Saturday, December 03, 2011
SAP to buy SuccessFactors for $3.4 Billion
The price seems to be high, but the idea is right. Enterprise company SAP is positioning itself for future work in Cloud applications. “The premium is significant and it shows that SAP was struggling in its cloud strategy, especially in talent management,” Paul Hamerman, a Forrester analyst, said in an interview on Saturday. “The cloud has been a small part of SAP’s revenue stream, about 2 percent; the deal adds to the revenue base and shows SAP’s strong commitment to the software-as-a-service business model.”
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The price is ludicrously high. SFSF never made any profit per share. Always its SG&A expenses eat all their respectable revenues.
After an initial shock, looking at the financials of SFSF, I realized SAP was after new revenues streams, like those 3000 companies using the HR software in the cloud, for 6 mil employees. SFSF had less than 300 mil $ / year revenues, so about 50 $ / head / year.
If for instance, SAP would be able to bundle that HR software with other of its own things, the revenue per customer employee will grow.
So, after the shock, I realized that actually SAP bought the client list. That is all. For 3.4 bil USD. That is 11 years of 2011 SFSF revenues (NOT PROFIT, that was negative or close to 0). That is insane. Plain and simple. We are witnessing a new bubble: the cloud.
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