SAP and TIBCO: a marriage to make in hell?

Dana Gardner says that TIBCO must surely be in the firing line for an approach. I agree. Dana thinks Sun is the natural ally:

Other vendors will be significantly impacted by the proposed merger as well. Red Hat, Sun Microsystems, and TIBCO will face a tougher market. That’s because Oracle will provide Linux and other open source value benefits (to blunt Red Hat’s differentiation), provide deeper proprietary transactional performance characteristics (to etch away at TIBCO’s differentiation), and offer one-stop shopping for a full and robust Java environment (to further demean Sun’s purported Java advantages).

Sun — a one-time Oracle collaborator wannabe — looks especially disenfranchised in an IBM-Microsoft-Oracle/BEA world. Perhaps TIBCO and Sun may need to work together?

Given the history between Sun and TIBCO I'd maybe agree except that I'll go out on a limb and assert TIBCO could make a better fit for SAP. Before those 'close to events' come piling in telling me I'm mad, consider these six reasons:

• TIBCO's strength in financial services, telco and utilities mirrors both SAPs presence and aspirations for those markets. Financial services in particular looks ripe for packaged applications after years of 'roll your own,' especially in the mid-market where SAP wants to make a name with Business ByDesign. The recent hiccup in the FS market hurt TIBCOs last quarter but I've not heard anything that suggests a long term slide. If the opportunities outweigh the long term risks then striking now while TIBCO is comparatively weak makes sense.
• SAP knows a fair bit about TIBCOs middleware platform from past relationships but has never managed to keep pace with TIBCOs engineering, especially in complex engagements. An acquisition would provide SAP with rich experience for making this kind of play.
• TIBCO's earlier acquisition of Spotfire provides an analytics tuck-in that helps continue SAPs journey to deepening domain expertise in markets where it either has a presence or is looking to gain traction.
• Having finally woken up to the ESB play, TIBCO now has a sensible story for the mid-market. Again, that dovetails to SAPs BBD positioning, especially as and when it moves up market.
• There is a good amount of crossover with customers. This gives SAP the opportunity to either deepen penetration on favorable terms or offer its customers a hands off approach to large scale business integration while learning more about the engineering challenges this represents. Either way, SAP looks like the good guy in an otherwise Oracle/SAP/IBM centric world.
• Despite a continuing view that SAP is mired in a NMH (Not Made Here) attitude, there are signs the company is open to innovation from wherever it comes. Check out SAPs use of ZohoCreator for TechEd as a small but significant example. TIBCO has always positioned itself as applications agnostic. That kind of thinking would benefit SAP as it transitions to a world where it already knows (but may not admit) that the world is not SAP centric but heterogeneous and chock full of custom code.

I could be way off base and there are plenty of reasons why this could be a non-starter. In email conversation, investment manager and fellow Irregular Jason Wood says he'd be shocked at such a move:

I would, for one, eviscerate SAP to anyone listening if they bought TIBCO. What would that give them? Other than massive confusion among customers who have been sold the Netweaver vision for the last four years.

It's been suggested that SAP has enough on its plate sorting out its BusinessObjects acquisition and that trying to pick up a Palo Alto based company by a German outfit doesn't jibe. Jeff Nolan thinks SAPs entry into the BEA fray is a non-starter so TIBCO isn't going to be any more palatable. On the other hand it's worth remembering that Netweaver's head of product marketing is a TIBCO alumni. Stranger things have happened.

Dana suggests that Oracle's proposed acquisition of BEA has the potential to drive SAP into IBMs arms. I don't see it although Larry Dignan believes it's only a matter of time. To me, IBM is a consulting operation that happens to sell software. SAP is a software company first. Where's the fit? On a competitive basis I'd agree. They're always bumping up against each other in deals so IBM taking out one more sales problem sounds tempting.

There's a lot of technical crossover between SAP and TIBCO and that could be a stopper in any SAP/TIBCO scenario. Others cannot conceive such a marriage. Dennis Byron noted earlier in the year:

In my opinion, SAP does not intend to compete head to head with neutral BPM players such as TIBCO in the near term. But SAP will do almost anything to make sure it does not lose any more longtime SAP users to TIBCO or anyone else. That is the best news of all for the SAP user community and almost guarantees success for NetWeaver BPM.

SAP may not intend but it may have no choice. It has been hurt in the past at places like Pirelli where the company used TIBCO to consolidate SAP instances rather than fork over for (at the time) mySAP licenses over and above what it already had.

SAPs BusinessObjects acquisition has sucked a lot of capital out of SAPs coffers, though I'm led to understand it still has around $2 billion in credit lines. At last Friday's close, TIBCO was valued at $1.75 billion, up 13% on the day although in early trading, TIBCO slid back 3%. In the last year, it's value nudged the $2 billion mark. So even if SAP likes the idea of a TIBCO hookup, it would be a stretch at current credit line levels.

What does SAP say? In a Financial Times article which discussed Oracle, its proposed BEA acquisition and SAPs response, Henning Kagermann, SAPs CEO hinted at possible future surprises:

...he repeated adverse investor reaction would not stop SAP from committing to more deals in the end-user market. “We’re categorically not excluding further big acquisitions,” he said.

Wherever the final home for TIBCO may be, someone needs to put it out of its misery. The alternative of continuing to go it alone looks increasingly bleak. A marriage of convenience with SAP as suitor might look more appealing than many believe.