Yellowfin’s Take on the SAP acquisition of BO
Cognos buys Applix– no stop press there is even bigger news in the industry! SAP buys Business Objects for $6.8 Billion. What’s all the fuss about and what does it mean for customers, the industry and BO’s current partner base?
The move wasn’t entirely a surprise; ever since the purchase of Hyperion by Oracle rumours have been circulating that Business Objects was next to be aquired. Industry watchers floated several likely candidates—including IBM Corp., Microsoft Corp., Oracle Corp., and SAP—but few expected a deal to conclude so swiftly.
What do we make of SAP’s deal? Clearly the party with the most to gain are the SAP shareholders. There is, however, no advantage in this move for the Business Objects customer who are not SAP customers. In fact, it’s likely that SAP’s sales force will pressure such customers to buy SAP applications. After all, up-sell and cross-sell are prominent reasons for vendors merging.
One of the major impacts that few analysts have discussed is the impact on the embedded market. SAP’s acquisition highlights the journey some of the original Crystal Decisions customers have faced. Crystal was the recognised leader in embedded BI when acquired by BO in 2003. Since then, licensing and maintenance costs have spiralled, and now this is its fourth transition in that software in six years That’s a fairly significant impact to companies if they’re depending on the Crystal as their reporting engine either in their application or organisation.
ERP vendors who compete with SAP and currently bundle BO products as part of their reporting offering are now in a bit of a conundrum. Do they open up their customer base to SAP or look for alternative, independent and more flexible offerings such as Yellowfin. “All of this acquisition activity presents a great opportunity for Yellowfin” says Yellowfin CEO, Glen Rabie. “Most software vendors are uncomfortable tying their offerings to SAP, they want to deal with a Partner, such as Yellowfin, that works with them and not one that wishes to aggressively acquire their customer base. In the embedded space we expect to see a big shift away from Business Objects over the next 12 months”.
Product rationalisation will also have a profound impact on the existing customer base. There is a huge overlap in product functionality (for example between SAP NetWeaver and Enterprise XI) especially since Business Objects has boosted its product base with nearly a dozen acquisitions of which many have not been fully integrated and could easily be dropped. SAP isn’t known for supporting earlier versions of software or for being a quick, nimble company that offers reasonably priced products – so how the rationalisation and integration is to proceed is any ones guess.
In the final analysis, it comes down to customers, of course. The acquisition doesn’t appear to have much to do with adding value for customers. It’s more about maximising shareholder returns. The only question now is when will the next major acquisition take place?