Will SAP Become More Acquisitive? New Strategy for Procurement and the Supply Chain (Part 2)

In the first post in this series, I shared an article from MarketWatch suggesting that SAP may have some new acquisition tricks up its sleeve as the application giant changes course on a corporate strategy that has seen it lose significant ground to Oracle in recent years. While SAP has focused largely on building products organically, and has also pursued a selective acquisition strategy focused as much on acquiring core software assets (e.g., BI, spend classification capability and expertise, e-sourcing, etc.), Oracle has grown largely through playing the roll of a consolidator. They've also pulled ahead from SAP in many core markets by taking this course, even when they've paid what some concidered a premium price for software and customer assets. If SAP's recent internal reshuffling and comments to the market are any indication, they could very well be gearing up to match Oracle at their own acquisition and roll-up game. This strategy could very well include assets in the Spend Management market, building on already small yet successful deals they've completed within the segment already.

One of the real benefits to a larger deal in the Spend Management market would be an influx of talent and management skills to bridge the current communications and leadership divide inside SAP's procurement solutions. SAP has never had strong solution / product marketing, and most importantly, development leadership that covers its entire procurement portfolio. This has led to largely opportunistic market pursuits, lost opportunities (e.g., delayed integration between e-sourcing, contract management and SRM) and a general front to customers and partners that lacks cohesion. A large deal or two in the Spend Management marketplace focused on a land-grab type of move rather than technology acquisition / leadership could bring in the right type of talent, cutting across the SAP Spend Management leadership divide, and bridging the solution divide.

The type of solution engineering, product management and marketing talent that an Ariba, SciQuest or Emptoris-sized deal could bring -- even if the solutions are run independently of SAP's own organic products, like how Oracle still develops and markets PeopleSoft and JD Edwards procurement solutions as well as the eBusiness suite (and soon Fusion applications as well) -- would be a huge asset to SAP as it attempts to weave a cohesive Spend Management web. Even the right smaller deals -- below a set threshold of $50 or $25 million, for example -- could interject a fresh set of skill and talent into a highly politicized organization that has yet to realize its full, integrated solutions potential.

Jason Busch

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