By Steven D. Jones
German software maker SAP AG (SAP, SAP.XE) bought a business-to-business transaction service this fall, and now it wants to get into match-making.
SAP's $4.3 billion purchase of Ariba Inc. gave it a purchasing platform on which 800,000 business customers in 140 countries buy and sell goods and services from steel to cleaning supplies. Online services like Ariba make it easier for companies to connect and trade.
Still only one in five business-to-business transactions happens online, and SAP plans to grow that market by combining its HANA analytic software with data from the Ariba network to create "a type of Match.com for businesses," said Tim Minahan, senior vice president of global network strategy for SAP.
SAP's HANA software, launched in 2010, can process data several times faster than traditional database systems stored on disks. Mr. Minahan, who was chief marketing officer of Ariba before the SAP acquisition, is putting HANA to work, analyzing more than 15 years of data on transactions and relationships between various suppliers on the Ariba network to link potential buyers and sellers through a new product.
Ariba Discovery, announced earlier this month in Madrid, is the result, Mr. Minahan said. The software can look through suppliers world-wide that meet the profile of what a buyer is seeking. The software also can forecast how a supplier will perform in the next 12 to 24 months so the buyer can gauge how well the supplier could meet new demand.
Ariba has generated revenue from connecting buyers and sellers and enabling transactions. The new focus is on harvesting intelligence, Mr. Minahan said.
"With SAP, we have technologies like HANA to leverage this information even more," he said.
HANA, short for "high-performance analytic appliance," is a cornerstone of SAP's strategy to lure its enterprise-software customers to become subscribers for an expanding roster of online services. The company has introduced nearly 30 products that utilize HANA to provide real-time analysis of ongoing business through cloud services delivered to clients online.
"Ariba takes us into transactional cloud computing and puts us into a whole new business," Bill McDermott, co-chief executive, said in separate remarks Tuesday at a Credit Suisse investment conference in Phoenix.
The company has divided its business into two reporting segments, one for enterprise software and a second for cloud computing, to show investors how well its cloud initiatives are performing, Mr. McDermott said.
He said the cloud business is on track to generate $2 billion in revenue and will be profitable by 2015.
"I fully expect SAP cloud to be a triple-digit growth business," he said.
AltaFlux Corporation is a global HCM cloud consulting partner based in Troy, Michigan. We empower organizations by streamlining, transforming, and optimizing key human capital management (HCM) processes with industry-leading HCM cloud solutions like SAP SuccessFactors, Benefitfocus, WorkForce Software and Dell Boomi.