SAP-Business Objects Deal Heralds Rocky 2008

I guess SAP's acquisitions of OutlookSoft and Pilot Software were not enough as they announced their intention to acquire Business Objects to bulk up in the BI and Performance Management markets. What does it mean to you who might be a customer of Business Objects or SAP?

If you are in the middle of evaluating SAP or Business Objects products in analytics, BI or performance management, take heed and prepare for a rocky future. Organizations evaluating SAP should stop and perform a thorough review before proceeding on new or existing projects. SAP products like SAP SEM, SAP NetWeaver BI, SAP BW and even recently acquired OutlookSoft are part of the overlap with Business Objects. Those evaluating Business Objects products should consider the potential impact on existing and planned deployments. While SAP plans to keep Business Objects as a separate organization, the reality is that there will be significant changes to existing products to ensure that they integrate effectively with SAP.As I pointed out in my recent blog posts "Business Objects For Sale?" and "SAP Improves Outlook on Performance Management," changing market conditions will impact your organization. Yesterday's announcements point to many changes in strategy and plans at SAP as well as a desire for a larger market position. SAP with Business Objects will gain a large portfolio of customers, products and revenue, but the significant overlap of products will not be easy to rationalize. SAP's recent "tuck-in" acquisitions of OutlookSoft is just one example, as Business Objects had recently acquired OutlookSoft and SAP competitor Cartesis, which had a complete suite of consolidation, planning, budgeting and reporting applications for finance.

If you think that this deal will not impact you in either business or IT, you are mistaken. Even if you do not own technology from Business Objects or SAP, the products you do own have probably been acquired within the last two years. Cognos, Infor, Microsoft and Oracle have all have made acquisitions and are also quite ready to battle for your IT dollars in BI, performance management and out into operational departments. All of these acquisitions increase the time required by vendors to support tighter integration for applications and platforms.

The significant number of acquisitions in recent months demonstrates the heightened focus on market potential and the deals are clearly being done with the best interests of shareholders in mind. I know that many technology suppliers in financial performance management believe that the market will reach even higher heights in 2008, but this expectation is greatly flawed as finance only looks for application replacements and upgrades when absolutely necessary, not on an annual basis. Finance departments are investing in applications and BI that can provide greater visibility and control in areas such as operations planning, sales compensation management and workforce analytics.

Hold onto your seat as 2008 will be a year that you might not like. Many of your technology suppliers in BI and performance management will be "under new management," and they will all be knocking on your door looking for new projects and contracts. There are still plenty of alternatives, so don't feel that you're locked in. There are a lot more technology suppliers out there than you might think that can deliver BI and performance management for your organization.

Let me know your thoughts.

Mark Smith is CEO And Senior Vice President of Research at Ventana Research. Write to him at [email protected].If you think the SAP-Business Objects deal will not impact you, you are mistaken. Even if you do not own technology from Business Objects or SAP, the products you do own have probably been acquired within the last two years. Cognos, Infor, Microsoft and Oracle have all have made acquisitions and are also quite ready to battle for your BI, performance management and operational IT dollars. But all of these acquisitions increase the time required by vendors to support tighter integration for applications and platforms.