SAP's $3.4B acquisition accelerates battle with Oracle

SAP America Inc., one of the largest providers of business-management software, has strengthened its position in the government cloud market by agreeing to buy SuccessFactors Inc. for $40 a share or $3.4 billion in cash.

Analysts say the merger of the San Mateo, Calif., cloud-based human capital management solutions provider accelerates SAP’s competition with archrival Oracle Corp. in the overall cloud computing market.

The acquisition will add SuccessFactors’ team and technology to SAP’s cloud assets, which will accelerate SAP’s momentum as a provider of cloud applications, platforms and infrastructure, the two companies said in a Dec. 3 news release.

The combination of SAP and SuccessFactors will establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes,” the announcement said.

The acquisition builds on a series of strategic moves in SAP’s targeted growth areas to drive innovation in its core applications and analytics; introduce breakthrough in memory technology; establish leadership in enterprise mobility; and grow its cloud portfolio, the company said.

“The cloud is a core of SAP’s future growth,” said Bill McDermott, co-CEO at SAP, the U.S. subsidiary of the German software firm.

“Together, SAP and SuccessFactors will create tremendous business value for customers, with potent synergies to accelerate our growth in the cloud,” he said.

The SuccessFactors acquisition comes six weeks after Oracle agreed to buy another cloud competitor, RightNow Technologies Inc., for $1.5 billion.

“This is a much-needed move by SAP,” Ray Wang, head of Constellation Research, told the Bloomberg news agency.

“What SAP had in human resources – basic transactional software such as payroll – was good enough for the old era. In the new era, performance reviews and talent management will be important,” he said.

SuccessFactors has more than 3,500 customers, with more than 15 million subscribers in 168 countries. The company is predicted to have $502 million in revenue in 2013, up from $332 million this year, according to analyst estimates compiled by Bloomberg.

The transaction is expected to close in the first quarter of 2012.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!