Keywords: OB10, Oracle, e-Invoicing, P2P, Purchase to Pay
When will Oracle buy OB10?
| 28 May 2012
Author: Susie West
The developments in the past week have begged many questions. Various parties have different views on whether the SAP purchase of Ariba is a 'good' thing or a 'bad' thing.
One question has been 'how do you think OB10 (Ariba's main competitor in e-invoicing) will react?'.
OB10 was founded in 2000 and has had in excess of $50 million invested in the company through various rounds of funding.Why is this important?
With rounds of funding, come a pool of investors who will want to realise a high return on their investment at the earliest point.
The news of SAP buying Ariba for $4.3 billion
(looking to close the deal third quarter this year) will have inevitably excited investors in networks like OB10 and Tradeshift.
The excitement comes from the multiple applied by SAP to the buy-price. Ariba's revenues are $444 million, so the deal comes in at ten times revenue.
If this is applied to OB10, the company could be valued at north of $350 million.
This would bring a smile to shareholders' faces.
There are a few considerations however that could take the edges off those smiles.
- Firstly, Ariba has wider functionality than OB10, handling 17 purchase to pay transactions.
- Secondly, Ariba has a SaaS solution which seemed to really prick SAP's interest.
- Thirdly, Ariba has around 800,000 companies connected to its network. OB10 has around 120,000.
So although shareholders might take serious encouragement from this M&A development, the excitement drops a little when you compare the size and functionality-reach of the two solutions.
This aside though, one question keeps coming back. What is Oracle doing in this space?
With Crossgate and Ariba in the SAP tool bag, Oracle's equivalent offering in the purchase to pay space is seemingly looking a little meagre.
It's been confirmed that Ariba will be sold to Oracle accounts and not exclusively SAP accounts. So what is Oracle doing to have its share of the purchase to pay market?
One question I have been asking myself all last week and heard it from a thought leader in this space at the weekend, it "when will Oracle buy OB10?".
Whoever Oracle buys, be it Tradeshift or OB10, one thing is clear: Oracle shouldn't be late to this party. A slow start here could put Oracle on the back foot in what is becoming a huge and lucrative market.