» VIEW ALL POSTS Nov 14 2008   3:23PM GMT

Is it a buyer’s market for vendors?



Posted by: JackDanahy
Tags:
SAP

Not everyone will be hunkering down in this economic downturn – the big vendors, including SAP, will be spending money.

The high cost of winning new customers will drive acquisitions – because many vendors are spending more than $1 for every $1 they’re bringing in, according to AMR Chief Research Officer Bruce Richardson.

“They’ve come to realize, it’s too expensive. They have to do acquisitions to offset organic growth,” Richardson said during his keynote at the AMR Research’s Business Technology Conference being held in Boston this week. “Even in a down economy, I think we’ll continue to see acquisitions.”

So who’s up for grabs? Richardson broke up the software field into two categories, the predators and the prey. The prey, “the shrinking software middle class,” as Richardson refers to them, are best of breed software companies that bring in between a $100 million and $500 million in revenue.

They are: Ariba, JDA, Manhattan, RedPrairie, Chordiant, RightNow, SuccessFactors, Taleo, Deltek, Epicor, Lawson and QAD .

Typically between a third and a half of their revenue comes from maintenance and Richardson thinks we could see a lot of those companies acquired in the next two years.

Larry Ellison’s certainly showing no fear when it comes to continuing the company’s acquisition spree in this economy- Oracle having just made its 10th acquisition of the year.

And with SAP’s blockbuster announcement this week that it will engage in more organic growth – tapping former Oracle exec John Wookey to lead the development of on-demand software for large companies -will SAP offset that with acquisitions of on-premise vendors and the maintenance revenue streams they carry?

Courtney Bjorlin, News Editor 

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