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Ardent Partners Analyzes the SAP/Ariba Merger

Acton, Mass.May 24, 2012—Following the news that SAP America Inc. entered into an agreement to acquire Ariba for $45 per share or $4.3 billion, Ardent Partners’ Andrew Bartolini now provides key analysis and insights on the deal.

  • With this announcement, SAP buys its biggest competitor in the space
  • The pricing of this deal validates Ariba’s strategy to move to the cloud that was started in 2003
  • The pricing of this deal validates the early vision of the Ariba Supplier Network, since recrafted and reformed as the cloud-based Business Commerce network
  • The pricing of this deal also validates the strategy of many other cloud and network solution providers
  • The disposition of the Ariba Sourcing Services team and the subsequent acquisition of Quadrem and b-Process were critical enablers to this deal
  • The “SAP Procurement portfolio” team is the group that introduced the most progressive and innovative solution improvements and expansions in this space over the past 18 to 24 months
  • A combined SAP and Ariba solution footprint will be the broadest and deepest in the industry
  • The combined solution footprint is largely but not fully complementary. Certain solutions compete directly and offer similar functionality (i.e. installed eProcurement and both eSourcing installed and on-Demand)
  • The large number of users of all of the different solutions, the length of time customers have been using these solutions and the complexity of the customizations and integrations (particularly the eProcurement solutions) will make product rationalization a complex and time-consuming process. We expect the combined group will not rush to sunset products and will support the core solutions for many years
  • While there will be synergies gained in the deal, the biggest opportunity will be the ability to up-sell the complementary Ariba solutions like cloud P2P (eProcurement and ePayables) and network connectivity into the huge SAP customer base
  • The Ariba Commerce Network has been successful in driving transactional efficiencies. Other collaborative or value-added services (like Ariba Discovery) are emerging and offer great promise but Ariba’s network is still the early stages of development and will benefit from the “new set of eyes” that SAP will provide as well as a significant uptick in engineering horsepower
  • The combined organizations will be able to follow the post-merger integration structure and strategy blueprint used with SuccessFactors
  • Oracle, IBM, SciQuest, Basware, Hubwoo, Cap Gemini, and Zycus, among many other solution providers in the space, will be directly impacted by this deal
  • Current customers and prospects will be directly impacted by this deal
  • Procurement outsourcing providers and other cloud providers will be directly impacted by this deal
  • We believe that there is a greater than 50 percent chance that another company will make a counter-offer for Ariba

 

For more analysis of the merger, visit https://ardentpartners.com/research/.

Andrew Bartolini is the Chief Research Officer at Ardent Partners, an industry analyst firm focused on supply management, including sourcing, procurement and accounts payable.

SAP, Ariba and most of the other companies mentioned in this article are clients of Ardent Partners. The author holds no financial investments in any company mentioned in this article.

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