Deals

SAP Invades Silicon Valley via Acquisitions

Germany’s business software giant spends billions on cloud companies

SAP Co-CEOs Jim Hagemann Snabe (center) and Bill McDermott pose for a photograph as CFO Werner Brandt takes his seat at a news conference in Walldorf, Germany, on Jan. 23Photograph by Ralph Orlowski/Bloomberg

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By Matthew Campbell and Aaron Ricadela

August 1, 2013 at 11:51 PM UTC

This article is for subscribers only.

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This article is part of the August 5, 2013 issue of businessweek.

German software giant SAP, the 41-year-old maker of financial and supply-chain software, has been slow to shift to cloud computing and has struggled for years to catch up to U.S. competitors such as Oracle and Salesforce.com. Among other things, it’s broken some of its brightest engineers into startup-like teams far from its main campuses. While waiting for them to spawn new products, the company is doubling down on plan B, for “buyout.”

As it struggles to upgrade its old server-confined software and move some of its 230,000 corporate clients to cloud-based subscription services, SAP has spent more than $12 billion on Silicon Valley takeovers since 2010. Last year, it picked up Sunnyvale (Calif.)-based procurement-software firm Ariba for $4.3 billion, along with San Mateo-based cloud-software maker SuccessFactors for $3.3 billion. In recent months it has considered deals for such companies as Palo Alto’s Jive Software, which sells business-collaboration programs, say two people familiar with SAP’s plans who weren’t authorized to discuss them publicly. SAP and Jive declined to comment.