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Delivery Model vs. Functionality: Have We Gone Cloud Crazy?

by Dave Hannon

May 24, 2012

By Dave Hannon

SAP's announcement this week that it plans to buy Ariba was very interesting to me on a couple levels. For starters, having covered the procurement function and technology closely for a long time, I traced Ariba's growth from its earliest days as an online catalog vendor through its jump into reverse auctions with the FreeMarkets buy and onward.

And the more Ariba grew and became the dominant procurement software vendor, the more speculation swirled about which megavendor would gobble them up. So to see that answer finally emerge is very interesting to me (although I've learned to never say "final" when it comes to acquisitions -- at least until the ink dries).

But what I find even more interesting about this acquisition is the dramatic emphasis on "cloud" and the lack of emphasis on functionality. For example, SAP's press release announcing the deal uses the headline "SAP to Expand Cloud Presence with Acquisition of Ariba." Further, the release uses the term "cloud" 22 times (and "procurement" four, but who's counting?).

But it's not just SAP. Ariba's own branding dramatically emphasizes "cloud" more than functionality. What started as a procurement software provider, and grew to be known as a "spend management solutions" provider today brands itself a "cloud-based commerce network." That's a cloudy description of a company if ever there was one (although you'l l notice its web site's title tag still uses "spend management" and "invoice management" as the lead terms, an admission that no one ever searches for "cloud-based commerce network" online).

So to me this all begs a bigger question--has the market gone cloud crazy? Is there TOO much focus on the delivery model and not enough focus on the functionality that model is meant to deliver? Because if you believe SAP co-CEO Jim Hagemann Snabe, it won't be long before all software is cloud-based, making delivery model a non-issue.

Heck, even Lars Dalgaard, SAP's new cloud chief, put it this way when asked about branding of SAP's cloud solutions in the future: "Branding doesn't matter. We're here to make our customers successful." 

What do you think?

Is there too much emphasis on delivery model and not enough on functionaltiy in today's market? Or is the "cloud" part of a deal like the Ariba acquistion as important to you as the functionality that will be gained? 

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