate value to our customers and provide another solid engine for driving SAP’s growth in the cloud,” they said on the acquisition.
The existing management team of Ariba will stay on and the company will operate independently under the name as ‘Ariba, an SAP company’. The SAP Executive Board intends to nominate Ariba CEO Bob Calderoni to the SAP Global Managing Board after closing of the transaction and subject to the approval of the SAP Supervisory Board.
