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    Business Objects to Buy Rival

    By
    Dennis Callaghan
    -
    July 28, 2003
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      The software consolidation bug bit the business intelligence space with Business Objects S.A. this month announcing plans to acquire business intelligence and reporting software developer Crystal Decisions Inc. in a cash and stock deal valued at $820 million. The deal could set off a wave of more acquisitions of BI companies as vendors jockey for position.

      The latest sign of consolidation came late last week when Hyperion Solutions Corp. said it would buy BI developer Brio Software Inc. for about $142 million.

      Crystal Decisions is best known for its flagship enterprise reporting software, Crystal Reports. The Palo Alto, Calif., company in April launched its Crystal Enterprise 9 Premium platform, which was designed to rival query, analysis and reporting products from Business Objects and Cognos Inc., the acknowledged market leaders.

      Business intelligence by the numbers

      Key numbers in the Business Objects-Crystal Decisions deal

      • Value of the deal $820 million
      • Combined 2002 revenues $725 million
      • Total employees 3,800
      • Software licenses 16 million
      • OEMs of Crystal Decisions technology 350
      • Operational savings $25 million

      Business Objects officials said that the companys products and those of Crystal Decisions overlapped more in marketing than in actual technology and that Business Objects would easily be able to sell both companies products on the same platform.

      Not all observers are convinced that integration of the companies will be so easy.

      “It is not clear how the integration of the companies management and product/ sales organizations will occur,” said Mark Smith, an analyst at Ventana Research, in Belmont, Calif. “While they position [their products] as complementary, the products for ad hoc query, reporting and analysis do have overlap, unless I am missing something.”

      “Crystal Enterprise and Crystal Analysis overlap with Business Objects V6,” Smith said. “There are some complementary aspects, but both do query, reporting, analysis and publishing of information.”

      Business Objects officials said Crystal Decisions enterprise reporting software will combine with Business Objects ad hoc query and analysis, enterprise performance management and data integration applications to create the most complete BI platform on the market. Both companies core products will be maintained, and they will move onto one platform, Business Objects officials said.

      Business Objects, based in Paris, with U.S. headquarters in San Jose, Calif., has a stronger European sales channel as well as a stronger presence in direct enterprise sales and among systems integrators than Crystal Decisions, according to Business Objects officials. Crystal Decisions, on the other hand, has a number of OEM relationships that Business Objects hopes to leverage.

      Some of those could be called into question, however, particularly the one with Hyperion, whose business performance management software offerings compete head-on with Business Objects.

      “You could put their product collateral sheets side by side, and its staggering how much they sound alike,” said Smith.

      SAP AG, Crystal Decisions largest OEM partner, is for now committed to maintaining the relationship, although analysts wondered how long that would last, given that Business Objects is more of a competitor to SAPs BI and data warehousing software groups than Crystal Decisions.

      The acquisition may not change the reality of mixed BI and reporting systems in most enterprises, at least not right away. CheckFree Corp. uses Crystal Reports in combination with Cognos BI software. Robert Catterall, director of strategic technology for CheckFrees Electronic Commerce division in Norcross, Ga., said its too early to tell if Business Objects acquisition of Crystal Decisions would change that mix. “I expect that we will maintain the status quo for the time being,” Catterall said. “It will be interesting to see if the deal leads to licensing changes in the future, but Im not particularly concerned at this point.”

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      Dennis Callaghan

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