Why SAP gobbled up Concur

Dan Gorenstein Sep 19, 2014
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Why SAP gobbled up Concur

Dan Gorenstein Sep 19, 2014
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If you travel for work, there’s a good chance you’ve used Concur to help itemize all those minibar receipts, your taxi cab rides and cups of coffee. Well, this week software giant SAP has scooped up Concur for more than $8 billion, in one of the largest software acquisitions ever.

What would SAP want with a company that helps people track their travel expenses?

SAP has been successful selling software to help the world’s biggest companies run their operations. The challenge, says Forrester Research analyst Ted Schadler, is that the software industry is changing, and SAP has an obvious hole.

“They’ve been missing this big transition which is the move to what they call cloud services,” he says.

Schadler says, historically, SAP has installed software at the office, but the new — and cheaper — way to run software is through these cloud services, where businesses pay to have the software run for them. Schadler says buying Concur is a signal to SAP’s clients that its taking a giant step into the cloud.

“With the cloud, it’s very easy to add customers quickly, and it’s a lot easier to improve the cloud software,” he says.

For all the potential, analysts are mixed on SAP’s purchase. Morningstar senior analyst Rick Summer says Concur does little to meet the needs of SAP’s core customers.

“Simply by going out and buying Concur, SAP can’t walk in and say ‘hey, we can make your inventory management system ready for the cloud tomorrow,” Summer says, but he does believe for $8 billion, SAP has bought itself some time.

“The companies that have great, strong relationships with their customers can be patient and over years, and even over a decade move their customers over to that public cloud,” he says.

Summer says it’s difficult and expensive for SAP’s customers to rip out their software and plug into the cloud with a competitor, but to remain an industry leader, the software giant must clarify its cloud picture soon.

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