Ariba buy parks SAP on Oracle's cloud turf

The multibillion-dollar acquisition of Ariba will put SAP into head-on competition with Oracle as the two rivals work to strengthen their grip on business-process cloud computing

SAP's plan to acquire Ariba for $4.3bn (£2.73bn) heightens the competition between the European data giant and chief rival Oracle and highlights how the cloud is changing the way company back offices work.

On Tuesday, SAP announced plans to buy Ariba, which specialises in business-process management software for buy, sell and back-office functions.

Like Oracle, SAP has watched from the sidelines as IBM, HP, Microsoft and other enterprise rivals have headed into the cloud. With this acquisition, SAP is making a statement of intent about how businesses will work in the future. Based on Ariba's products, SAP is betting more than $4bn (£2.5bn) that businesses will increasingly move their business-process management out of their back office and into the cloud.

If completed, the acquisition will intensify the rivalry between SAP and Oracle. The database specialist's flagship Oracle Fusion Middleware family handles many of the tasks that Ariba deals in. Oracle is also pushing further into this area — last year it bought RightNow to strengthen its position against Salesforce. It also plans to launch a secure public cloud service soon.

With Ariba, SAP is acquiring a company that gives it parity with Oracle in back-office management. Ariba's specialism lies in automating many of the elements of back-office business — spend analysis, contract management, buying cycles, compliance, and catalogue management.

Ariba's technology lives in the cloud, and over the past 16 years the company has built up a large customer base, particularly among medium-sized enterprises.

In the next 24 hours, hundreds of thousands of companies will use Ariba-backed technology to buy and sell over $800m (£500m) of goods and services, according to Ariba.

SAP hopes to weave Ariba's cloud-based business-process technologies into its own suite of database and analytics software, so it can offer what, predictably, it calls "a truly end-to-end solution".

The flight of business-process management to integrated software packages from single vendors has been going on for a while. But many IT professionals believe no vendor has truly sewn up this market. Many people use a mixture of VMware, Oracle, SAP and Microsoft, and have no plans to turn to a single vendor.