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SAP's acquisition makes some sense

The combination of SAP and Business Objects spells benefits and pitfalls, and could help bring business intelligence to the masses, industry analysts say.
Written by Victoria Ho, Contributor

SAP's acquisition of Business Objects makes some business sense, and it could also bring business intelligence tools down to the regular office worker, analysts say.

Earlier this week, German enterprise software giant SAP announced plans to acquire Business Objects in a cash deal valued at slightly more than US$6.8 billion, making this SAP's largest acquisition to date.

Commenting on the significance of the deal, David Bradshaw, Ovum's principal analyst, said in a statement that there were a few reasons why the German company chose to go down this route.

Bradshaw noted: "Most obviously is retaliation to Oracle buying Business Objects' competitor Hyperion, which specialized in adding financial and performance management tools for SAP systems.

"While neither SAP nor Hyperion can afford to back away from this relationship, it is deeply uncomfortable to SAP. We therefore expect SAP to work with Business Objects--which only recently acquired performance management vendor Cartesis itself--to provide alternative for its customers."

Bradshaw noted that SAP also stands to gain "business growth" from the acquisition, and there was "a much more important and longer term objective".

The Ovum analyst was referring to "operationalizing the intelligence from the business data", which is where "Business Objects brings great breadth of BI and performance management capabilities to SAP".

"Typical BI systems address only top management's need for intelligence, which is why penetration of BI within the enterprise has only hit the 15-20 percent range," he explained.

In an e-mail interview with ZDNet Asia, Sharon Tan, IDC Asia-Pacific senior market analyst for its application tools software research division, noted the potential benefits of the combination.

Tan said the merger could spell "cross and upselling opportunities into each vendor's installed base of customers".

"In the pipeline could be solutions that provide users with unified access to both content and data for a more complete information environment," Tan added.

Noting an overlap in product capabilities between Business Objects' tools and SAP's Netweaver BI software, Bradshaw said: "We expect any soon-to-be announced integration plans to detail the areas for rationalization and the product roadmap moving forward."

Responding to ZDNet Asia's queries, Ben Wightman, SAP Asia regional marcom manager, said: "We will continue to support both [companies'] offerings.

"Users will be offered applications that will run on multiple platforms, SAP-based and non-SAP based," Wightman added. The companies have said there will be very little restructuring, and Business Objects will operate as a stand-alone business as part of SAP.

Quoting a past IDC survey, Tan said users in the Asia-Pacific region were "generally favorable to acquisitions" due to "perceived benefit" from increased research and development dollars improving products.

However, Tan said, the survey revealed that users were worried about more expensive software and less support for existing and third-party software investments.

Cautioning companies to manage user expectations regarding integration issues, Tan said: "Uncertainty about these issues may act as a brake to adoption to any companies that are targeted for acquisition in the short term."

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