Cloud wars

The Big Software Gamble

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Place your bets on the takeover paying off here.
  • Why it matters

    Why it matters

    SAP has previously mocked its competitor Oracle for buying up software companies to expand. Its purchase of Concur shows it is now using the same strategy, but both companies may struggle to integrate their increasingly complex portfolios.

  • Facts

    Facts

    • SAP, one of the world’s leading independent software companies, has agreed to buy Concur for $8.3 billion.
    • Concur is a cloud-based provider of business and expenses tools with 25 million users.
    • SAP and main rival Oracle are locked in a battle for cloud revenue.
  • Audio

    Audio

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It’s one of the many bizarre aspects of the eternal dual between software giants SAP and Oracle.

On Thursday evening, SAP announced its biggest takeover to date. And what did Oracle founder and chief Larry Ellison do?

He resigned at the same time and stole the limelight from SAP. Part of it, at least.

With that move though the two arch rivals find themselves in a similar boat, as they both have the same enormous challenges ahead of them: They have to prove that their buying spree is sustainable. Employees as well as investors are watching.

For many years SAP has mocked Mr. Ellison’s strategy of buying up innumerable companies concerned with SAP’s core business of making enterprise software to manage operations.

But for some time now, SAP, which is based in Walldorf in central Germany, has been following the same strategy. The company has been digging deep into its pockets in order to become competitive in the cloud computing sector.

SAP has offered $8.3 billion (€6.5 billion) for Concur, a business travel software provider. It’s a deal that poses questions. Can Concur move SAP decisively forward on the technology front? That is doubtful.

What the software leader is getting is a lot of cloud customers. That’s a good thing, provided the company can sell more SAP products. Only 30 percent of Concur’s customers now use SAP systems. But the rest first want to be convinced of SAP’s advantages. A true synergy doesn’t look that way.

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