And on Another Battlefront

Lest you think we're all wireless all the time here, I'll share pieces from an email that popped up in my in box this morning. "Late last night at in impromptu press conference, SAP announced that it had agreed to acquire Business Objects for 42 euros per share or around 4.8bn euros. The deal needs approval from the shareholders of Business Objects. It also depends on the approval of the French Stock Exchange Authority and the French Finance Ministry.  So what, you ask. Well, here's the spin in the press release from the analysts at tech consultancy Ovum David Bradshaw, Principal Analyst and Helena Schwenk, Senior Analyst, as they attempt to answer the question, Cui bono?: "There are two key questions here: Why is SAP buying Business Objects, and why is Business Objects interested in being acquired? "Most obviously is retaliation to Oracle buying Business Objects' competitor Hyperion, which specialized in adding financial and performance management tools for SAP systems. While neither SAP nor Hyperion can afford to back away from this relationship, it is deeply uncomfortable to SAP. We therefore expect SAP to work with Business Objects -- which only recently acquired performance management vendor Cartesis itself -- to provide an alternative for its customers. "Another factor is the business growth that SAP can get from the combination. Large suppliers are attracting ever larger share of customer spend, as customers try to reduce the number of suppliers to bring some order to their IT buying. In some accounts, the purchase might turn SAP from being an 'also ran' into a strategic supplier. "But a much more important and longer term objective is what we call 'operationalizing' the intelligence from the business data, and here Business Objects brings great breadth of BI and performance management capabilities to SAP. "Two other issues for SAP in the acquisition will be conflict with its existing BI capabilities and its relationship with other BI vendors. SAP's own BI platform (SAP Netweaver BI) competes with BI vendors in around 30% of deals, but SAP also operates in a landscape of 'co-opetition' with the leading BI vendors -- including Business Objects -- to complement and broaden the reach of Netweaver BI. Some SAP customers had success with Netweaver BI, but others had problems, for example with integrating non-SAP and SAP data sources and the complexity of SAP's analysis front end (BEx). "The Business Objects acquisition will bring both data extraction capabilities and market-leading front end query and reporting tools, complementing parts of the Netweaver BI stack. However, there are huge areas of overlap between the product sets. We expect any soon-to-be-announced integration plans to detail the areas for rationalization and the product roadmap moving forward. How well it can carry on 'playing nicely' with competing BI vendors after it acquires Business Objects remains to be seen, but we think it will have no choice but to try. " And what's in it for Business Objects? "Consolidation in the independent BI space has picked up space recently with the acquisitions of Hyperion, Cartesis and Applix -- to name a few -- all happening this year. In fact rumors surfaced in September in the French newspaper Le Figaro that Business Objects was looking for a buyer. We expect this consolidation trend to continue in the future, so it comes as no surprise that Business Objects took the initiative. "The only other indicator was a profit warning that the company issued last night. Business Objects will hope that being part of a larger company will help drive revenue and growth for its BI and performance management products in an increasingly competitive market." So in some respects, the story is an old one.  The blood feud between SAP and Oracle continues. SAP admits through its actions, if not in words, that it cannot be all things to all people--at least not under the SAP label.  And another smaller, independent player seeks shelter from the vicissitudes and terrors of the stock market in the arms of a bigger player with deeper pockets.   For Control readers who are also SAP users, the pertinent question would seem to be what, if anything, will this acquisition do in terms of helping get plant floor "business intelligence" up the food chain to the "C" team -- and will it in any way make it easier to convey to those folks the value of what goes on down at the factory level in terms they understand; i.e, financially and strategically.  Don't miss the next exciting episode.

What are your comments?

You cannot post comments until you have logged in. Login Here.

Comments

No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments