Indigestion for SAP

The integration of technology and processes will be difficult as SAP digests Business Objects acquisition, analysts warn.

Warnings of integration challenges and technology conflicts have already begun, as analysts warn SAPs $6.78 billion acquisition of Business Objects will be hard to swallow.

The deal, announced early Oct. 8, will combine SAPs business analytics with Business Objects BI (business intelligence) technology. It is SAPs largest to date.

Judith Hurwitz, CEO at Hurwitz Associates, said, "SAP clearly understands that customers need to be able to leverage their enterprise data to make better business decisions. Therefore, it is not surprising that SAP would look to a company like Business Objects for their BI and overall analytical software capabilities."

However, she added, "A lot of the revenue from companies like Business Objects comes from renewal of existing licenses. Once a company has hundreds of users trained in the use of [its] software, migration is very unlikely. The deal does seem expensive. The key question is what does SAP really gain that couldnt have been gained from a tight partnership?"

David Bradshaw, principal analyst at Ovum, also said the firms existing, joint working arrangement would be put at risk, alongside SAPs other vendor agreements.

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