SAP's acquiring Business Objects: 1st take

SAP's proposed acquisition of Business Objects is an interesting move on a number of fronts:

• It provides a fresh route to achieving the 100,000 customer target that Leo Apotheker has previously described as 'aspirational.' While there is significant overlap, BusinessObjects' 44,000 customers as a top line number is impressive.
• Both companies are EU based. This solves one of SAPs acquisition problems of managing across dispersed geographies.
• BusinessObjects has a strong footprint in the medium sized business segment. This acquisition allows SAP a relatively easy entry route to expand its own footprint in what analysts consider one of the hottest parts of the market.
• There is a good cultural fit. France and Germany are historically strong trading partners. Further evidence comes from the fact that upon acquisition, BusinessObjects CEO John Schwartz is slated to join SAP's executive board. Bernard Liautaud, BusinessObjects' founder is to be proposed for election to SAP's supervisory board at the next shareholder meeting.
• It is a tacit recognition that Oracle's acquisition has merit.

My Irregular colleagues were initially surprised, perhaps best expressed by Zoli Erdos:

So much for knowing SAP's DNA and "they don't do big acquisitions" :-)

Indeed. But the reality is the large enterprise software market has become a two horse race between SAP and Oracle. As Jason Wood says:

BusinessObject is an excellent company but there is precious little differentiation between the major BI vendors offerings these days. If I were Oracle, I would be smiling today because SAP is now clearly playing by their rules now, yet Oracle has a lot more experience on this battlefield.

Jason's observation explains why SAP is making sure the acquisition path is smoothed by the immediate introduction of Schwarz at board level as confirmed by Jeff Nolan's view that:

There's been a shift in the winds within SAP that recognized the Oracle strategy actually does have merit and given the state of enterprise software companies on Wall Street it doesn't take a leap to suggest that they have been hunting for the right deal for a while. The structure of this acquisition also suggests that SAP understands the weaknesses they have in trying to execute integration following acquisitions.

More later once the webcast, slated for later today has taken place.