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October 08, 2007 | Comments: (0)
SAP's Business Objects acquistion: The death knell for point solutions?
SAP, the company known for building rather than acquiring technology, did an about-face this week, announcing its intention to acquire Business Objects, one of the largest point-solution ISVs in the BI space.
SAP does not usually acquire large companies. Instead, it more typically makes what its executives like to call strategic "vest pocket" acquisitions of smaller, lower-profile companies to fill in gaps missing in their own technology. But the acquisition of Business Objects could very well represent a major change in the ERP landscape.
From where I sit, Oracle has been on a buying spree for the past several years and, over that time, has learned more and more from each acquisition about how to do it right.
In the meantime, SAP has remained reticent, almost as if it were sitting back and waiting for Oracle to have a major stumble. Unfortunately for SAP, that never really happened. And SAP can wait no longer. Now it will have to play Oracle's game if it wants to remain competitive.
What we will probably see now is an accelerated pace in acquisitions and consolidation among software vendors as each major company vies for what remains of the pure-play vertical solution ISVs. Given a few years of this, point solutions may become extinct or, certainly, an endangered species. Companies will be forced like never before to make a platform decision: Fusion, NetWeaver, or Microsoft and go with it. Of course, eventually, the pendulum will swing back the other way.
As Howard Dresner, principal at Dresner Advisory Services, says, "For every vendor that is acquired, there are 20 emerging companies offering new approaches, technologies, and business models." This will be the case, but it will take a while for these startups to become seasoned enough for an enterprise customer to bite at their solutions.
ERP as a stand-alone enterprise solution is no longer what it once was, a topic I addressed last April. Oracle saw the handwriting on the wall and started acquiring. SAP saw it a bit later and started building, mainly NetWeaver. But for my money, this Business Objects acquisition is an admission on SAP's part that NetWeaver alone won't cut it. It needs to broaden its market potential and market offerings now.
Business Objects' strength is in analysis and performance management categories. According to a SAP statement, the acquisition of Business Objects will give SAP customers the ability to integrate embedded analytics in transactional applications.
With the market for pure ERP systems in decline, the acquisition is not surprising and fits into the SAP strategy, as stated by SAP CEO Henning Kagermann, "to double our addressable market by 2010."
Posted by Ephraim Schwartz on October 8, 2007 12:32 PM
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SAP Has been playing in the small and mid market space with products like SAP Business One and SAP All-in-One for a long time. SAP recently launched SAP Business By Design, to address a larger component of the smaller market space.
Most of the new customer acquisitions have been in the smaller market segments. We have utilised Crystal for considerable amounts in implementations. I believe this acquisition could on strengthen the SAP reach in the smaller segments.
Britton Solutions
http://www.businessone.co.za
The bigger questions are:
- Why did SAP spend half a billion dollars on OutlookSoft and Pilot Software?
- Why couldn't SAP have developed something comparable with 20,000 coders over the past 20 years?
- Is this further indication of the "re-eurofication" of the company?
Posted by: Questioning1 at October 9, 2007 04:59 AMConsolidation in the enterprise space often leads to increased opportunities for newer vendors. As a case in point, when Oracle bought Siebel (which was certainly a stand-alone CRM vendor), salesforce.com flourished. What was once a focused competitor became just another Oracle acquisition. Siebel became distracted with the acquisition, creating a huge growth opportunity for salesforce.com.
The same thing will happen with Business Objects. BI is undoubtedly very hot right now, so there are newer, innovative BI vendors entering the market. With the 800 pound gorilla spending time planning how to integrate their massive technology base with SAP's even more massive technology base, these newer companies have a great opportunity to stake out market share.
Basically, as the traditional vendors continue to consolidate, it's like a fire clearing out the aging Redwoods. The result is that it let the sunlight shine on the undergrowth, giving them a chance to grow.
Posted by: Ken Rudin at October 10, 2007 12:46 AMRumor is (only rumor) that HP is considering a counter-offer...
Posted by: Shamo at October 16, 2007 10:27 PMTOP STORIES
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