SAP Touts Synergies in Business Objects Deal

CEO Henning Kagermann says the $6.78 billion acquisition of Business Objects will bolster SAP's BI efforts, and denies the deal is a reaction to Oracle.

SAPs $6.78 billion acquisition of Business Objects is a win-win for both companies, said the leaders of the two organizations in a news conference Oct. 8.

SAP CEO Henning Kagermann said the two companies are "very complementary" and added that overlap between them is small. "Forty percent of our clients are also Business Objects clients," he said.

The deal is aimed at bolstering SAPs presence in the business intelligence market.

Some observers claim SAPs acquisition of Business Objects, dually headquartered in both Paris and San Jose, Calif., is a move against inroads being made by Oracle, but Kagermann refuted that idea. He pointed to the last 12 fiscal quarters for both SAP, based in Walldorf, Germany, and Oracle as proof that SAP has nothing to worry about from Oracle in the business intelligence space.

"There is no need for reaction here," he said. "We have proven with organic growth that we can outperform the market. We have the largest and best ecosystem."

Meanwhile, Kagermann said Business Objects can leverage SAPs capacity and strength to bring its solutions to market. Werner Brandt, SAPs chief financial officer, said Business Objects will operate as a separate entity or business unit under SAP. He also said he expects the deal to close in the first quarter of 2008.

"We have many clients asking for highly, tightly integrated solutions, and we can expand our customer base and exploit up-selling opportunities," Kagermann said.

And where customers are requesting "easy-to-consume" analytical applications, the joint SAP/Business Objects organization will deliver embedded analytics applications, he said. The SAP customer base also will benefit from the "deep analytic know-how" of Business Objects, he said.

Moreover, the companies will leverage each others strengths in the on-demand software arena, where SAP recently announced its SAP Business ByDesign solution, Kagermann said.

John Schwarz, CEO of Business Objects, said his company has been building value for its customers by delivering broad, open standard solutions, and "that value is being protected in this acquisition."

Schwarz also pointed out that the idea for the acquisition "came from SAP, not from us," squelching rumors that Business Objects had been shopping itself.

Moreover, Schwarz said business intelligence is a $10 billion-a-year market and is growing by 10 percent annually. "Business Objects participates in all aspects of the business intelligence space, and weve built an aggressive strategy" to grow beyond the markets growth rate, he said.


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In addition, Schwarz said he sees large potential in the midmarket segment from becoming part of SAP, as SAP is aggressively pushing into this market. He said Business Objects now draws one-third of its business from the midmarket and has more that 3,000 business partners.

Other areas where joining forces with SAP will benefit Business Objects include consulting and services, internationalization and taking on new business models such as on-demand solutions and hosted services.

In the middleware arena, Schwarz said, "We will be extending the [SAP] NetWeaver middleware with our platform," focusing on a common data integration platform.

Overall, Kagermann said the deal represents a combination that "enables us to cover the entire space and do it better than anybody else."


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