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For SAP, this will translate into additional revenue from the BI market worldwide. For BO, this will mean warding off the challenge from Microsoft and Oracle that have been nibbling away at its license and maintenance revenues. By bundling CRM analytical tools, the center-piece of the BI market, SAP and BO will benefit immensely.
According to Kagermann, both companies would need to align their technology and sales. He said that the companies will follow the L-formation pattern, wherein SAP will integrate with BO on the horizontal and analytics domains, while BO will leverage on SAP’s value proposition for data integration.
Said Bitterer, “SAP already has three and BO two products under this portfolio. A lot of rationalization is necessary. SAP customers will have to find out whether to use BI or stick to Business Explorer. BO support remains the same. Overall, we see each as complementary to the other…the only change is in the nature of the work.”
BO mostly offers end-to-end BI solutions for end-users. SAP on the other hand has been traditionally focused on ERP and back-office applications, and while it has BI capabilities, this acquisition allows it a relatively easy route to expand its footprint. “Outside of financial considerations, Springboard views this as a very favorable acquisition for SAP from a strategy perspective,” said Chakravarti.
Outlining the benefits to both companies Kagermann said, “BO will enrich its analytics capabilities with our vertical expertise and tech innovation. It will also leverage the data management, in-memory analytics, governance, risk and compliance management capabilities from SAP. SAP in turn will use the services and other BO offerings.” But SAP will not bring all BO products on its NetWeaver stack. “BO runs on technologies of competition. We will allow them to do so, but all the same certain components of BO would be embedded on the NetWeaver. We will continue to have a business data warehouse and will be a strong player in the analytics market.”
Added Chakravarti, “BO is probably the most aggressive large BI provider for SaaS, and it should continue pushing this strategy.” The hosted model will offer big value to the mid-market, said Bitterer. “Nobody has addressed this market really. Oracle and Microsoft wanted to do it, but enough was not being done. SAP is a big company and it would have survived without BO, but it wanted to extend its reach and portfolio.”
Mohan said that the acquisition has also brought forth a trend that platform players would bundle BI as a part of CRM at the low-end, while independents would push for AI tools and advanced statistical tools to differentiate themselves. In the long term the market would converge, he believed.
According to Chakravarti, “Echoing other areas, you will see BI coming more under the umbrella of the Oracles and SAPs of the world. With opportunities among larger customers declining, pure-play vendors are being relegated to the mid-market segment where there are more customers but smaller deals.” To this Mohan added, “The only major independent player left in the space now is SAS, which has about 12 percent of the marketshare.”
Concluded Bitterer, “This will not be the last acquisition. Companies such as IBM, HP and Sun, with deep pockets and an interest in BI, are also waiting in the wings. Nobody wants to be left out, and everybody wants to acquire the best companies. This has triggered a whole series of acquisitions, so the buying spree will continue till a majority of the BI companies are acquired. BI will eventually disappear into large infrastructure companies.”
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