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Cloud Expo: Article

SAP to Buy E-Commerce Firm

SAP means to connect the front-end e-commerce engine to back-end systems and then manage the resulting transactional data

SAP is buying hybris, a 16-year-old $85 million-a-year Swiss e-commerce company, expecting to deliver the next-generation e-commerce platform for on-premise and cloud deployment.

It claims the purchase, which many have expected for a long time, puts it at the leading edge of the consumer economy, raising the stakes in customer relationship management (CRM) and defining the next-generation customer experience.

Terms weren't disclosed, but All Things Digital thinks the deal is costing SAP $1.2 billion-$1.5 billion.

hybris just got $30 million from the VCs in March including Meritech Capital Partners and Greylock Israel. Its majority investor is Huntsman Gay Global Capital (HGGC), a private investment firm based in Palo Alto, California.

Forrester Research thinks these guys and their controlling interest dissuades hybris from going public and pushed it into SAP's arms instead.

Forrester also thinks SAP made the move now because its Web Channel Experience Management was way behind the market; because hybris has been treading on SAP's traditional ERP turf; and because SAP had a gaping hole in its portfolio compared to Oracle and IBM.

Forrester says, "With this acquisition, the enterprise commerce technology landscape is now dominated by four large software companies: SAP, IBM, Oracle and eBay. There are other smaller players, notably: Demandware, Digital River and Intershop, all of which have long been publically traded. The acquisition of hybris brings to a close a multibillion-dollar, three-year spell of intensive M&A and IPO activity in the enterprise commerce technology space. There will be future acquisitions for sure, but there are few independent vendors left now. The enterprise commerce space has entered a new phase of maturity and is now firmly entrenched as a strategically key product line alongside ERP and CRM."

The total value of the e-commerce technology market is estimated at $37 billion.

The consumer-facing widgetry is supposed to reinforce SAP's e-commerce applications and counter market share gains made by Salesforce. SAP's sales from CRM software was up just 0.1% last year, putting it behind Salesforce which grew 26% according to Gartner.

SAP means to connect the front-end e-commerce engine to back-end systems like inventory management and applications managing sales accounts, marketing and social engagement and then manage the resulting transactional data in other systems.

SAP will be going after folks interested in multiple delivery channels, devices and touch points. The combination of its enterprise solutions and hybris' omni-channel commerce solutions is supposed to offer the enterprise the enhanced data and tools needed to optimize margins and customer loyalty.

SAP said, "Today's consumers and businesses demand a seamless brand and shopping experience across all channels. Big Data, cloud and social technologies only heighten demand for the innovative commerce solutions needed to manage consistent customer engagement. Growing at more than twice the rate of the retail industry, e-commerce is increasingly recognized as a critical capability in identifying, winning and growing profitable customer relationships."

hybris will keep its current management led by CEO Ariel Lüdi and president and co-founder Carsten Thoma and remain standalone - which suggests to Forrester that there will be no forced dependencies.

SAP already has Ariba to facilitate transactions between businesses and it plans to integrate its HANA in-memory database technology with the service so clients can find and compare what they want. It also has the Jam social software platform

Actually everything SAP's got is ultimately supposed to be integrated with HANA and its analytics.

Besides Salesforce, SAP will be up against IBM and Oracle. hybris competes with IBM's WebSphere Commerce Suite and Oracle's Commerce Suite. NetSuite also just said it's getting into e-commerce and has a deal with Williams Sonoma.

The deal theoretically makes SAP number three in the market behind IBM and Oracle.

The company is based in the pretty lake-side town of Zug, Switzerland. It has 650 employees and its main offices are in Munich and Montreal. It has 500 corporate customers including GE, P&G and Ericsson.

hybris is supposed to be the world's fastest growing e-commerce software company although some Chinese firms might dispute that statement.

Its omni-channel commerce platform incorporates web, mobile, call center and store solutions. SAP says it helps businesses of all sizes on every continent sell more goods, services and digital content through every touch point, channel and device. Its solutions provide a single view of customers, products and orders across multiple demand and delivery channels through state-of-the-art master data management and unified commerce processes.

SAP is supposed to expand its scope, scale and power.

The deal should close in Q3.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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