SAP buys ARIBA for 4.3 billion dollar

SAP subsidiary, SAP america has entered into an agreement to purchase the cloud based business commerce network ARIBA for approximately 4.3 billion dollar. This gives ARIBA a valuation of $45 per share, 20% more than the current stock price. 

SAP has been strengthening its cloud based solutions to cater to the emerging markets in cloud and to compete with Oracle and Salesforce.com. Recently SAP acquired SuccessFactors for over 3 billion dollar. 

SAP also recently announced the roadmap for its cloud applications business  focusing on managing customers, suppliers, employees, and financials, in addition to its cloud suite offerings SAP Business ByDesign and SAP Business One.

Oracle  acquired RightNow and Taleo. The cloud computing market is buzzing with activity and these recent acquisitions have validated the other cloud players. This in some way indicates that the on premise ERP (enterprise resource planning) is nearing an end in near future if not immediately. 

Here are my 2 cents on the recent buying spree from Oracle and SAP 

If both the companies continue to grow inorganically into cloud market without any real innovative ideas they may be left behind. These strategy will only vindicate the innovative players like Workday and Salesforce.com. Oracle and SAP cannot become major cloud players by just buying out cloud companies. They have to come up with innovative solutions like relational database on cloud, online ERP system etc. 

ARIBA 
The company is headquartered in Sunnyvale, California, with approximately 2,500 employees. The company provides a system for suppliers to provide the catalogs and the buyers to buy the products over the cloud.  More than a million transaction are handled by ARIBA with values in billion dollar in a month. Other products like spend management, discount management are also provided. 

SuccessFactors
The company is headquartered in San Mateo, California. It provides employee performance management over the cloud and has over 3000 customers with million of users  in over 180 countries. 

Taleo
The company is headquartered in Dublin california, with over 5000 customers. It provides talent management over the cloud. 

RightNow
The company is headquartered in Bozeman, Montana. It provides CRM solutions and has over 1000 employees.