SAP Acquiring Business Objects to Leap into BI Market Lead

| Oct 9, 2007 | Data Management | Competitive Intelligence Report
| Analyst: James Kobielus

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

On October 7th SAP and Business Objects announced that the companies have reached an agreement under which SAP will submit a direct-cash tender offer to acquire Business Objects. The offer is expected to commence in the next several weeks and to close in Q1 2008. The two companies announced that Business Objects will operate as a standalone, separate business entity, but it will increasingly integrate its complementary solutions with SAP’s offerings while focusing on mid-market customers in various product segments.

Analytical Summary

• Current Perspective: Positive on SAP’s announcement that it intends to acquire Business Objects in a direct-cash tender offer expected to close by Q1 2008, because SAP and Business Objects have complementary solutions in many (but not all) functional areas. SAP is a leading vendor of packaged business applications, service-oriented architecture (SOA) middleware, master data management (MDM), and governance risk compliance (GRC) solutions. Business Objects is best-of-breed in business intelligence (BI), corporate performance management (CPM), data integration (DI), and data quality (DQ).

• Vendor Importance: High to SAP and Business Objects, because their pending combination into a single company is precisely the sort of bold move they both needed to keep an increasingly aggressive common rival, Oracle, at bay. Once the deal closes, SAP will have leaped to the top of the BI market and find itself in a better position to challenge Oracle/Hyperion for dominance in the growing CPM space.

• Market Impact: High on the BI, CPM, DW, DI, DQ, MDM, and GRC markets, because SAP and Business Objects are the leading solution providers in line-of-business transactional applications and BI, respectively, and their consolidation will create a powerhouse global software vendor that can leverage its considerable market clout across many SOA, application infrastructure (AI), and data management (DM) market segments.

Recommended Competitor Actions

• Rival BI, CPM, DW, DI, and DQ vendors should foster FUD surrounding SAP’s pending acquisition of Business Objects, inasmuch as the converging vendors have considerable functional overlap among their respective product portfolios and will almost certainly need to rationalize, reconcile, and consolidate these offerings going forward. However, some recently converged rivals (i.e., Oracle/Hyperion, Cognos/Applix) should be careful in how they wield this double-edged sword.

• Rival CPM vendors should continue to expand the functional breadth, analytic depth, and platform integration of their analytics application portfolios to match SAP in all horizontal and vertical market segments. To this end, SAS, Oracle, Cognos, and Microsoft should make additional strategic vendor acquisitions across diverse CPM segments. Oracle and Microsoft should leverage the deep domain expertise in their packaged application groups in this endeavor.

• Rival pure-play vendors in the BI, CPM, DW, DI, and DQ segments should seek out mergers, acquisitions, and/or closer partnerships with any of the SOA suite vendors, in order to better match the soon-to-be-combined SAP/Business Objects. Vendors should increasingly bundle these diverse data management (DM) offerings in comprehensive solution portfolios that also include portals, application servers, business process management (BPM) tools, enterprise service bus (ESB) middleware, DBMSs, and other features of the soon-to-be-combined SAP/Business Objects solution family.

• Rival SOA suite vendors that lack strong CPM portfolios should consider acquiring best-of-breed BI/CPM pure-play solution providers to gain a swift, significant presence in this growing segment. In particular, IBM, BEA, TIBCO, and Software AG should engage any of the remaining BI/CPM pure plays (i.e., Cognos, SAS Institute, Information Builders, various vertical and horizontal specific vendors) in merger/acquisition discussions.

• Rival MDM vendors should counter the potentially formidable SAP/Business Objects value proposition by enhancing their packaged offerings and domain data models to address CDI, PIM, financial data consolidation, and other applications. At the same time, MDM vendors such as IBM, Teradata, TIBCO, and SAS/DataFlux should consider acquiring BI/CPM vendors and leverage their tools and expertise to make a more aggressive attack on the financial data hub market.

Recommended End User / Customer Actions

• SAP customers and partners should respond favorably to the news that the vendor plans to make a direct-cash tender offer for Business Objects in the next several weeks, with the transaction expected to close in Q1 2008. In spite of numerous functional overlaps with the NetWeaver portfolio, Business Objects will bring best-of-breed BI, CPM, DQ, and other offerings into the SAP solution portfolio.

• Business Objects customers and partners should reserve judgment on the proposed SAP/Business Objects merger until the deal closes and the vendors present a joint roadmap. Customers and partners should insist that the joint roadmap clarify how the vendors plan to position, integrate, and evolve their respective BI, CPM, DW, DI, DQ, and other solutions going forward while safeguarding customer investments, avoiding unnecessary functional overlaps, and seamlessly merging their respective partner ecosystems.

CLIENTS ONLY

Current Perspective

Competitive Positives

Competitive Concerns

Recommended Vendor Actions

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