“You know, at one time there must have been dozens of companies making buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw. Now, how would you have liked to have been a stockholder in that company?”
Comment made by Danny DeVito in the 1991 movie Other People’s Money
I could of have started this blog post by quoting dialogue from another famous movie The Graduate . . .
Mr. McGuire: I just want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.
But we will get to this in a minute (hint: think mobility).
Of course Mr. DeVito was not really talking about today’s blockbuster news that SAP was acquiring Ariba for $4.5 billion, but he could have been.
Over the years I have covered Ariba and SAP quite extensively both here in this blog as well as on my radio show the PI Window on Business.
In fact two of the more memorable interviews until my recent 2-Part series in which I talked about the German giant’s brilliant (and I mean this sincerely) move into the mobile market, was with Ariba’s Chief Marketing Officer Tim Minahan (There’s a slow, slow train comin: Epilog for the Ariba Interviews), and its Chief Financial Officer Ahmed Rubaie ( Ariba: Calculating the Cost of Transformation) regarding the vendor’s then newly announced transformation to an on-demand company.
Suffice to say that the makings for today’s deal can be reasonably traced back to that period in Ariba’s history as it signaled the acceptance on the part of a traditional ERP player that the 2001 Software & Information Industry Association (SIIA) white paper called Strategic Backgrounder: Software as a Service was in fact accurate.
Specifically, the report’s assertion that “Packaged desktop and enterprise applications will soon be swept away by the tide of Web-based, outsourced products and services.”
To learn more about this check out the soon to be published article I wrote for Supply Chain Quarterly.
Within the context of the above reference to the SIIA paper, not only does the SAP acquisition make sense, it also validates (although many might disagree) the DeVito commentary. Which is why I opened with it.
The fact is that SAP is the best of breed in terms of traditional, ERP-based solutions partly because they are, with the exception of Oracle, one of the last one’s still standing.
But here is the thing, I believe that unlike Oracle, who’s days like the dinosaurs are truly numbered, SAP will use this as a stabilizing stepping stone to transition to its own version of plastics. Enter mobile computing!
Huh? What is he talking about you may be wondering?
Well, let’s try another track. Think of SAP’s acquisition of Ariba in terms of space travel to the moon.
The rockets that catapult the astronauts into the heavens, along with the Command module and Lunar module all serve an important purpose in terms of getting the crew where they want to go and then once the mission is complete, returning them back home to earth.
When the astronauts break back into earth’s atmosphere at an incredible speed, the only thing that remains is the capsule that will gently and safely land in the warm waters of a tropical sea. The other appendages re the rockets, Command and Lunar modules have served their purpose and are discarded with much appreciation.
Do you see where I am going here?
Unlike Oracle who for all intents and purposes has a limited vision and strategy beyond it’s core traditional business, SAP’s capsule to ensure a safe landing in a new and rapidly changing market is its mobile strategy and all it encompasses including purchasing and supply chain solutions.
While Oracle customers will be left out in the cold as mobility takes the forefront of sound supply chain planning, SAP will offer its own unique version of safe passage to the new world.
A world that will be built upon the foundation of a very large and eager ERP customer base.