A major ERP/CRM acquisition for Microsoft…good or bad for Dynamics CRM?

Posted by Mike Snyder on May 13, 2009  |  Comments (4)

I was speaking with Microsoft sales rep today and he mentioned a rumor that Microsoft was considering acquiring SAP. Sure enough, the Wall Street Journal reported this story today:

“The Redmond, Washington-based software giant - for the first time in its history - sold bonds to investors earlier Monday, capitalizing on its sterling credit rating and investor appetite to raise $3.75 billion.

The move sparked speculation that Microsoft could be planning to use the money for an acquisition - especially since the company already had more than $25 billion in cash and investments at the end of March - as it seeks to revive growth.

Bill Whyman, an analyst at ISI Group, had said Microsoft could use the additional cash to help fund an acquisition in the corporate software market, such as that of a company like SAP AG.”

My initial reaction to this rumor was “hmmm… that might not be good news for CRM partners like us”. However, the Microsoft rep seemed really excited about the SAP acquisition idea for the following reasons:

• SAP’s CRM is horrible and everyone knows it.
• SAP has a large global customer base using their ERP products.
• Microsoft could then run back through those SAP ERP customers and sell those companies oodles and oodles of Microsoft products such as SQL Server, Windows Server, SharePoint and of course…Microsoft Dynamics CRM!

After thinking this over a little longer, I am starting to see his point of view that an SAP acquisition just might be great news for Microsoft Dynamics CRM. Of course this sounds good on paper but the process of digesting a company the size and complexity of SAP into Microsoft would be a MAJOR task. If you think there are a lot of Microsoft reorgs now, just add SAP’s 50,000 employees into the mix and let the fun begin! In case you’re curious, SAP has a market cap of $47 billion which is about 25% of Microsoft’s $177 billion. Therefore that $3.75 billion that Microsoft raised today wouldn’t even make a small dent into that $47 billion number.

Steve Ballmer shot down this rumor immediately, but stay tuned…where there is smoke, there is often fire!