Sunday, December 4, 2011

Not every acquisition is not a great idea

On May 2010 SAP acquired Sybase. According to my post titled: Acquisition is not simple: SAP-Sybase acquisition agreement, buying Sybase was not a great idea. If you would like to know why you can read my post.

Today (December 3rd 2011), SAP buys Successful Factors the provider of Cloud-based human resource management software, for  $3.4bn in cash. This time I would not argue that it is not a good idea.

Actually the last paragraph in my post about Sybase acquisition was titled: Which type of company I would acquire if I were Sap's CEO? Believe it or not, I recommended that "a successful SaaS applications company could be an adequate acquisition target". 

According to Financial Times, SuccessFactors Human Resources (HR) SaaS applications provider has 5 millions subscriptions at more than 3,500 companies worldwide and it is believed to be the second largest Cloud-based  provider of Enterprise software after
Lars Daalgard, SuccessFactors CEO will run SAP's Cloud business after the deal.

My Take
SuccessFactors products is a comprehensive HR SaaS suit including Workforce Planning,  Employee Life Cycle and Business Performance, Compensation Management, Career and Development Planning, Employee Profile, Reporting, Workforce Analytics, Recruitment etc. 

This acquisition is another evidence in the direction towards SaaS as a Mainstream approach for Business Applications.

Oracle's recent RightNow acquisition is another evidence. RightNow is a CRM vendor.

As far as ERP is concerned SaaS ERP evolution is on two axis: 

1. Type of Applications - First non-core ERP applications such as CRM and HR and only afterwards Core ERP applications such as Financials, Manufacturing and Production Planning etc.
SuccessFactors applications are HR applications.

2.  Enterprise Size - SMBs before large and complex enterprises.
SuccessFactors applications are used by Large Enterprises as well as by SMBs.

The SuccessFactors acquisition and its CEO Lars Daalgard's appointment as the manager of SAP's  Cloud business is an indication that SAP Business by Design  is a limited SaaS solution.



Avi Rosenthal said...

LinkedIn Groups

Group: Gartner Application Strategies (Xchange)
Discussion: Not every acquisition is not a great idea
Beautifully stated case for the true mainstream arrival for SaaS and SOA inbetween.
Avi is somewhat of a Nostradamus !
Posted by Mark

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