SAP to Buy Ariba for $4.3 Billion

SAP AG, the giant business management software maker, announced yesterday afternoon that its subsidiary, SAP America, will acquire Ariba's cloud-based business commerce network for $4.3 billion.

SAP co–chief executive Bill McDermott described the move as a "game-changing opportunity."

"Our agreement to acquire the most successful global trading network is the next bold step in our strategy to be the leader of the cloud," McDermott said in a conference call yesterday. "The acquisition of Ariba will advance us in realizing our goal to reach two billion dollars in cloud revenue by 2015."

Headquartered in Sunnyvale, Calif., Ariba offers a cloud-based commerce platform through which more than 730,000 businesses worldwide have bought and sold more than $319 billion of goods and services. The acquisition is expected to be completed in the third quarter of this year. SAP plans to combine Ariba with SAP HANA, its in-memory database, as well as its analytics solutions, helping customers to "better understand their spending," according to SAP co-chief executive Jim Hagemann Snabe.

This acquisition follows several recent cloud-related technology purchases. Late last year, SAP acquired cloud-based human capital management provider SuccessFactors for $3.4 billion. In February, Oracle announced it was acquiring Taleo, another maker of cloud-based human resources software, for $1.9 billion. Oracle also bought RightNow Technologies for $1.43 billion last year.

It is not yet clear how Oracle and other competitors will react to SAP's move. Constantine Limberakis, a senior research analyst of global supply management at Aberdeen Group, noted in a blog post that SAP's acquisition of Ariba will "completely change the landscape for the spend management space."

"SAP is putting their foot down…to be the dominant player in both ERP and commerce in the cloud," Limberakis wrote. "[In regard to Oracle's reaction]…of late they have not had much acquisition activity in this space, but given its history. this likely changes everything for them, and for all players who once considered Ariba a direct competitor."

Update: Oracle announced today that it will acquire Vitrue, a cloud-based social marketing and engagement platform, for an undisclosed amount. Vitrue enables marketers to centrally create, publish, moderate, manage, measure, and report on their social marketing campaigns and activities on social media platforms such as Facebook, Twitter, YouTube, and Google+.