While the risk of such an acquisition is immense, but given that this deal means SAP solutions are set to become home to more than 730,000 ecommerce companies hosting their applications on Ariba business cloud which includes almost half of fortune 500 companies. Its a risk worth taking.
SAP’s entry into the inter-enterprise business network space significantly expands its growth opportunities and accelerates its momentum in the cloud. This aligns in time with SAP's announcement to boost its cloud portfolio last week with HANA platform along with development of its business applications suite for small to large businesses and enabling businesses to bring all such functions to their pockets on mobile and tablets.
This acquisition is business network driven growth to SAP with Ariba totalling $444 million in revenues and experiencing 38.5 percent annual growth in 2011. Its business network recorded 62 percent organic growth in the same period.
The combination of SAP’s innovations and core applications with the Ariba cloud-based network will create new business value for customers leveraging the advantages of in-memory HANA platform and provide real-time insights to enable trading partners to discover, connect and collaborate more effectively.
A decade worth of market leadership by its closest rival Oracle is duly challenged with this acquisition and sooner or later Oracle has to get to grips with its strategy to mould itself to have lean and to the point systems than the ones acquired and integrated.
Upon completion of the transaction, it is planned to consolidate all cloud-related supplier assets of SAP under Ariba. The existing management team will continue to lead Ariba, which will operate as an independent business under the name “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.