Top enterprise software makers, SAP and Oracle made some bold acquisitions recently that prove that the they are stepping into the next stage of their development and they are interested in finally offering cloud solutions to their clients. Previously, Oracle announced acquiring RightNow Technologies (customer relationship management provider) for $1.5 billion and SAP showed off its new acquisition SuccessFactors (provider of cloud based human capital management) for $3.4 billion.
In addition, last week Oracle just finished the negotiations with Taleo and paid $1.9 billion for the human-resource software maker. According to Jeffrey Liu, U.S. technology sector leader at Ernst & Young Capital Advisors “these acquisitions are very indicative of how mature and desirable these cloud-based software service companies are. I don’t think that’s a trend that’s going to go away any time soon.”
Oddly enough the first in line to applaud SAP and Oracle’s acquisitions are their competitors who seem that the market leaders are validating cloud based services. Many analysts saw in the new strategy of SAP and Oracle a clear sign that the former Enterprise Resource Rlanning (ERP) systems are at their dusk.
However, the move is long overdue, as Tien Tzuo so compelling explains for Tech Crunch. “SAP and Oracle should be pushing innovative cloud solutions that cannibalize their bases. Instead, they’re attempting to acquire themselves into innovation. That’s not a strategy. That’s a shift into survival mode,” says TienTzuo who has the benefit of looking to the situation from inside the industry. As industry leaders SAP and Oracle first tried to resist the wind of change and then tried to adapt but did this inadequately and unconvincing.
The pressure of their big clients, who are more and more interested in cloud-computing, convinced the two giant companies make such large-scale acquisitions. However, further steps are needed in order to fully adapt to the market and both SAP and Oracle are expected to come up with big cloud solutions.