SAP and Business Objects took the first step towards integrating with each other by announcing a first set of joint product offerings that be made available at the end of January.
An impressive lineup of senior SAP and Business Objects bigwigs gathered at a special press conference at SAP’s Palo Alto Labs in California to outline their joint vision and integration strategy going forwards. Both companies are merging in a $6.8bn deal that closed yesterday, after SAP secured a majority ownership of Business Object’s share capital.
We’re ready to execute of our acquisition and have 87% of Business Objects shares and subsequent tender offers in place as per French law. That’s enough to start integration, said SAP CEO Henning Kagermann.
As a result SAP has unveiled a initial set, presumably the first of many more to come, of integrated product bundles that pull together complementary technologies from both companies’ product portfolios.
To hit the road running we’re introducing nine software application packages that will be available by the end of this month, said Leo Apotheker, SAP’s deputy CEO and president of customer solutions and operations.
The packages marry various BI and performance management tools and applications from both SAP and Business Objects, and are split into three main categories.
The first is performance optimization, and addresses financial performance management and governance risk and compliance.
The second relates to BI with packages crafted around enterprise query and reporting, visualization, data integration and data quality and master data management.
A third set of packages is geared specially for the SME market, which the company pegs as an important growth area this year. These include: a combined package that pulls together SAP’s Business All-in-One software with BusinessObjects Edge Series software; a Crystal Reports Server package for enterprise query and reporting; and a standalone BusinessObjects Edge Series package that integrates more easily with SAP’s business applications.
These packages demonstrate the strong synergy between the two companies’ product and sales organizations and foreshadow how quickly we will be able to progress in our integration efforts, Apotheker said.
They also allow companies to license, install, and manage solutions from SAP and Business Objects in a single IT investment transaction.
Apotheker said the nine software packages will be sold by both organizations’ sales teams. He also added that Business Objects’ Crystal Reports and Edge Series would, for the first time, be distributed through SAP channels as well.
SAP has also made progress on organizational restructuring, and seems committed to running Business Objects as a semi-autonomous business unit within SAP. Former Business Objects CEO John Schwarz will head up the new Business Objects organization in SAP that will also pull in various SAP units and personnel. For example, reporting to Schwarz will be Doug Merritt, who was previously in charge of SAP’s business user applications division, which has will now transition over to the new Business Objects organization under the banner of business performance optimization to allow for closer collaboration and development.
In SAP parlance business user applications refers to a class of software targeted at users involved in ad-hoc and collaborative work, which tends to be unstructured, innovative, and predictive and are different from SAP’s process-centric business applications such as Business Suite, Business One, and Business ByDesign. Typical examples include planning, financial consolidation, and evaluating risk.
Most of SAP BI and performance management development work will probably gravitate around its Palo Alto Labs facility where Merritt will be based. Additionally, John Nugent, who ran global field operations for SAP, and Keith Costello, from SAP’s consulting services organization, will also to join the new Business Objects organization.
However neither Business Objects nor SAP commented about the future roles of Business Objects founder and current chief strategy officer Bernard Liautaud or Sanjay Poonen, general manager of analytics for SAP.
The new business unit is likely to be run from California, where Business Objects maintained its headquarters.
While we’re a French company, we only had a nominal French headquarters and the critical mass of the business was in North America. In fact my own office is down the road in San Jose, Schwarz said.
Kagermann confirmed that Business Objects will operate mostly independently.
Why did we organize this way? Because we have two large client bases to address; joint customers and another 10,000 or so Business Objects customers that have not selected SAP. We like that as it gives up great potential for the future.
Kagermann also explained that SAP wanted to protect Business Objects’ value of being agnostic to the databases, data warehouses and transactional systems it can work with.
If you fold them [into SAP], automatically people will push them in direction where they work best with SAP. That’s normal. That’s human nature.
Indeed ensuring openness was a recurring theme that both SAP and Business Objects stressed during the press conference. We’re committed to developing business optimization and BI applications that are open. By that we mean remaining totally open to any underlying data sources and transactional applications – even sub par ones (i.e. read into that Oracle), Apotheker said.
Schwarz reiterated an open commitment to platform and data heterogeneity: Even though we’re aligning our technology to SAP’s technology and its sales force we’re equally committed to non-SAP customers. In fact our intention is to have a BI solution running on top of Oracle that’s better than their own.
Schwarz added that openness also extended to both companies’ partner eco-system as well. We won’t limit access to our platform to partners in any way, he said.
By welcoming and continuing to enhance both (eco-systems) we can go-to-market with a combined 6,000-strong community of partners. That will be a formidable engine for building complementary offerings on top of our technologies and a major route to market.
Kagermann called the acquisition the fourth pillar in SAP’s overall strategy: That’s why we call it a strategic acquisition. He explained that organic growth, monetizing its core business process platform and growing SME business volume are the other three pillars of SAP’s current strategy.
We’re the only company that has organically outperformed the market over the past year. Plus’ we’re adding over 1,000 live NetWeaver systems every month.
Kagermann however admitted that SAP still has some work to do in cracking the SME and mid-market in spite of launching its Business ByDesign (formerly called A1S) hosted software-as-a-service versions of its core business applications to great fanfare last year. But he’s optimistic about making SAP’s that into a volume sales business and sees Business Objects’ own SaaS BI offerings as having a big impact on that growth.
One of the things that Business Objects has done well is on-demand and we’re excited about leveraging that in our Business ByDesign hosted offerings.
Schwarz added that Business Objects’ on-demand system, which it launched two years ago and is based on crystalreports.com and hosting infrastructure acquired from NSite, now has around 70,000 subscribers and envisages easy integration with SAP’s hosted applications suite. We have a multi-tenant platform that allows people to bring their applications and plug into our hosted environment. The last pillar was leadership in a fast growing market in the business user applications space. We wanted add that and we’ve now done so with this acquisition, Kagermann said.
However he asserted that the purchase of Business Objects did mean a radical change from SAP’s previously stated organic growth strategy.
Our priority always was and is to grown organically. We’re not looking to buy customers, market share and maintenance stream revenue as others in the market are looking to do. Rather we’re looking to extend our capabilities through innovation.
But if we see a unique business opportunity to expand into a market through an acquisition we will do it if it makes sense for us, our shareholders and our customers. Sometimes you can’t plan ahead for when that opportunity comes.
The press conference fell during SAP’s financial quiet period so the impact of the acquisition on its forthcoming results was not discussed during the press conference. SAP will report its fourth-quarter and year-end earnings January 30.
