SAP’s Latest Buy Fits Well with Mobile, Analytics Strategy
Software maker SAP has acquired human resource management SaaS provider Success Factors for $3.4 billion, a premium of 52 percent over Friday’s closing price and about 10 times more than the company’s annual revenue. Reuters reports that JPMorgan Chase & Co. will provide a loan of one billion euro, or the equivalent of $1.3 billion, to SAP to aid the deal. Co-CEO Bill McDermott noted that his company can be expected to pay back the full sum within a year’s time.
The acquisition is a part of an effort to realize the 20 billion euros annual revenue agenda SAP promised by 2015, partially thanks to initiatives focusing on the three fastest trends in IT today: the cloud, big data and mobile tech. McDermott said that the SuccessFactors deal may help his company to beat that goal by up to 1 billion euros.
Indeed, sales growth is just as important in this deal as the expansion of SAP’s cloud portfolio. Success Factors will remain an independent unit in order to conserve that momentum, and SAP salespeople are taking over.
“Fourteen percent of SuccessFactor’s customers are SAP customers,” Bill McDermott, co-chief executive of SAP, said in an interview over the weekend. At the same time, he noted, this amounts to about one percent of SAP’s total customer base. With SAP salespeople offering the product, he said, sales should increase dramatically, while profit margins improve.”
In addition to boosting revenue, SuccessFactors fits rather well in a long-term plan to position SAP in the cloud data analytics world. Customers will be able to migrate data stored on-premise to cloud-based SuccessFactors databases gradually, and the acquisition will help to fill “the strata that will fit between one database and another.”
The deal follows another big development for SAP in the cloud space. It announced a partnership with VCE to run its business applications on Vblock.
Since you’re here …
… We’d like to tell you about our mission and how you can help us fulfill it. SiliconANGLE Media Inc.’s business model is based on the intrinsic value of the content, not advertising. Unlike many online publications, we don’t have a paywall or run banner advertising, because we want to keep our journalism open, without influence or the need to chase traffic.The journalism, reporting and commentary on SiliconANGLE — along with live, unscripted video from our Silicon Valley studio and globe-trotting video teams at theCUBE — take a lot of hard work, time and money. Keeping the quality high requires the support of sponsors who are aligned with our vision of ad-free journalism content.
If you like the reporting, video interviews and other ad-free content here, please take a moment to check out a sample of the video content supported by our sponsors, tweet your support, and keep coming back to SiliconANGLE.
