Performance Management is Hot says Gartner

Chicago was host to the Gartner BI conference this past week. I had a chance to attend and tried to focus most of my time on the CPM side of the house attending most of the performance management related sessions, here’s a recap from the events that took place:

CPM is still hot according to Gartner, with strong growth in the market over the past several year, the future looks bright for once upstart now well established category of performance management. Nigel Rainer had a session on CPM where he called out five key focus areas of corporate performance management functionality including; planning and budgeting, dashboards and scorecards, financial consolidation, profitability optimization, and financial management reporting. Rainer also had spoke to hosted solutions in the CPM realm as an area to watch in the next 2-5 years. This holds true particularly in the mid-sized business market where organization have neither the budget nor the IT staff to support user demand around performance management applications.

There was lots of interesting commentary around XBRL and hosted solutions as the future of the space, there was a mention of XBRL filing being made mandatory by the SEC. Rainer spoke to XBRL as a new way to revolutionize the way companies provide financial information to the org. Rainer pointed to the SEC’s financial explorer portal which provides financial details of several dozen publicly traded companies using XBRL tagging. http://209.234.225.154/viewer/home/

John Van Decker and French Caldwell had an interesting session on GRC and financial governance, the net here was that most of the smaller governance vendors will get sucked up by the already consolidated CPM/ERP vendors and added to the portfolio. They also spoke to the overall vision of document management and collaboration as a key piece of the future of GRC.

From a vendor perspective there were a number of other very interesting presentations from the other BI vendors including Oracle and SAP/Business Objects, where they showed roadmap and tried to paint an integrated story. The session that I did sit in on was SAP/Business Objects where they mostly talked around SAP/Business Objects integration or BI/ERP cooperativeness and focused mainly on the Business Objects product stack feature some of their newly acquired technology such as their text mining functionality acquired from a company called Insight.

HammerTime!

As you no doubt have been hearing if you’re either at the Gartner BI conference this week, or if you’re a regular reader of all the hip, happening IT publications, InfoWorld (among others) has the scoop on the long awaited announcement of which SAP and Business Objects products made the cut, and which did not.

There seemed to be some degree of confusion between what was said at last week’s SAP BI and Portals conference, and what appeared in print, but with no revisions or corrections coming out after the initial wave or articles, our bet is that what’s on paper is what’s happening.

Interestingly, these announcements don’t deal with the entirety of the product overlap—by John Schwarz’ own admission, product decisions on Crystal Reports, Web Intelligence, Dashboard Builder, Voyager Visual Analyzer and BEx BI are still outstanding, so there’s clearly more to come here. But still, we start to get a clear idea of who won out in the product battles:

· Planning—looks like OutlookSoft is the big winner here, perhaps not surprising given the investment SAP was already making in the product; one wonders what will happen to the joint BOBJ/Cartesis new planning product effort bringing a new planning product to market—likely shelved. Also shelved is the ALG and unfortunately, SRC planning products

· Consolidations—interestingly, they announced 2 solutions—kind of “enterprise” and “mid-market” if you will (although they would likely argue on this classification, but his is how analysts are already referring to them). Cartesis, with its large European install base, gets the nod on the enterprise side, while OutlookSoft is on point down stream. Again, a good breakdown, and there were relatively few SRC consolidations customers, and clearly Cartesis was the product of the future here.

· Dashboarding—this one may cause some chafing. They’ve decided to go with the Pilot dashboarding product, and will ditch the Dashboard Manager product from Business Objects. Given the number of customers on the BOBJ technology vs. the Pilot install base, this is not an insignificant move. However, given some of the known architectural and technological limitations of the BOBJ products, they obviously felt that the Pilot product had a more robust technological foundation and didn’t come with many of the scalability issues that Business Objects often had with these products.

· Profitability—no surprise here, as the ALG functionality wins out, and the agreement with Acorn will be undone. ALG, while not selling a ton of product for Business Objects, was a great pick-up, and gave the company a huge dose of credibility in the EPM marketplace, both from the IP they picked up from the company management, as well as the technology itself. The goal now is to scale the skill set for the product into the SAP channel, which should really help sales.

Overall, not too many surprises, outside of the dashboarding strategy. Everyone pretty much knew that SRC was not long for this world, although the team was doing some really interesting things associated with the mid market efforts of BOBJ, so hopefully the product will live on in some form or function; and the vertical expertise and IP (and so forth…) should aid the OutlookSoft application, although that’s not an insignificant effort right there.

Next up: aligning the staffing resources around the product decisions. Hey wait, is there any connection here to the number of resume’s in my inbox lately?

Naahhh…. (man I’ve turned cynical in my old age).

The Big "O"

News of Oracle Corp's share drop echoed around the software market today as Oracle shares fell 7 percent Thursday March 27. Questions again arise around whether or not the shopping spree the company has been on in the past few years is paying off, Oracle has spent over $35 billion over the past three years on acquisitions. It’s been unique to watch Oracle’s aggressive moves particularly in the BI space with the acquisition of Hyperion, there have always been rumors around whether they will actually be able to successfully pull off their acquisition strategy. Oracle points to some of this downturn to be reflected by the US economic situation and overall market dynamics as many companies are being forced to pull back on their IT spend and investment in new technologies. It will be interesting to monitor this term as Oracle fourth quarter guidance for the is being set cautiously. The macro economic environment will hurt companies like Oracle more than smaller software vendors, giving a fighting chance to smaller players to come up with that next big thing and does open up the door for rival ERP software vendor SAP to gain some momentum particularly in the BI space.

Is Your Team #1?

Walking through San Francisco International and I happened to glance up and see the newest (at least to me) "We're #1" pronouncement from Oracle. They claim to be #1 in Enterprise Performance Management, which the sub-head in the ad defines as Business Intelligence, Financial Applications and analytics.

While Oracle gets full credit for leadership as of the latest Gartner MQ, it is not immediately clear that Oracle is #1. This may be a function of overall market share, or it just might be more chest pounding from Oracle. Of interest is the fact that Gartner calls out that Oracle's BI offer needs work and the fact that current customers, especially the Hyperion customers, are taking a wait and see approach to Oracle offerings.

Oracle has a strong global market share in financial analytics, but it is by no means clear that Oracle is #1 in EPM. Especially if SAP has anything to say about it. And they do, based on a recent announcement of Oracle replacements based on their offering not inclusive of Business Objects.

Let the games begin.

All Things Performance - Seen and Heard

Lots of activity and reports from all across the world of performance management this week...actually in the last couple of weeks. Some truth, some rumor, some things to be determined. So a little bit about a number of things:

Business Objects announced nice earnings this week, up 20% to $444 million. Most amusingly, Business Objects was referred to by eChannel Line in their write up as SAP Jr.

An industry analyst recently suggested that the Cognos acquisition by IBM is doomed to fail because they are going to get pulled into the EIM group, get squashed and disappear. Time will tell on this one.

According to Valleywag, BEA employees have been instructed not to blog about the impending acquisition by Oracle. In an effort to help, they suggest you send them tips and they will take care of the rest.

One of the more interesting suggestions coming out of the closure of the SAP / BOBJ deal is the idea that John Schwarz, CEO of Business Objects is now in the running as the heir apparent to SAP CEO Henning Kagermann. Apparently he has made a very strong impression with Kagermann and the senior management at SAP.

As of the earnings announcement today, it was officially announced that BOBJ founder and chairman Bernard Liautaud has officially resigned his positions as chairman of the board and chief strategy officer. He is widely expected to be elected to the SAP board later this year. Congratulations to Mr. Liautaud for building one of the pioneers and leaders in business intelligence and guiding it to a successful exit with one of the industry leading software companies. From zero to $1.5B in revenue for calendar 2007. A great ride.

Baby Got BI

It's not quite Sir Mix-A-Lot…but Baby got BI. Check out the music video from the Business Objects team in Vancouver, this is how nerds break it down. Peas and carrots. Word-up.

Kind of a Busy Day Yesterday in the World of BI...

So in addition to the big news that Oracle was final able to find a number that Carl Icahn could live with, and with Cognos trying to convince the world that v8.3 of their BI suite was the greatest thing since sliced bread, SAP and Business Objects also got into the act yesterday, announcing that the transaction was all but done, and coming to market with 9--count 'em--9 new solutions to the marketplace.

And the changeover to the SAP web motif is already underway, if you head over to http://www.businessobjects.com/ and check things out. Not sure that the color schemes really match up, and I think we all know where things will end up, but an interesting dichotomy and contrast in styles side by side in the same website nonetheless.

In the midst of well placed banner ads and somewhat murky conference calls yesterday came the solutions. Did we mention there were 9 of them? We can show you a press release in case you don't believe us. Spanning the spectrum (gratuitous last "Let There Be Light" plug there for the old BOBJ marketing team) of performance management, reporting, and everything in between, these new solutions, available on the market today and likely trained on heavily at this week's final BOBJ sales kick-off, are now in the hands of sales reps everywhere.


But what are they? Well, it's hard to tell. If you click on one of the solutions from Business Objects, you actually head over to the SAP website, where the solutions talk a lot about capabilities, but little else. It doesn't take a marketing genius to see that these solutions are little more than marketing rebranding, and that's actually not necessarily a bad thing. After all, they need to start somewhere, and at such time (months or years down the road) when they get the product roadmap figured out, these should be formidable offerings. Until then, however, if I'm a competitor, I'm going to have fun making the SAP rep talk about the products that comprise these solutions and how they actually work together.

I'm engaged, but I still see other people

Interesting to read the recent article in e-Week on how the SAP-Business Objects deal may impact the long standing relationship between IBM and Business Objects. IBM and Business Objects have been close partners for many years. In fact, IBM has been neck and neck with Accenture as the most important strategic partner for BOBJ for some time. Interestingly, they also develop software together, with specific emphasis on SaaS. And then there is the minor issue of IBM having just spent $5B on Cognos. Guess that might make these strategic partner dinners a little uncomfortable.

In reality, this face-off is likely much ado about nothing - at least in the near term for a number of reasons.

First, many of the partner deals are driven via IBM global services. Even when Cognos becomes fully assimilated into Big Blue, Global Services or whatever they are called these days are likely to do as they please, much as they have always done. And if you don't think they won't recommend Business Objects to an existing account, or Cognos to a SAP Shop, you are kidding yourself. (BTW - Will Cognos' logo become blue?)

Second, IBM continues to drive both a platform play and custom consulting to tailor results for clients via a wrap and trap strategy. Their message to clients is, just keep your existing PeopleSoft HR, essbase, R/3, Agile, JDE, mainframe, and whatever else in the basement. We will freeze those systems where they stand and start building solutions for you on our platform to maximize your investment and provide near term value. Of course BI will be part of those solutions. I am not sure if this is a result of Innovation man or those ideation sessions they show in their idiotic commercials, but it makes sense to many companies. Especially when the alternative is a complete rip and replace with the new stack from Oracle or SAP.

Third, when those big ELA contracts come up and IBM reps are looking for what else they can stick into the goody bag for the $50M they want to charge, Business Objects and Cognos are already on the price list. There will be no incentive for the IBM field guys to vote Cognos, especially if the client has previously bought BOBJ via IBM.

Over time this is may be a stickier issue, but among the options provided short term, IBM customers have more choice and have a little bargaining leverage. For my money, this will be even more entertaining if the rumor of IBM acquiring SAP were ever to come to pass. This would make those awkward blended family holiday situations look warm and comfortable

MicroSAP Anyone?

Posted with limited comment, because this would likely make our heads explode...

More on Consolidation - Business Objects and Cognos together?

Interesting comment and prognostication from Rob Preston at Information Week regarding consolidation. While Cognos being consumed by IBM is notable for the size and last tier one vendor to leave, Rob believes there are many more to come, some sooner rather than later as the tier one players - IBM, Oracle, SAP and Microsoft - as well as the tier two players in software - HP, Symantec and CA continue grow. Among the interesting suggestions here:

- SAP would be a great acquisition for IBM. Among the reasons cited was the marriage of applications from SAP to IBM global services. Not mentioned is the perspective $5B+ overlap of BI and EPM applications. Not out of the realm of the possible.

- A mention that Oracle may be running out of big companies to buy, but buying a big services company is unlikely according to Jason Mayward from Credit Suisse Worldwide because "Oracle isn't interested in the relationship business." He said it, I didn't.

- MSFT could still be interested in Yahoo.

- A Joint venture between Salesforce.com and Workday, the SaaS ERP company built by the same great people who brought you PeopleSoft.

I suspect the consolidations will continue and the big will get bigger. What will be interesting is to see the next class of companies who deliver new value and innovation in the shadow of the larger players.

Another Angle on the SAP/Business Objects Merger

So while we've commented a few times (like here, here, and ok, here) on the potential issues behind the impending SAP/Business Objects merger, today on RealMoney.com, writer and investor Vasu Vijayraghavan chimes in with a more financially oriented analysis of the balance sheet fundamentals of both companies, and comes to the conclusion that the deal isn't a great one for SAP shareholders--to the point where she's sold her shares.

Now the Performance Guys are not in the business of touting a specific stock, and we certainly don't pretend to be as educated as the experts in the field. But in contrast to a drive-by "this deal stinks don't do it" type of article, Ms. Vijayraghavan cites some compelling reasons why this isn't good for holders of SAP in her opinion. Some tidbits to support this hypothesis:

#1: Most of the BOBJ current financial metrics are, on the income side, worse than SAP's, with a table full of supporting data contained in article;

#2: Balance sheet and cash position of BOBJ including outstanding liabilities and restricted cash;

#3: Significant increase in total liabilities due to recent acquisitions (up to 38% of total equity from 2% last December, primarily (it would seem) as a result of the Cartesis acquisition, which was the biggest investment the company made this year)

All this, coupled with the decrease in quarterly revenues, has her antennae up. Now Business Objects investors are protected of course, with the offering moving ahead full steam and the stock trading at the offer price.

These facts could be more of any issue, however, when it comes time to derive the "synergies" that SAP investors will be expecting from the acquisition. That's when we'll see if these issues raised are just disparate data points, or precursors to some major restructuring that needs to occur to ensure SAP continues to deliver. To date we've heard nothing from both SAP and Business Objects other than the party line, which is focused on changing very little in the structure of both organizations. However, it will be interesting to see if that stance changes should the underlying financial fundamentals of both companies continue to diverge.

Is SAP Too Preoccupied?

We've wondered here before that in this Performance Guy's opinion/hypothesis, was Oracle always intending to go after BEA and not Business Objects, forcing SAP's hand and tying them up in a costly and lenthy acquisition and integration process while continuing to encircle them with more competitive technology?

Now news comes that Oracle has added to its performance management portfolio with the announcement of their intent to acquire Interlace Systems, a maker of integrated planning systems, which in large part acts as an extension of sales and operational planning--kind of a "planning for planners" type of approach. This move will further differentiate Oracle's performance management portfolio, and adds a solid extension of planning capabilities that you would expect to be used in sales cycles as soon as the acquisition is closed.

Interestingly, the "SAP may be distracted" angle was just picked up by another blogger we're now linking to on the right hand side here, Tony Baer at www.SandHill.com/opinion. Tony's insights are interesting in that as he looks on the Interlace site, while they have IBM, Oracle, and SAP as partners, the SAP partnership does have prominence over the others, particulalry on the support and certification side vs. what they are doing with Oracle, and he surmises that this may be another acquisition that Oracle has snatched away.

Time will tell, but first BEA, now Interlace, stay tuned for more developments...

The Microstrategy POV on the SAP and Business Objects Deal

Among the finest things to watch is the aftermath of any proposed acquisition is the competitive response. The Microstrategy camp has issued their own set of talking points and review of the SAP acquisition of Business Objects. They are fairly straight forward with their position - this is bad for customers and Microstrategy is the only pure play focused on BI. Of interest is the handy reference guide they provide on product overlap.

Significant Areas of Product Overlap Between Business Objects and SAP
Product Category	Business Objects	SAP
Dashboards and Scorecards	Xcelsius, Dashboard Manager, Crystal Vision	Visual Composer, Web Application Designer
Query, Analysis and Reporting	Web Intelligence, OLAP Intelligence, Voyager, Crystal Reports, Cartesis, Inxight Software	BEx Web Analyzer, BEx Analyzer, ABAP™, BEx Report Designer, Pilot
Office Plug-ins	Live Office	BEx Analyzer
Application Infrastructure	Nsite (on demand), crystalreports.com Vertical and Horizontal Apps	NetWeaver xApps Vertical and Horizontal Apps
Desktop Design Tools	Desktop Intelligence, Designer	BEx Query Designer
Portals	InfoView	SAP NetWeaver Portal
Performance Management or CPM	SRC, ALG Software, Cartesis	SEM-BCS, BPS, Netweaver® BI-Integrated Planning, OutlookSoft, Netweaver® BI Advanced Planner and Optimizer, mySAP ERP Express Planning
Master Data Management	Metadata Manager, Composer	SAP NetWeaver® Master Data Management
ETL/EII/EIM	Data Integrator (Acta), Data Federator (Medience), Data Quality (Firstlogic, FUZZY! Informatik)	Data Extraction routines to populate SAP BI
Mobile	Mobile Interactive Viewing (InfoView Mobile)	SAP NetWeaver® Mobile

Source: Microstrategy website. Link is HERE.


Also of interest is the fact that this is not totally complete or accurate. For example, there is no mention of the Dashboard Builder or Performance Manager as part of the dashboard and scorecard offering in box one. However, they do give at least one overview of the variety of overlap. As of this writing, no analyst or 3rd party has provide a similar side by side comparison that I have seen.

If I was SAP and Business Objects, I would fully expect to see this in wide circulation in competitive deals.

So Just What IS this New Category Called Then?

So if we're to believe Pat's previous post (and I've made lots of money from believing Pat), then the BI category, as we know it, is pretty much gone. (Pat says it's "BI" that's going away, but without consulting him, I'd bet he means the category, obviously not the functionality).

Interestingly, the more you hear about how SAP is going to operate Business Objects, the less likely it seems to be sustainable over any period of time. For the last 18-24 months we've been hearing about the consolidation of the industry we're now experiencing, and that MSFT, SAP, ORCL, maybe IBM, would all have a share. And so it's coming to pass (we'll assume that given even Cognos is now not confirming that they'll be around forever) that IBM is the 4th one in the mix).

Is it really realistic to think that Business Objects, "an SAP company," is going to be able to disassociate with its parent in non-SAP shops where they're in a competitive deal? Any chance SAP is going to let Business Objects keep developing new connectors to Oracle ERP and Hyperions CPM for the betterment of "independent BI?" I'm not so sure. The other Three from above will go to great pains to paint Business Objects as nothing more than an extension of SAP, lumping all the things that Business Objects does as SAP technology (with one heck of a product roadmap, but that's beside the point). So while the marketing may stay unique, the "black is the new black" look and feel may stay in place, conventional wisdom is already coalescing around the idea that if you're an SAP shop, you'll go with BOBJ; if you're something else, you'll go with something else (We'll leave the question of "what if you're none of the above" to another time).

So that leaves Four big tech vendors all with BI and performance management functionality resident within their offerings, but not at the core of them. Which means that we're in another category of technology. As BI is consumed into the overall portfolio of these companies, it follows that these offerings, along with all the resident technology, must add up to something new. But what is it?

Little noticed last month was the acquisition of former CPM leader Longview Solutions by a Dutch company called Exact Software. Longview was once a high-flyer when CPM was new, and had the potential to be what other vendors ultimately achieved. Last month they were sold for $50M, a fraction of their competition's selling prices. In the acquisition press release, Exact conjures up a new term to describe what they now do with their ERP, CRM, and now, CPM portfolio--Business Empowerment.

So is that our new category name here? Business Empowerment? Seriously?

Ugh...

BI - Is it over that it is Over?

After a week of market gyrations about SAP and Business Objects, not to mention the "he said, he said" Oracle and BEA activity of Friday and into the weekend, you have to wonder if maybe the real news here is that BI is done a category. A little more on that and a couple observations.

I find it somewhat surprising that both Business Objects and SAP have gotten such crappy market response to their announcement of the take over. When you are the smaller guy and get offered the premium that BOBJ got offered by a market leader, you call it a day. And when you need what they got - good BI, great customer base, market share, maintenance revenue, scale - you pay to keep up with Redwood shores. SAP is getting a good company, filling in the gaps in technology (SAP BI was not exactly driving huge growth) and solidify your position to fight another day. You can actually make a pretty strong argument that this is actually a classic SAP tuck in acquisition, just a lot more expensive compared to how they have executed their strategy in the past. Also with some performance management overlap that was already supposed to have been tucked in.

A couple of SAP moves are also smart - stand alone company, send BOBJ a senior executive, etc. However, the "there is no overlap" and "give us time, we don't have all the details worked out", from team SAP clearly does not inspire confidence. You have to believe if Shai Agassi was still running the point, the spin control would have been handled better and you would not have seen the sheer amount of negative stories and stock movement you saw last week. Once again for those scoring at home, it turns out marketing is important in technology.

Maybe the bigger observation, not yet reported, is that this move officially signals the end of BI. The simple postgame here is that Cognos takes great pain to position themselves as the corporate performance management company, SAS institute is all analytics all the time, and Microstrategy is less a company than an ongoing hobby for their CEO. In simple English, when Intelligent Enterprise quotes Howard Dresner, the alleged "father of BI", (now an independent consultant after having been issued his walking papers after Oracle consumed Hyperion) to comment on the transaction, and Pentaho manages to position a point release of their product as making them an enterprise BI player, you have to ask yourself, is this a real category anymore? If someone can actually show me evidence of a true innovation in this category for awhile, I am all ears. (BTW - new delivery channel via SaaS, Microsoft paying more attention, or giving BI away via open source do not qualify). Color me concerned and more than a little skeptical.

Also of interest is Oracle playing with the BEA bunny and BEA swatting back and saying no thanks. Goldman Sachs is running a "process" for BEA to sell to someone other than Oracle - or least to try to find more money. This is both very expensive and ensures that BEA will not close any big deals for anywhere near what they were quoted on the street last week. Also notable that Oracle says they are not buying BEA for their process management capability. This is the former Fuego acquisition that has now been dressed up as Aqualogic BPM. Oracle seems to be willing to spend a lot of $$ on a strong application server and a bunch of other Aqua stuff that nobody buys, so BEA gives it away because it hangs off the application server. Seems expensive, and a nice premium to BEA shareholders, but the market will make its own judgments.

Does Business Objects Really Help SAP get at the "Business User?"

I've been doing some thinking on this whole concept of the "business user" segment that SAP is using as a rationale for their acquisition of Business Objects.

On the face of it, I get it. SAP is basically saying that their core ERP user has most of the ERP they need, and there's only so many ERP users out there, so in order to double their addressable market, they need to expand beyond their traditional user constituency. Everyone pretty much has an ERP system at this point, it's heavily customized, and organically adding on new functionality doesn't get them their growth targets. So great, let's get more into this new business user segment that shows some promise, which to date has been where their own performance management products have resided.

But do the core Business Objects products really help SAP get closer to the business user? The mantra of the BI vendors for the past 4-5 years (at least) is that their systems help unlock the data and information that business users need (so far so good). But then in the next breath, they say that the potential BI user population is only 20% (or so) penetrated; and they, by their own admission, haven't been able to expand the pie any further themselves with their traditional BI tools. So the very business users they proport to want to help are not using the products today.

So who IS using these tools? Well, we know that IT does; they do a lot of work on the reports, adminsitration, security, and integration of the product. But they're not business users. And if they're doing this for Business Objects, they're doing it already for ERP/SAP as well. So no one new here. We know business analysts do, they're certainly business users; they use the pivot tables, cubes, etc., to analyze the information from the data warehouse and universe and look for trends, etc. But there are relatively few of these analysts in a company today, and they're already likely using their ERP system to get out the data, look at orders, forecasts, maybe even financials. So that's not necessarily a net-new user for SAP either; in fact, like the IT user, they may be already counting this user in their population as well. And even if it is, it's a negligible addition to the potential user population.

Well what about the people for whom all these reports and analysis is created--are they are elusive business user? I'm not sure. Would we say they're' "users?" Perhaps in the technical sense, in that they are "using" the information that IT or the analyst is creating to help them run their business. But they're really not using the BI tool or app, just getting information delivered to them. Are they more likely to use Business Objects or a BI tool now that BOJ is part of SAP than when it was independent--i.e. is this an untapped user population? I just don't think so. They're not attached to BI, they don't care where it comes from, they're fine with what they're already getting (or not, but you get my point). So that's not a net-new segment either.

Which brings us to performance management. Here, I'd argue, is the one place where BI companies have been branching out in recent years to hit the line-of-business person, the business decision maker, the CFO, whoever--the audience that SAP is calling "the business user." Cognos led the charge with its performance management initiatives 5 years ago, and everyone else has been playing catch up since them. Including Business Objects. And SAP.

So if this is really where they see the best opportunity to grow into a new segment, someone who will not produce data for others, not just get a report in their inbox, but actually run their business through the BI tools and applications, then I agree, this is where we find a business user.

But isn't this precisely where SAP has already invested, acquired, begun integration, and has almost a 100% product overlap with Business Objects? The BOBJ performance management customer base is pretty small (relative to their BI customer base). So SAP is not getting access to a new built-in business user customer segment that helps them expand the pie. Additionally, the SAP performance management product line-up is already on the way to being integrated into the SAP architecture. So how does adding the only applications really "used" by a business user to a portfolio that already has them (and good ones at that) actually expand the pie? Won't the "business user" product portfolio basically look the same as it does today once integration is completed?

Now please don't misread this as sour grapes on the acquisition or naivity in terms of thinking that this acquisition won't work. To the contrary, SAP was far from successful at weaning itself from the Crystal environment, and SAP users will certainly benefit from the great tools and apps that Business Objects wil provide. I get that part, and I think that SAP shops will have great tools at their disposal.

But saying that BI is for business users flies in the face of the core buying audience and users of Business Objects BI products today. They're selling to IT; IT is the main user, not a business person. The business person is mainly a consumer. The main business users are in the field of performance management, which SAP was already well on the way to doing on its own.

So how is that an expansion?

The "Business User" Segment

As the news of the SAP acquisition of Business Objects continues to filter in, one term, new to this Performance Guy, keeps popping up throughout the articles and press conference today--the "Business User." It seems to be a new term to the analysts that follow SAP as well, representing a 3rd-wheel of strategy that is more acquisition friendly for SAP than their core businesses. It's in this third area that SAP apparently intends to continue to branch out with other acquisitions and new technologies (OutlookSoft for instance), and Business Objects is likely to be the cornerstone of this strategy moving forward.

We'll discuss this issue more as the transaction unfolds, but there are some early prevailing thoughts on how this term came to be used: first, it might be something SAP just made up to justify the size of the acquisition of BOBJ--i.e., we can't say this is ERP, let's create a new category--hey Business Objects, who's your main customer? The business user? Great, let's call the new category that." Or, it may signal a big strategic shift for SAP whereby they continue to acquire new technologies under this umbrella and use this part of their company as an incubation area for higher growth IT products (BOBJ's earnings miss not withstanding). Or third, perhaps they created it to allow the illusion of independence for BOBJ customers, most of which are using something "other" than SAP, and upon which the company's "BI needs to be source independent" mantra has been based. By showing themselves as off to the side of the core SAP businesses, perhaps this allows Oracle, Microsoft, and IBM customers to feel more calm about using Business Objects in the future.

Whatever their reason (perhaps it's a combination of all three in some form), it will be interesting to see how it plays out in the course of the next several quarters!

Well THAT Didn't Take Long

News breaking that the hammer has finally dropped on the long rumored SAP/Business Objects takeover, with the announcement of the $6.8B deal today. Even though this possibility has been talked about for months, it's still somewhat of a surprise to see the news, as well as the amount of the transaction, which is quite a premium for BOBJ stockholders.

Other releases out talk about little restructuring at the outset, and of some of the senior management appointments, particular about Bernard Liautaud and John Schwarz on the SAP Executive Committee. Additionally, SAP will operate Business Objects as a "stand alone" entity, which makes sense since most BOBJ customers utilize both SQL Server as well as Oracle as their database infrastructure.

On the performance management side of the world, things are super messy. Both companies are right in the middle of integration of previous acquisitions (SAP of Pilot and OutlookSoft, Business Objects of Cartesis), and now there really IS a lot of overlapping technology there, particularly on the planning side of things.

We'll dig into this more in the coming days, but it doesn't get any bigger than this. Which is actually good timing for this minor little press release also out today on Business Objects missing their number this past quarter--bye for now!

“The Five Possible Suitors”

So by now everyone has heard about the now infamous “Le Figaro Leak” from over the weekend, where some enterprising young reporter/disgruntled employee/cash poor intern, whoever—got hold of news that Business Objects has retained Goldman Sachs to help them find a buyer.

Couple of important markers to tell you this has some legs to it—first, multiple emails going out to employees to not discuss the matter externally, or even with each other. The old “loose lips sink ships” mantra is in full force in the halls of San Jose and Paris. Second, however, no statements of outrage, denial, or any sort of righteous indignation came out yesterday, and with the crack PR staff of Hill and Knowlton on speed dial over there, one would think that something would have been said to squash the rumors before they gained legs. So lets assume that there’s some smoke here.

Importantly, this smoke is really not new. For months before Oracle acquired Hyperion, there were rumors that an announcement was imminent—the “safe” room had been set up, documents were being exchanged—it just came down to a price issue. Now whether or not that’s the truth, I have absolutely no idea, but the point is that amongst the employees, they’ve been down this road once already this year.

Marketwatch mentions five possible suitors for the company, and since none of the Performance Guys work at Business Objects at this point in time, and all my options have cleared, let’s look into our EPM Magic 8-ball and see who might be contacted to see if there’s an “expression of interest” on their part…

SAP: “Outlook seems clear.” This is the one “name” that’s out there in terms of who would likely be most interested. Becoming more acquisition-friendly with recent purchases of Pilot and OutlookSoft, but far less of a partner and far more of a competitor to Business Objects in recent years. Also, OutlookSoft acquisition is a direct overlap to BOBJ Cartesis/SRC/ALG acquisitions—so do they take it for the BI side? Two European companies—might be easier to bring together culturally—wait what am I saying—SAP and culture? Sorry about that…

HP: “Intriguing—hadn’t thought of them, wait to shake again.” They have been making noise for some time about getting into the BI space, and with the business humming along all fronts, this would be a bold move in an area in which they have little experience or mind share. However, they have the deep pockets, and as the server and printer businesses continue to mature, the higher-growth apps business may beckon, and this may be an easy, less threatening way to get into the game. Local as well with the San Jose/American side of Business Objects, would afford good integration at the corporate level.

IBM: “Maybe, but not sure this works for them, hold still a minute. Yep, makes sense.” They keep making inroads into the BI space with EIM and ETL acquisitions, but also have deep partnerships with Cognos and others that would be sacrificed to bet everything on Business Objects. Great services opportunity for Big Blue (are we still allowed to call them that?) here, and if they want to make a play against the big apps vendors, this would certainly be that stake in the ground. Culturally, way different than Business Objects, but it would be an easy integration for most of the product line. The key is the services arm—do they want an exclusive with one vendor?

Adobe: “Just how hard are you shaking me?” Just announced stellar earnings, doing more with Business Objects, have a contrary technology to Microsoft around documents and reports, have the #1 product in Acrobat around document sharing—what’s not to like here? The companies are reportedly working on an announcement around business process management, might this be a precursor to something bigger? This is an intriguing combination, one that will require further watching...

Oracle: “Are you insane?—shake again.” As mentioned above, this was the assumption earlier in the year before the Hyperion announcement, and in the words of O.J., “if they did it,” they’d likely be doing it for the BI and EIM business, not the EPM business which is now well served by Hyperion. Boy talk about technology overlaps—but—to keep it out of SAP’s hands, might that be enough of a carrot for the Oracle folks to grab onto?

Was OutlookSoft the Best Choice for SAP?

No, I'm not on my high horse again on this one, whatever a high horse actually is (note: my interpretation on the left). But Doug Henschen pretty much mirrors my earlier thoughts in his Intelligent Enterprise article on the acquisition. Nice money quote at the end which pretty much sums it up:

"...it's clear to me that the early movers gain the best advantage by not only setting the trend but also by picking the best acquisition targets to fit the new strategy. Outlooksoft wasn't the best choice for SAP, but it was the best option still available."

Read it here for yourself and be impressed.