The news today that SAP plans to buy Fieldglass is an easy one to interpret.

1. SAP needs cloud revenue.

2.  SAP has strength in direct materials with their core ERP and SCM offerings and gained strength in indirect catalog/MRO items with Ariba.  The only gap remaining was in the third type of supply chain automation (which I have described here), services.  Fieldglass plugs some of that gap quite nicely.

Congrats to Jai Shekhawat at Fieldglass and the folks at Madison Dearborn Partners, who bought a majority interest in a deal valued at $220 million a few years back.  At that time, pundits considered it a very rich (crazy?) deal.  While terms were not disclosed yet, I’m guessing it worked out quite nicely for everyone!

From afar, the Fieldglass experience teaches us a couple of lessons:

• Perseverance.  These B2B networks are like flywheels, they take a long time to get up and running, but once they get momentum they are hard to stop.  Jai stuck with building the company through thin and now thick.  Kudos again.
• Focus.  Fieldglass stayed a pure, neutral SaaS play (called a VMS in that industry) and resisted the temptation to become a managed services provider (MSP)—a tough decision, but ultimately a good one.  This made them a much cleaner and far more attractive story to strategic software buyers.
• Timing.  Who knows, but it certainly seems like it is a great time to be a seller of enterprise SaaS plays!

Fieldglass was reported to have 350 employees; no details on revenue were provided.  I’m going make a wild guess and estimate it went for $750 million and had revenues of $75 million or more. Shall we start a pool?