SAP acquires Business Objects

German applications giant SAP has announced that it is to acquire Paris-headquartered business intelligence provider Business Objects for 4.8 billion ($6.8 billion).

Rumours of the deal were leaked by French newspaper Le Figaro last month, and Ian Charlesworth, analyst at technology watcher Ovum, today described the deal as ‘the most predicted acquisition of the year so far’.

The acquired company will operate as distinct business unit within SAP, and will retain its CEO John Schwarz. While there is some overlap between Business Objects’ and SAP’s performance management and BI tools, they will all, for the mean time at least, be maintained.

The price SAP has paid for Business Objects is the most the German company has ever paid for an acquisition, and the largest transaction in the BI space.

Indeed, SAP has historically avoided large acquisitions, preferring to develop its own technology. But at this year’s SAPPHIRE user conference, CEO Henning Kagermann said that the company was relaxing that attitude. “We cannot do everything ourselves,” he said.

With Business Objects, SAP has not only bought some market leading technology, albeit in a highly commoditised technology market, it has also added some 44,000 customers to its roster.

“The acquisition of Business Objects is in keeping with SAP’s stated strategy to double our addressable market by 2010”, said Kagermann in a statement.

And although the BI market is highly commoditised and consolidated, that does not mean there is not still room for revenue growth.

Gartner analyst Andrea Bitterer said that the combination of the two companies is now ‘one of the world’s business intelligence powerhouses’.

Both companies have ambitions to expand into the mid-market, where business intelligence is currently under-utilised, and to benefit from online software delivery., which is owned by Business Objects, is the most mature of the few business-intelligence-as-a-service offerings available.

Consolidation almost complete

Between this deal and Oracle’s $3.3 billion purchase of Hyperion earlier in the year, the business intelligence market, as long predicted by analysts, has been largely consolidated. BI now serves as a function of the business applications space, rather than a technology field in its own right.

That is because the independent vendors failed to innovate fast enough. BI technology itself has become commoditised; most tools can do roughly the same things, technologically speaking. And there is little reason to remain loyal to what once may have been described as a ‘best-of-breed’ vendor, when they are no longer that much better than the rest of the breed.

For the likes of SAP and Oracle, buying up the BI market has been not only an opportunity to buy brand-name analytics packages to be sold natively for their applications, but also a precious opportunity to acquire customers.

Further reading

SAP looks beyond its borders

Oracle buys itself leadership in BI

HP joins BI frenzy

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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