SAP Buys Outlooksoft

Consolidation in financial analytics and performance management is happening at light speed with the announcement yesterday that SAP plans to acquire Outlooksoft. In their announcement, SAP clearly positions this as extending its solutions for the CFO's office and expanding its portfolio to include performance management. In SAP speak, they provide everything from governance, risk and compliance to performance management, while doing a little ERP as well.

Interestingly, SAP usually does not usually spend much time talking about performance management as a stand alone offering, yet with Hyperion buying Oracle and Business Objects buying Cartesis, SAP could not afford to be left on the sidelines. Paul Hammerman at Forrester indicates that this closes a gap around Planning in the SAP product line in his interview with SearchSAP and notes that SAP's Strategic Enterprise Management (SEM) was not great. Hammerman suggests that SAP is losing CPM deals to best of breed vendors like Hyperion and Cognos.

OutlookSoft had been all Microsoft, all the time, until recently when they expanded support for Oracle. Outlooksoft offers a nice Excel front-end tool and makes it easy to do custom planning, budgeting and forecasting. The capability is user friendly for finance teams who have grown up with Excel. The capabilities and ease of use are both things SAP customers will benefit from, but there is clearly some overlap with existing functionality, and OutlookSoft products are not going to be used like Hyperion or Cartesis for complex consolidations. John Haggerty from AMR research points this out specifically in his view of the SAP acquisition.

"When thinking of Outlooksoft, we picture an image of a solid, highly usable, prediction-focused planning, budgeting and forecasting system. Customers, many of which are divisions of larger organizations, have built very responsive and flexible planning systems with the product. The consolidation tool is decent, but used more for budgeting and forecasting roll ups and less for complex enterprise consolidations, which is what SAP customers will need and expect. "

I would suggest this is true for legacy SAP customers, but maybe less so for the next generation of SAP customers, who are smaller organizations. SAP has spent a lot of energy and money talking and marketing to the mid-market with NetWeaver, even spending on ads suggesting start ups use SAP. While there is little evidence to suggest this is true, SAP has been touting mid-market wins and spent many cycles at Saffire 2007 talking about the mid-market and their strategy.

SAP's Chairman Hasso Plattner unveiled SAP's focus on SaaS as part of their mid-market strategy at Software 2007 yesterday. His chalkboard slide set was interesting to those of us in the audience, but the strategy was not as warmly received by the media. (Thanks Darren). Regardless of whether you believe SAP will be successful with on-demand, the Outlooksoft acquisition will sell very well in the mid-market, be very applicable for existing SAP enterprise customers, especially at division and business line levels, and the concept of extending Outlooksoft into a SaaS option is not a big jump. The OutlookSoft offering with Oracle also gives them something else to sell into Oracle and Hyperion customers, many of them still running on OFA and Essbase that is way past its prime.

Very clearly the consolidation wave has crested. Will the last pure play financial analytics and performance management vendor please hit the lights on the way out.