Playing Monopoly With Enterprise Software: Will SAP And BOBJ Build Hotels On Broadway Or Go To Jail?
by Boris Evelson.
SAP and Business Objects today announced that the companies have reached an agreement for SAP to acquire Business Objects for approximate sum of slightly above 4.8 billion euro. Forrester has been predicting this continued market consolidation for some time — see our Microsoft Buys Proclarity and Oracle Buys Hyperion research documents, as well as a couple of my earlier blogs on the subject. SAP must be feeling a lot of pain and pressure to make such a significant move — SAP executives have been telling the world for years that they prefer small, tuck-in acquisitions. The deal though does make a lot of sense. In one transaction SAP gets the best of breed set of BI tools with full BI stack capabilities, everything from data integration tools like ETL and data quality to reporting, OLAP, dashboards, text analytics and many others. This deal has multiple implications to enterprise software users, especially for those 30-40% from the common SAP/BOBJ customer base:
- Business Objects users will gain from SAP’s domain expertise. In the era of increasingly commoditized products and services, domain expertise and industry specific solutions are key differentiating factors for any enterprise software vendor.
- NetWeaver BI (formerly SAP BW) has traditionally compared unfavorably to competition. No ETL tool to speak of, poor performance (partially solved with the new SAP BI Accelerator appliance) and scalability, instability, and inflexible reporting often make SAP users turn to 3rd party BI solutions such as the ones from Business Objects. Now these SAP ERP customers will have fewer incentives to look elsewhere for BI solutions and can get best of breed ERP and BI apps from one vendor.
- SAP/BI combined entity has the opportunity to lead the pack in the convergence of the worlds of data and process. BI vendors have traditionally thought of the world as being data centric. It is not – our world is process centric and data exists only as a byproduct of processes and rules. SAP understands this concept very well and has been practicing and implementing workflow based industry specific processes with embedded BI for a long time.
- SAP and Business Objects have always been known for their ability to ingest and analyze structured data from relational databases, in order to discover patterns and trends that help guide business decisions. Conversely, text mining vendors like Inxight, recently acquired by Business Objects, specialize in extracting information from unstructured text — such as emails, documents, blog sites, and Web pages — and then automatically tag and quantify it for analytical purposes. SAP/BOBJ/Inxight now have a powerful combination for applications like fraud detection, enterprise risk management, quality improvement, and a host of other information-intensive initiatives within organizations.
Issues and challenges:
- The roadmap for SAP/BOBJ Performance Management or Business Performance Solutions is murky. There’s nearly 100% overlap in the PM capabilities of SRC and Cartesis (BOBJ) vs. Outlooksoft (SAP) and profitability applications from Armstrong Laing (BOBJ) vs. Acorn Systems (resold by SAP). Until both companies go through a formal product road map exercise, which may take at least a few months, it is unclear which products will remain front and center of SAP’s Performance Management strategy and which ones will be relegated to the “second class citizen” status. See more on the subject from my colleague, Paul Hamerman.
- Even though Business Objects continues to work on product integration and made good progress in XI release, it still suffers from incompletely integrated set of products: Crystal, full client BI, WebIntelligence, Voyager, etc. While these products share metadata, security and other integrated features, one cannot easily move a report developed in one tool to another. Moving some of the BOBJ R&D resources to SAP product integration will not make internal BOBJ product integration effort any easier. To make matters worse, BOBJ XI release requires complete retest and sometimes even redesign of every single report. Some customer have been struggling with this upgrade and even used the requirement to upgrade (BOBJ will stop supporting all prior versions sometimes in 2008) as an opportunity to consider other BI tools. SAP has to be very careful not to make this situation worse and potentially loose some BOBJ BI customers.
- SAP has a bit of a mess on their hands after Informatica (which has a multi year OEM agreement with SAP) was awarded a permanent injunction preventing Business Objects from shipping Informatica's patented data transformation technology in the Business Objects Data Integrator product (acquired as part of BOBJ acquisition of Actaworks, company originally formed by ex Informatica employees). SAP now needs to figure out how Informatica and BOBJ will play nicely in one sandbox.
- And last, but not least, Oracle, SAP’s archenemy, has numerous partnerships and joint development efforts with Business Objects. BOBJ is Oracle’s largest BI partner and provides tight data base integration as well as data integration and data quality solutions for Oracle eBusiness applications. This relationship is going to be strained at the very least, and quite possibly severely reduced in scope.
What does it mean to the rest of the market? Remaining pureplay BI vendors (Cognos, IBI, Microstrategy, SAS, Actuate) will most probably treat this as a non-event, and will possibly even try to spin a positive story – the less independent BI vendors left on the market, the more opportunities they have to go after customers who want stack independence. As far as recommendations to enterprise BI users – I say take quick advantage of uncertainties in the product roadmap, lock down maintenance contracts and sweetheart deals while you can to get a good deal from BOBJ before SAP really takes over.