‘Tis the Season, I guess
The press release said all the right things. SAP was acquiring hybris, a Swiss ERP company that will help SAP get over into the online world that was started by the company’s acquisition of SuccessFactors, a human capital resources management company. This is largely good stuff as the company has been unsuccessful in its prior attempts to get to the cloud.
This acquisition reflects a growing trend in which ERP companies take on leading eCommerce partners. Oracle bought ATG for one billion dollars, NetSuite has some nice functionality that it developed in-house and now SAP is buying hybris. Nice. It shows that ERP vendors are thinking about how to expose some of their valuable ERP components in another form, in this case, product catalogues and related things that feed back to the supply chain to make for tighter integration from order to production to fulfillment and inventory.
It’s an important bet that some vendors can probably follow up with subscription support though it will take more work to get manufacturing ERP up to snuff for small value, high-transaction subscriptions. So I predict that the bumper crop of subscription companies from Aria to Zuora (clever how I did that, no?) will be hotly pursued in the next year as many terrestrial software vendors move to the cloud and find they need more and different infrastructure. Opening bids would be in the billion-dollar range, I suspect, but I wonder if someone like Tien Tzuo, CEO of Zuora, would even consider such a transaction given that Salesforce just paid $2.5 billion for ExactTarget. That would be a tough call.
For now, let’s not get ahead of ourselves. eCommerce is nice but it doesn’t fill the sales need completely; it’s more of a round peg in a square hole. Companies still need SFA/CRM despite my friend Zach Nelson’s (CEO, NetSuite) clever assertion that ERP is the real CRM system because it contains real customer data. As I have said before, and no intent to beat a dead horse but, you gotta have a system for managing proto-customers on your event horizon. Good thing SAP sees this and has made nice progress on its SFA and marketing packages.
Companies like SAP and Oracle are so big their primary concern is reselling or upselling the customer base so the bar is a little lower for them, except that Salesforce is making nice inroads with its Blue Ocean strategy and social and experience products in places like Toyota, General Electric, Coke, and Burberry’s. The resell isn’t a clone of the last sell — let’s see if any of the incumbents gets that.
(Cross-posted @ Beagle Research, LLC)