SAP To Acquire Business Objects: A Complicated Merger

Paul Hamerman

SAP made a major departure from its "tuck-in" strategy with the October 7 announcement of its agreement to acquire Business Object for 4.8 billion (Euro). On the surface, the deal makes sense from the standpoint of marrying business intelligence (BI) technology with ERP applications. The deal is surprising in the sense that SAP has long insisted that its growth strategy is organic and that it would not make major acquisitions to gain market share. The Business Objects deal is by far the largest SAP acquisition to date, comparable in scope to Oracle’s acquisitions of PeopleSoft, Siebel and Hyperion.

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SAP Launches Business ByDesign

Paul Hamerman

SAP's official announcement of Business ByDesign, formerly known as A1S, targets midsize companies looking for relief from complicated ERP implementations and support. Some key points regarding the Business ByDesign (BBD) announcement:

• The solution will be provided as a hosted, subscription service

• A dedicated website enables a try-before-you-buy sales approach, where customers can rapidly configure a demo system that reflects their needs

• Pricing is set at $149 per user, per month, with an nominal charge for self-service users

• The scope of the offering is comprehensive, spanning finance, HR, supply chain, supplier relationship management, CRM, project management and compliance management.

• SAP has 20 live early adopters and another 20 that are actively engaged in rolling the solution out. The initial emphasis is on US and Germany, with expansion to more markets in 2008 and 2009.

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Cognos Makes A Smart Move To Pick Up Applix

Paul Hamerman

Continuing the trend of rapid consolidation in the business performance solutions (BPS) space, Cognos announced a definitive agreement to acquire Applix on Sept. 5. Cognos is positioning the acquisition as an extension of its financial performance management capability. The combination is an interesting contrast of styles:

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SAP Acquires Outlooksoft - Not A Minute Too Soon

Paul Hamerman

SAP has addressed a major gap in its business planning performance management offerings with the acquisition of Outlooksoft today. The internally-developed SAP offerings known as SEM had seen limited traction among its customer base do to usability and complexity issues. SAP has been vulnerable to competitors (e.g., Hyperion, Cognos), particularly in the planning and budgeting domain.

Outlooksoft’s offering, by contrast, features a native Excel UI that appeals to finance and business users, and has integrated capabilities for planning, financial consolidations, and business performance analytics. It has seen good traction as a best-of-breed offering, with a base of approximately 700 customers. Its newest release (5.0) incorporates SOA and Web 2.0 technologies, making it compatible with SAP’s technology directions. Also, Outlooksoft has begun to move away from its sole dependency on the Microsoft BI platform.

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Notes From SAPPHIRE

Paul Hamerman

SAP's annual Americas user conference was held last week (April 23-25), with impressive attendance of approximately 14,000. The abrupt departure of Shai Agassi a few weeks prior to the event was well covered, as Hasso Plattner stepped in to handle the technical vision keynote slot. A key message of the event was progress in adoption of SAP's NetWeaver platform and the latest release of the ERP suite, renamed ERP 6.0 from mySAP ERP 2005. ERP 6.0 adoption was announced to be approximately 2,600 to date, but upgrades from the older 4.6C and 4.7 versions continue to be a challenge for customers. SAP is looking to have 75% of its ERP base upgraded by mid-2008. Besides relief from rising support costs under the 5-1-2 maintenance plan, customers who upgrade to 6.0 can take advantage of a series of forthcoming enhancement packs as incremental add-ons (a strategy reminiscent of Oracle's family pack releases).

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