SAP Set To Wrap Up $8.3B Concur Acquisition

SAP now expects to close its $8.3 billion acquisition of cloud travel and expense management application developer Concur Technologies next week, following last week's approval of the deal by Concur's stockholders.

The acquisition will extend SAP's growing cloud software portfolio. The Walldorf, Germany-based company, which became an industry heavyweight selling its on-premise ERP and CRM application sets, has sought to remake itself in recent years as a leading provider of cloud-based software.

SAP and Concur unveiled the acquisition deal Sept. 18, under which SAP is paying $129 per share to buy Bellevue, Wash.-based Concur.

Related: SAP Snapping Up Concur For $8.3B

Concur has an annual revenue run rate of approximately $700 million. SAP said the majority of its customers don't use Concur and only about 30 percent of Concur's customers currently use SAP applications, presenting the vendor with significant cross-sell opportunities.

It also means opportunities for SAP's channel partners. Earlier this year an IDC study commissioned by SAP estimated that SAP partners will generate $33.6 billion in global sales ($20.6 billion in the Americas) over the next five years from working with SAP cloud and managed services. That opportunity includes reselling SAP cloud services and related cloud services from other vendors, professional services, private cloud hardware, customer support and add-ons.

SAP has been growing its cloud application portfolio in recent years. The company acquired human capital management cloud application developer SuccessFactors for $3.4 billion in 2012 and later that year bought Internet commerce cloud software company Ariba for $4.3 billion. Earlier it acquired Fieldglass, a developer of cloud-based vendor management applications, for a reported $1 billion.

The company also has developed cloud software in-house, including the cloud-only Business ByDesign application set, cloud financial and sales applications for larger customers, and a cloud version of the SAP Business One application set for small businesses.

SAP plans to link Concur's services with those of Ariba and Fieldglass, creating what the company calls its "business network" of corporate cloud applications.

SAP's cloud computing efforts also are a critical element of the vendor's efforts to grow its sales to small and midsize enterprise customers. While SAP has 212,500 SME customers -- 80 percent of the SAP customer base -- much of the vendor's revenue is still derived from big customers.

At an event in New York last week highlighting SAP's SME efforts, Rodolpho Cardenuto, president of SAP global partner operations, said most of SAP's future growth would come from SME customers. And he said much of that business would be conducted through the company's nearly 12,000 channel partners, a "high percentage" of whom are adopting cloud technology.

"As our solution portfolio has continue to grow, our brand awareness among SMEs is getting stronger," said Kevin Gilroy, senior vice president and general manager, global SME segment and indirect channels, at the SME Summit event.

At the event SAP also said it was extending into 2015 a zero-percent financing offer that helps prospective customers, especially small ones, with cash flow.

That move will help channel partners such as Salt Lake City-based Navigator close deals, said Navigator President and CEO Grant Fraser. "Cash flow is usually the big issue," he said, particularly with on-premise software sales and less so with cloud software sold on a subscription basis. Navigator sells both cloud and on-premise versions of Business One and the cloud-only Business ByDesign.

Fraser said many customer prospects recognize the SAP brand, but some still see it as a marketer of big software to big companies. "But they're getting there," he said of SAP's SME efforts.

PUBLISHED NOV. 25, 2014