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CLOUD CONSOLIDATION ONGOING
It happens in any market that this issue arises: buy versus build yourself; the big add product lines by acquiring smaller companies. And the cloud is starting to pick up speed in the M&A game. The most recent example is Salesforce.com which is buying HR company Rypple. That’s on the heels of SAP getting ready to spend $3.4 billion to buy an HR cloud vendor, Success Factors, which itself just acquired Jobs2Web for $100 million.
We also saw this happening below the enterprise market in the last two weeks. Sage inked a deal in which it will resell CornerStone OnDemand, another cloud-based vendor of HR applications. (Are we seeing a theme here?) While that’s not an M&A move, it’s certainly not build-it-yourself and is being made for similar reasons: it’s quicker to get to market by buying a product that’s finished than to spend your own money and developer hours trying to cobble your own together. On the sales-and-use-tax side, there was CCH’s purchase of SpeedTax earlier this year. And in the CPA application market, Intuit threw in the towel on trying to go it alone in building an online practice management application. It contracted with BigTime Software, which as the press release put it, will "embed its core time and billing" and other features in the products Intuit has been trying to get past test stage for the last year. So it’s just about time for some of the ERP midmarket software publishers to do the same. The likelihood of Sage and Microsoft doing a deal to get true cloud-based ERP applications is growing daily and some of the smaller fry in the market are likely to get an offer they can’t refuse because money will be thrown at them.
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