SAP to buy Business Objects
SAP AG, the Germany-based world leader in business management software announced it biggest deal ever, the purchase of French-based Business Objects Sa, a leading company in an area called "business intelligence software." The deal is for $6.8 billion.
Unlike its biggest rival Oracle, which has bought up one rival after another, SAP has concentrated on organic growth and smaller tactical purchases. The idea of business intelligence software is finding a way to analyze performance of a large corporation and its competitors, software hat top companies are willing to pay a lot for. It's a $10 billion a year industry that is growing by 10% a year.
Curious, Oracle had previously considered by Business Objects last year. Instead, it bought Business Objects' competitor Hyperion Solutions in a $3.3 billion earlier this year. In way, the buyout was almost predestined. SAP needed Business Objects to compete, and Business Objects needed a rescuer. Its platform had been used by SAP, Oracle, and Microsoft (#3 in this area) customers alike, but with Oracle closed off, it had to find a partner.
Oracle, by the way, has bought over 30 companies in the last three years, spending over $25 billion.
And Business Objects itself has been bulking up with eight acquisitions in the past two years, including financial reporting software company Cartesis SA, and US firms Nsite Software and Firstlogic
Saps' uncharacteristic move will almost certainly lead to even more radical consolidation in the industry as everyone is forced to pick sides. As an InfoWorld article ("SAP's Business Objects acquisition: The death knell for point solutions?", 10/8/07 ) points out:
What we will probably see now is an accelerated pace in acquisitions and consolidation among software vendors as each major company vies for what remains of the pure-play vertical solution ISVs… Companies will be forced like never before to make a platform decision: Fusion [Oracle], NetWeaver [SAP], or Microsoft and go with it.
Once again, consolidation breeds consolidation, and like a game of musical chairs, the small companies have to scramble not be left out in no-man's land.
