Andy on Enterprise Software

Last man standing

October 11, 2007

So, what does the acquisition of Business Objects by SAP mean for the BI industry? In some ways this is a curious move by SAP. Business Objects is a very successful company, yet the overlap between SAP customers and Business Objects customers is much less than generally thought. Of course really large companies tend to have lots of software, so many companies will have SAP and also Business Objects, but this does not meant that they are being used in concert. I spoke to an executive of Business Objects this week who told me that the overlap was “almost zero” because for Business Objects to access the SAP environment was awkward (”nearly impossible” were his exact words). Typically Business Objects reports will be running against a separate data warehouse being fed by SAP and other systems rather than Business Objects directly reading, say, a BW warehouse or (far less likely) directly accessing SAP systems. Business Objects is much more common in Oracle shops, which makes me wonder whether the purchase is more a defensive one i.e. to take Business Objects out of the market before Oracle gets its hands on it. Oracle + BOBJ would be a much more natural fit, and so I am sure that this move will displease Oracle, who had bought Hyperion, yet Brio was only a distant third in the reporting space behind Business Objects and Cognos.

For Business Objects customers the news is not necessarily positive. SAP tends to be fiercely proprietary about its environment, preferring to fight it out for footprint with Oracle in customers rather than opening everything up. Hence SAP BW, for example, while it can certainly load data from non-SAP systems, is suited best to an SAP environment, and it would be bizarre indeed to imagine a customer without SAP buying SAP BW. Business intelligence is not SAP’s core competence, and there is some considerable danger of dilution of attention, as well as future product directions potentially being pulled in awkward ways e.g just how open will SAP want Business Objects to continue to be to other sources such as Oracle? Of course for now it is all public harmony, but think down the road a year or two and consider whether someone in SAP might at least consider the option of making it harder for Business Objects to work with Oracle’s applications in order to encourage customers to switch from Oracle to SAP applications. Do you think this would never cross their minds; not even a little bit? Moreover SAP has a distinct culture, and has no track record of an acquisition of this size (indeed, until this week its executives had scorned the very idea). I suspect that just about every person in Business Objects is at least updating their resume right now, and even if things work out fine it is going to be at best unsettling for staff. As Woody Allen said, the lamb may lie down with the lion, but the lamb will not get much sleep.

I think Cognos is the winner here, as it can now stand as the clear leader in business intelligence as a truly independent vendor. Companies with genuinely mixed environments will surely edge towards Cognos now in preference to Business Objects. Even if it turns out that Business Objects truly will be run as an independent business, there will always be that nagging doubt (reinforced by Cognos sales people). Informatica has demonstrated that you can prosper perfectly well when your main competitor is bought by a behemoth (in their case Ascential by IBM) and Cognos is now positioned to follow suit.