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Wednesday, June 5, 2013

SAP’s Purchasing Power Play

SAP just did a big acquisition, along with a little head fake.

While the announcement by SAP, the German enterprise software company, said this was a deal about online marketing, in fact, it’s part of a broader effort by many companies to reshape retail sales.

SAP announced Wednesday that it was buying Hybris, a Swiss e-commerce software company. The price was not disclosed, but someone familiar with the deal who was not authorized to speak on the record, said SAP paid “somewhat less than $1 billion” for hybris.

The deal follows Tuesday’s announcement by Salesforce.com that it was acquiring ExactTarget, an online marketing services company, for close to $2.5 billion.

Not surprisingly, many industry analysts wanted to make a connection between the two deals.

That link was reinforced when Bill McDermott, SAP’s co-chief executive, took a couple of shots at Salesforce during the conference call about the Hybris deal, saying Salesforce had bought an old-fashioned e-mail marketing company (yes, that’s old-fashioned now). Gartner, an industry research firm, recently announced that Salesforce had replaced SAP as the leading vendor of customer relationship management software, giving Mr. McDermott reason to want to get even.

The Salesforce deal, however, is part of a larger plan by Salesforce to blend advertising, marketing and sales. Marc Benioff, the chief executive of Salesforce, has said that technologies like cloud computing and social media increasingly break down the distinctions between those things.

This is particularly true for customer relationship management of sales from one company to another, where complicated specs and contracts mean e-mail matters more.

SAP is going after consumers as much as businesses with Hybris and hoping to use the data from online commerce for Big Data marketing, and eventually, things like planning inventory and manufacturing. That is a much bigger goal, and ties into both SAP’s roots in enterprise resource planning software and the online data analysis of its HANA platform.

“You can read this purchase as us being serious” about customer relationship management,” said James Dever, a spokesman for SAP. “But it’s deeper than that. This touches a company’s back end transactional data,” or information about things like inventory.

One feature of Hybris’s software is that it allows customers to open an online shopping cart on one computer and then adjust an order later on another computer before closing a sale. Using its HANA platform, SAP hopes to let sellers see behaviors, then offer deals or companion offers before a sale is completed.

Eventually, companies may be able to use that overall information and data analysis to figure out faster how much of a product they need to make, store or sell quickly. The product could also help in planning what to stock in retail stores.

In some ways, the SAP deal is closer to last year’s move by NetSuite, another SAP rival, to offer online commerce services. While that business has been slow to emerge, NetSuite recently announced some significant deals involving blended online and traditional brick and mortar sales.

“The big picture is that consumers want to connect with companies on a personal, individualized basis, online and offline,” Zach Nelson, the chief executive of NetSuite, said.

In an even bigger picture, deals like this are part of the broader move to create the immediacy and data-led insight (or, if you prefer, cookie-based spying) of online retail with the high-touch experience of physical stores.

Amazon.com moved early into online skills and has edged into the physical world by offering fast delivery of goods. Apple has gone farther, designing stores that in many ways embody its online sales presence, from the minimalist look to the absence of formal checkout kiosks.

If SAP can build out Hybris, it could blur further the barriers between ads, sales and marketing. And more companies could break down barriers between things online and off.