Last year has been a huge year for Cloud Computing. The software giants have moved aggressively into the space. In the year 2011, SAP acquired cloud software vendor SuccessFactors for approximately $3.4 billion. The same year Oracle too announced acquisition of cloud CRM vendor RightNow. Collectively, SAP and Oracle spent nearly US $5 billion to acquire software vendors based in the cloud. Acquisition of cloud based performance management vendor Rypple by Salesforce.com also came shortly after these acquisitions.
With these big acquisitions, it is clear that the cloud computing market is growing up and the race is on for the larger organizations to consolidate and broaden thin cloud portfolio. It signals, that the acquisition targets are going to be Talent Management / HRMS SaaS vendors. It also implies the realization that cloud deployment will be the predominant approach.
The cloud computing format makes perfect sense for the human resources world. A key aspect of the cloud is the delivery of the business application as SaaS. By using software as a Service (SaaS) applications, firms gain valuable cost,energy and time savings. It has been seen that the acquisition and deployment of SaaS solutions drive down costs radically. It both lowers the upfront investment of solution ownership and eases budgeting because of the predictability of costs over time. Rather than a large, upfront lump-sum hit to the budget, SaaS deliveries are rather like the electric bill, occurring on a pay-as-you-go basis.
Analysts at technology think-tank Gartner Group predict that by 2014, sales of SaaS HRM software will outpace new ERP-based purchases in global 2,000 organizations. With such estimated demands it’s no wonder why traditional ERP software firm SAP just paid early $3.4 billion for cloud-based SuccessFactors.
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