Business Objects and Cartesis - Consolidation Continues

As everyone has seen this week, Business Objects announced its intent to acquire financial planning and consolidation vendor Cartesis for as much as $300M in an all cash deal. There have been many media cycles on this and perspectives on the impact on the industry: - continued consolidation in the market, potential overlap with existing financial applications - including the SRC deal for financial planning and budgeting already in the Business Objects portfolio. This has also been positioned as reactive to Oracle's purchase of Hyperion, which closed and was consummated in high style with Hyperion officially turning over the keys to the castle this week at their user conference. While this may be exciting if you are in the middle of it or work at one of the aforementioned companies, the reality of all these moves are pretty straight forward.

Oracle Buys Hyperion
In spite of how this has been positioned as performance management and rounding out Oracle's BI portfolio with a best of breed BI tool, the simple reality is that the Hyperion acquisition is nothing more than continued acquisition of financial applications to add to its portfolio, as well as the associated customer base and maintenance revenue that comes with it. See also PeopleSoft, Siebel, Retek and most other things added recently. If there is one thing Oracle does not need, it is one more BI tool to add to the multiple versions it has. Hyperion is #1 is financial applications in most markets globally, has a strong installed base, has plenty of legacy Essbase customers, and a nice maintenance revenue stream. (Sound familiar?) They were not successful in upgrading Oracle Financials customers, their new solution was great, but nobody bought it, and so they bought the market leader in the segment for financial analytics. The big get bigger and things roll on.

Business Objects Buys Cartesis
This one is almost as simple, regardless of how it was positioned or not positioned realitive to existing applications and prior acquisitions (SRC) on the conference call. This is about market reach, customers and access to Global 1000 accounts. It has little to do with BI.

Guy notes in his post that Business Objects has been accused of not having strong enough consolidations. While that may be true, the reality is that they do have it and they don't sell much of it. Cartesis does not exactly solve this problem because if you are a company that matters, you likely already have consolidations. If you don't, the bad news for Business Objects is that you are likely to buy 6 -10 seats. This reality is reflected in Cartesis growth - which is to say not much. They also never had success selling in the states. But not for lack of effort.

Conversely, SRC never sold much in Europe outside the UK prior to the acquisition. This deal solves a problem for everyone involved: Cartesis gets a white knight and investors get an exit. Business Objects gets a great enterprise consolidations solution at a low multiple, footprint in key accounts across Europe, and the opportunity to leverage BI and performance management leadership in the existing account base. The portfolio expands, they continue to scale EPM solutions and can fight Oracle head on.

The acquisition, in spite of the pain of buying a French company, should close with good speed and Business Objects will continue with their focus on growth and acquisitions. The overlap is minimal, and I will not be surprised if more EPM acquisitions follow in short order.