BOSTON -- SAP is buying cloud-based e-commerce vendorAriba Inc
. for US$4.3 billion, the companies announced Tuesday.
Ariba's platform focuses on business-to-business commerce transactions. It makes a natural fit with SAP's "broad customer base and deep business process expertise," SAP said in a statement.
The deal has been unanimously approved by Ariba's board and is expected to close in the third calendar quarter of this year, subject to stockholder and regulatory approvals.
When complete, the Ariba
transaction will substantially grow SAP's footprint in cloud software
, which got a previous boost from its recent $3.4 billion acquisition of SuccessFactors, a company focused on human resources applications.
At its Sapphire conference last week, SAP spelled out further details of its overall cloud computing strategy, with which it hopes to shoulder aside rivals such as Oracle as well as pure cloud vendors like Workday and NetSuite.
Ariba had US$444 million in revenue during 2011 and has 2,600 employees, according to a statement. Its trading network is involved with more than US$319 billion "in commerce transactions, collaborations, and intelligence among more than 730,000 companies," according to a statement.
Once the deal is done, SAP plans to "consolidate all cloud-related supplier assets" under the auspices of Ariba, which will operate as an independent subsidiary.
According to Ariba's Web site, the Canada Revenue Agency and National Bank have been customers. It isn't clear if they still are.
A press release says that in 2011 HCMWorks, a consulting firm, helped connect National Bank to Ariba Procure-to-Pay -- its globa goods and services trading community -- while the CRA implementation dates back to 2006.
The company has enough business in Canada that it has an office is Mississauga, Ont., just west of Toronto.
Ariba isn't merely a B2B platform. It's a Web-based trading community used by 730,000 companies around the world. Modules include sourcing, procurement, supplier management, spend analysis, sales contract management, sales and marketing, invoice and payment management.
The deal is in line with the on-demand strategy outlined last week at SAP's annual Sapphire conference, said Liz Herbert, an industry analyst at Forrester Research. At that time executives said that the company is looking at expanding its offerings in human capital management, CRM and sourcing, she said.
She said Ariba has best-of-breed sourcing technology, and if the deal goes through would give SAP a leading offering in the category.
The competitor likely most wounded by the deal will be Oracle Inc., she added, which has its own cloud-based goods and services sourcing tool. "This clearly makes SAP more competitive than they have been ... it will make them stronger in the ongoing battle against Oracle."
Zeus Kerravala of ZK Research agrees. "This is becoming a two-horse race with SAP and Oracle in the (cloud) enterprise apps front," he said. The Ariba deal lets SAP "easily drop it into their suite of cloud applications and grab more enterprise share."
In a way, he said, the race for cloud-based enterprise apps could be called "BYOA" -- bring your own applications -- with corporate business units bypassing their internal IT departments to access apps online. In that scenario, he said, the more applications a vendor has, the more market share it can capture.