SAP's Buying Into Cloud Computing
The largest maker of business-management software, Germany's SAP, signed on to buy SuccessFactors Inc. of San Mateo, California. The investment into cloud computing will cost SAP $3.4 billion in cash.
Paying $40 a share for SuccessFactors, SAP is buying a business which makes software used to manage employee performance. This deal is for a little more than 50% of the closing price for SuccessFactors in New York trading Friday.
With this deal, SAP is promoting cloud computing in a big way. Cloud computing lets clients rent software delivered via the Internet rather than install it on their own computers. Cloud computing is a safe way to outsource data centers and reduce the need to purchase new hardware. This deal comes on the heel of Oracle's deal to purchase RightNow Technologies Inc. for $1.5 billion six weeks ago. RightNow Technologies is also a California based business in Redwood Shores.
According to Gartner Inc, the marker worldwide for cloud computing services is estimated to surge to $148.8 billion by the end of 2014 from $68.3 billion in 2010.
Founded in 2001, SuccessFactors has more than 3,500 customers and more than 15 million subscribers in 168 countries. SuccessFactors is forecast to have revenue of $332 million this year, according to a Bloomberg survey of analysts.