6 thoughts on what the SAP purchase of Ariba might mean
We have had about 12 hours for the SAP/Ariba news to sink in. And now the market players are beginning to think about the ramifications.
Here are 6 thoughts on what this acquisition means:
1. It's good and bad for other P2P/e-invoicing networks. Good because SAP bought Ariba for 10 x revenue. This is partly because of the cloud offering and the size of the Ariba network. This means other service providers could use this as a benchmark for the amount they might sell for.
It's bad for other networks because, especially in Europe where SAP is so widely used by the multi-nationals, companies may be tempted to use the SAP owned supplier network rather than another.
2. SAP bought Crossgate in 2011, is buying Ariba in 2012... who might they buy in 2013 to own the entire market? OB10 has a network of over 120,000 and Tradeshift has a good sized network for a young player. Both these networks have had a lot of VC money invested, and have investors who will want to get a return on their investment. IPO or trade exit is inveitable. It will be interesting to see who SAP looks to acquire next.
3. What does this mean for supply chain financing solutions? Ariba have been pushing the SCF part of their proposition for a while now. If indeed this becomes part of the 'standrard SAP' suite, it is natural to assume that a SCF solution have a harder job than in the past to win the business?
4. How will Oracle users perceive Ariba now? Ariba will not just be sold exclusively to SAP under the new arrangement. Oracle users will be able to continue to trade with and sign up to Ariba. It begs the question though: "what is Oracle doing to get ownership of this space?".
5. Ariba has put a huge focus on Europe for the last three years (incidentally using sharedserviceslink.com very regularly to heighten exposure in Europe). This purchase is the ultimate for Ariba as SAP is the ERP-chief in Europe, opening up massive potential for Ariba.
6. e-Invoicing is a service. It's not about software anymore, and of course it's all internet based and cloud based. But importantly it's about onboarding suppliers. So SAP is stepping into a new type of business here. It will be interesting to see how SAP respond to the 'service' part of the offering.
To conclude, it's a very exciting development and it sends all the right messages to the market about getting the P2P bit automated, and getting the most out of P2P. Congratulations to both parties.