SAP Acquires Virsa for Compliance Capabilities

Updated: The company buys enterprise risk management software provider Virsa to bolster its software compliance skills, as well as to strengthen its ties to Microsoft.

Honing its software compliance skills, SAP announced April 3 the acquisition of Virsa Systems, a privately held company that develops enterprise risk management software.

Terms of the deal were not disclosed.

Founded in 1996, Virsa has an interesting pedigree. Its investors include SAP Ventures, the investment arm of Walldorf, Germany-based SAP AG, Kleiner Perkins Caufield & Beyers, and Lightspeed Venture Partners. The company also has heavy-duty ties to Microsoft as a Gold Certified Partner.

SAP has been strengthening its ties with Microsoft over the past year or so.

The two software giants are working on a joint development project, Mendocino, which will integrate some MySAP ERP (enterprise resource planning) business processes with Microsoft Outlook.

The first product is expected in 2007.

/zimages/3/28571.gifClick here to read more about Mendocino.

As a Gold Certified Partner, Virsa has in-depth access to "exclusive resources"—priority access to Microsoft support engineers, nondisclosure evaluation of new products and technologies, and Microsoft planning tools—as well as early product information, according to Virsa Systems.

Virsa also collaborates closely with SAP on the technology front. As an ISV with NetWeaver certification, its software is designed for SAPs NetWeaver integration platform. At the same time SAP resells Virsas Compliance Calibrator suite as an add-on to MySAP ERP (the two share 150 customers in common), and SAP deploys Virsas Access Enforcer and Compliance Calibrator software to its customers.

"Our solutions already work in NetWeaver. Going forward, we are aligning with ESA [SAPs Enterprise Services Architecture]," said Jasvir Gil, CEO of Virsa, in Fremont, Calif.

Virsa is developing a new compliance platform that customers can build related applications on. "We have a very ambitious vision thats shared by SAP. Over the last two months weve been talking about aligning our visions together," Virsa said.

As the deal nears its closing date, SAP and Virsa will continue to work on a joint road map to deliver a broader set of compliance software applications, according to Doug Merritt, executive vice president and general manager of Suite Optimization at SAP.

"We have a whole list of compliance and risk management solutions that weve been working with the core Virsa product set. But Virsa as a whole platform ... well be working on that to continue to extend the end-to-end integration capabilities."

As for the Microsoft deal, SAP said it plans to continue that work—if it can.

"We are extending compliance to Microsoft ERP and will evolve into what Microsoft does in that area [with its next-generation ERP development]," Virsas Gil said. "We are still trying to figure out how that work will be carried out."

Merritt said SAP will move forward with Microsoft, "unless Microsoft disallows it," he said, "which hopefully they wont be able to do. For this application set to be as compelling as wed like it to be, the ability to access other ERP [systems] is critical ... including Microsoft, Oracle and SAP [applications]."

The companys software includes its Continuous Compliance suite of automation applications that enable collaboration, workflow and built-in rules for business intelligence. The software takes the approach of "embedding" risk prevention capabilities into business processes that span applications from ERP vendors including Oracle, SAP and PeopleSoft (now part of Oracle) custom and legacy applications, according to the companys Web site.

Virsa will also bring about 300 customers to SAP that span across a number of vertical markets.

"Companies are looking to adopt an integrated view of governance, risk and compliance instead of the current reactive and fragmented approach," said Shai Agassi, president of the Product and Technology Group and executive board member of SAP, in a statement. "We welcome Virsa employees, partners and customers to the SAP family."

The deal, subject to regulatory approval, is expected to close in May.

Editors Note: This story was updated to include additional information and comments from Virsa.

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