SAP pays $3.4 billion for cloud vendor SuccessFactors

SAP wants the acquisition to bolster its cloud strategy

By , IDG News Service |  Cloud Computing, SAP, SuccessFactors

Forrester analyst Paul Hamerman noted in a blog post Saturday not only the premium SAP paid for SuccessFactors but also that the purchase price was about ten times revenues. "SAP's cloud strategy has been struggling with time-to-market issues, and its core on-premise HR management software has been at competitive disadvantage with best-of-breed solutions in areas such as employee performance, succession planning and learning management. By acquiring SuccessFactors, SAP puts itself into a much stronger competitive position in human resources applications and reaffirms its commitment to software-as-a-service as a key business model," he wrote.

How the two company cultures mesh will be an area to watch, according to Hamerman's colleague at Forrester, analyst China Martens. Also, "it will be interesting to see how SAP incorporate SFSF into its existing HCM, particularly as SFSF does address both SMB and enterprise customers," she added via email. "I'd expect to see more consolidation in the HCM arena and other largely on-premise ERP players looking at deeper partnerships and/or acquisitions of SaaS HCM pure-plays."

Constellation Research CEO and analyst Ray Wang tweeted that SAP's acquisition of SuccessFactors is designed to compete directly with Workday which is "eating up marketshare".

"While the core offerings provided a solid approach, these applications remained in the systems of transaction world and lacked many of the newer requirements for systems of engagement. In fact, many customers left SAP to go to SuccessFactors to accelerate innovation in the talent space," Wang said.

(Mike Simons at Computerworld UK contributed to this story.)

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