Spend Matters welcomes a guest post from Mark Schaffner, Vice President of Marketing at Verian.
SAP's $4.3 billion dollar acquisition of Ariba is certainly newsworthy. $18 billion dollar ERP industry leader pays 10X revenue for a segment leading e-commerce Company. This begs for the speculative type of questions that create a fascinating story.
How is SAP going to quadruple Ariba's sales? What will happen to Ariba's 1,100 customers? Why would SAP pay so much? Who in the segment is going to be acquired next? What will Oracle do? Does this financially impressive exit validate this market's business opportunity?
It's the last question that worries me.
I remember the last time Ariba validated the business to business ecommerce market by going public in 2000. For at least a few days, Ariba carried a $40 billion valuation. Yes, $40 billion -- nearly 10 times what SAP paid for it 12 years later. The financial success brought into the market a swarm of companies that were long on business strategy and arrogance while short on meaningful customer impact.
Investors pumped these new companies full of cash and the money was used to create "buzz." Their marketing machines buzzed about a transformational new technology, how much money they raised and how quickly they were capturing new clients.
As I remember the story ended badly for many. CommerceOne, Clarus, Metiom, PurchasePro, Pantellos, e-Scoute and a variety of other players acquired customers aggressively for a time, only to eventually run out of cash. Some merged and others went out of business. Customers received either limited or no ongoing support.
It was hard for everyone when the economy slowed and investment money disappeared -- everyone except the customer. Companies could no longer just sell the sizzle and or count on investors to subsidize the acquisition of new customers. They had to focus on delivering true value.
That is when I noticed the stories stopped being about the latest business deal and started to be about you -- purchasing and accounts payable professionals -- and how to make your life easier and your work more valuable.
I have enjoyed the focus being on you and hope it stays that way.