SAP to Acquire Business Objects
It looks like this time the rumor mill got it right as SAP announced its friendly take over of Business Objects, to the tune of 4.8B Euro or $6.8 billion. It makes it the priciest BI/Performance Management deal of the year.
Business Objects CEO John Schwarz did say that the rumors were wrong about the company being shopped around--instead SAP had approached Business Objects. The agreement to be acquired does indicate a change of course for Business Objects who previously had stated its intent to remain a pure-play vendor. But at a price that is more than 5 times revenue, the price must have been right. Add to that an SAP-Business Objects combination makes a formidable competitor versus Oracle-Hyperion and Microsoft.
An interesting spin to this acquisition versus others is that Business Objects will remain a separate company under SAP’s ownership. This organizational slant could prove to offer customers and prospects of either company the best of both worlds. It also is a smart move to stave off competitive FUDing (fear, uncertainty, and doubt) that the BI/PM vendor will become proprietary, application-centric, or a bit-player in the larger SAP.
In explaining the motivation for the acquisition, SAP CEO Henning Kagermann cited business intelligence as the top priority for IT spending. The possibility to cross-sell offers growth possibilities to both companies’ existing customers, of which only 40% are joint customers. Kagermann also cited synergies in the on demand space (with SAP By Design on one hand, and Business Objects Information on Demand), an attractive proposition for mid-market customers and in stark contrast to Oracle whose chosen not to pursue SaaS.
So where’s the catch? The reporting and analysis tools in SAP Netweaver BI (see the free BIScorecard BI Market report for specific module names) have historically lagged solutions from BI pure-play vendors. SAP has become an important base for BI vendors to sell to. The most recent release of SAP Netweaver BI (version 7 released June 2006) offers significant improvements, but forces customers to upgrade the entire SAP Netweaver BI infrastructure, info cubes and all, making the pace of upgrades slow. Business Objects XI, meanwhile, offers customers of earlier BW versions a stronger BI solution. Customers can expect a number of modules from Business Objects XI to become part of the Netweaver BI product, complementing (rather than replacing) interfaces such as SAP Business Explorer. SAP meanwhile, adds MDM and in-memory capabilities to Business Objects.
On the Performance Management front, though, there is more product overlap following SAP’s recent acquisition of OutlookSoft and Business Objects’ Cartesis. This is the area that will warrant some product rationalization.
While industry heavy weights SAP, Oracle, and Microsoft continue to duke out market share in this hot space, this most recent move will make it harder in the long term for Cognos, MicroStrategy, and IBI. Care to place bets on IBM, HP, or Teradata jumping into all this?
Sincerely,
Cindi Howson, Founder, BIScorecard, a web-site for in-depth BI product reviews
Author: Successful Business Intelligence: Secrets to Making BI a Killer App
I have been specializing in integrating Crystal Reports with SAP BW for the past five years. Bottom line: when implemented correctly, it's a terrific solution for the business end user. It requires a savvy analyst or IT developer to create the content and publish it to the web, but the tool is much more robust and easier to work with than the BI tools provided by SAP. But then, of course, that's why SAP bought Business Objects. Once the dust settles on this there are going to be a lot of happy end users out there.
Posted by: Mike Garrett | January 17, 2008 at 02:27 AM