SAP Follows HP’s Lead In Cloud Acquisition

When enterprise application provider SAP announced over the weekend that it intends to spend multiple billions of dollars to acquire cloud services provider SuccessFactors, the news was strikingly reminiscent of another recent IT for IT acquisition, Hewlett-Packard picking up the U.K.’s Autonomy four months ago.

Both deals involve international old-school IT companies spending billions to inject themselves with new-generation talent and intellectual property so as to maintain relevancy in the enterprise computing market.

Staying Relevant

More specifically, this is all about two well-established companies who want to provide the transformation of large, old-line onsite business software deployments to those that are much easier to control and make accessible through secure Web service connections. Easier and more accessible generally means fewer mishaps in systems that can ill afford to suffer mishaps.

Walldorf, Germany-based SAP announced Dec. 3 that it will pay $3.4 billion (£2.61bn) in cash, or about $40 (£26) per share, for publicly traded SuccessFactors, which makes human resources data management software provided via cloud service. SAP has been trying internally to cloudise much of its software for the last three or four years with not a lot of success and this bold move pushes the company into new territory immediately.

Of course, nobody’s saying that SuccessFactors is the ultimate success factor for all of SAP’s issues. To be sure, SF itself hasn’t been a screaming business success for 10 years as it hasn’t posted a profit yet and it specialises in only one type of cloud software.

But SAP is clearly convinced it can take that IP a long way toward rebuilding its overall product line. It sees SF’s platform as one it can build upon.

On the other hand, HP clearly is changing its business model to one that embraces software over hardware. The company paid about $11 billion (£7bn) to acquire Autonomy, a 15-year-old unstructured-data analytics company that was founded as a result of research and development at Cambridge University.

Big Data

Autonomy is a multifaceted IT provider that knows how to store data, archive it, access it, find it, analyse it, report on it and return it to where it should be kept for all eternity. A big bonus is that it plugs right into cloud systems.

HP can do most of this now, but not in a form that can be distributed natively by a cloud system. That’s essentially what this acquisition was all about.

Big Data is all about the volume, velocity, variety and value of large data sets that are pouring into enterprise data centers. Overburdened IT systems are having increasing difficulty handling and analysing these workloads. This is where the future of IT is going, and this is where HP is investing its time, energy and capital.

HP also sees Autonomy as a platform upon which it can build many new products.

Like SAP, HP isn’t guaranteed of high-level cloud system-building success based on this one acquisition, although it is a key one.

However, like its old German friend, it should receive credit for taking a bold step forward, rather than sitting on its hands to watch a flock of newcomers come into the cloud market and infringe upon its market share, which is happening with more frequency.