SAP Buys Concur - Interesting Mix!

Labels: Business Model, Cloud, Digital Enterprise, Enterprise Software, SAP

SAP Makes An Interesting Move

Close on the heels of the planned acquisition of Business Objects, SAP makes yet another move – this time a small one – acquisition of Yasu, a very small player in the business rules market. An Indian firm, YASU has quietly built comprehensive rules platforms based on Rete for both Java/J2EE and .NET, and created a promising environment for business analysts as well. Business rules platforms are an increasingly popular alternative to conventional programming to automate decisions, analysis to action, and policy compliance. This popularity is indicated by the strongly growing revenues of most business rules platform providers. With this announcement, SAP enhances its BPM offerings and provides customers with the agility they need to easily embed new business rules in business processes, increasing their independence to create solutions while ensuring compliance. SAP claims that solutions from YASU Technologies will enable customers to encapsulate business rules as enterprise services that are independent of applications. As business process experts build new applications, they can easily reuse and apply these services to ensure that business decision logic, including rules that ensure compliance, is uniformly used throughout their enterprise applications.
SAP says that the technology from YASU Technologies will be embedded into the SAP NetWeaver technology platform as part of SAP NetWeaver Composition Environment, a solution that gives developers tools to easily compose new business scenarios and adapt existing ones, and will enable partners to integrate the solution directly into their offerings. With an expanded BPM portfolio, SAP can give customers new innovative ways to govern business rules across multiple organizations and ensure that business processes comply with centrally defined business rules.

There had been recent demands from various quarters to bring together BI, BPM, BRE as a converged service and this small step by SAP is in the right direction. In addition to being operationally efficient, organizations need BI- and BPM-driven business processes for more effective business operations.Together, BI and BPM offer a comprehensive operational view. BI takes the role of finding patterns and reporting, BPM picks up where BI leaves off towards design and execution and the loop gets closed here. The combination of software infrastructure (such as orchestration engines, logic containers, service registries and service buses) with these design and composition environments is described as "integrated composition technologies" within the business process platform (BPP) model. SAP makes an interesting move towards this.

Labels: BPM, BRE, Emerging Technologies, Emerging Trends, SAP

SAP Plans To Acquire Business Objects

I wrote a brief note for sandhill on SAP's plans to acquire Business Objects. Recently, Oracle moved into the BI space aggressively by acquiring Hyperion. I wrote then,” All I can say is that once can expect more attention on Cognos & Business objects while expecting more traction for players like Outlooksoft". Few weeks later SAP acquired Outlooksoft.
BI is clearly one among the fastest growth area in enterprise application space today. The consolidation in the BI space was expected for sometime. SAP says that the primary driver for the acquisition, its biggest and a reversal of its avowed organic-growth strategy, was the potential to gain new business. SAP is racing towards reaching its goal of more than doubling its customer base to 100,000 by 2010, mainly by winning more small and medium-sized companies as clients. Business Objects has more than 43,000 customers, according to its own data, and made 2006 sales of $1.25 billion. It says about 40 percent of its customers are already customers of SAP.The two companies said they would continue to offer standalone software as well as integrated solutions from an unspecified future date.
BOBJ's preannounced less than expected numbers for 3Q07. This reflects the increasing competitive landscape within the BI sector. Analysts infer that the license growth were negative this quarter. Business Objects also offers its software on demand over the Web as so-called software as a service. SAP plans to start selling a broader on-demand offering next year, though the launch has been delayed, and Oracle mostly inherited on-demand customer-relations service Siebel.com with its acquisition of Siebel Systems. Oracle has spent more than $20 billion in recent years on buying companies to challenge SAP's lead in the business application software space. The business intelligence-software market is worth at least $8 billion and is expected to grow by 11 percent annually until 2010, faster than the wider software market. SAP said the acquisition would be earnings-dilutive by a single-digit eurocent amount next year but would add to its earnings per share from 2009 onwards. Next in line – perhaps players like Cognos, Informatica etc. As an aside, would like to revisit this acquisition 12/24 months from now to see how such mergers benefit the players , industry etc. – and that include the customers.
Read the full note here.

Labels: Emerging Technologies, Emerging Thoughts, Emerging Trends, Enterprise Software, SAP

Oracle, SAP & Cybercrime

Just landed in Singapore and noticed that the Oracle –SAP imbroglio has taken a decisive turn. SAP admits that TN made some inappropriate downloads but claims that SAP never benefited from that. By clearly delinking TomorrowNow from that of SAP, it has created speculations about the future role of TommorowNow. The original complaint by Oracle went on to say,” SAP employees used the log-in IDs of multiple customers, combined with phony user log-in information, to gain access to Oracle’s system under false pretexts. Employing these techniques, SAP users effectively swept much of the contents of Oracle’s system onto SAP’s servers”. The charges appear pretty serious indeed. SAP’s response makes interesting reading. Oracle now
says that with SAP’s admission of inappropriateness, proved its case. Eric Goldman points to potential ramifications of this. I am not too sure of the nature of downloads and the possible usage of those. While I do not justify any illegal or unethical activity, somehow I feel that no materially significant advantage could have been accrued on account of TN’s downloads. Hopefully this does not get any more ugly.

Labels: Cyberlaws, Oracle, SAP

Navigating A Technology Shift

A recent article on remarks made by Hasso Plattner, former CEO of SAP, makes an interesting reading besides serving as an interesting barometer of the evolution in thinking in the software industry. Speaking at the launch of a school for design at the Hasso Plattner Institute, Hasso Plattner took the opportunity to comment on the changes in the business application software market particularly related to on-demand software. Of note was the fact that Dr. Plattner credited Google with having a significant impact on computing in general saying, 'Google has changed the world, and we all have to learn, and if we don't learn quickly enough and redesign our thinking ... then we might not be as successful as we were in the past."

For good measure, Plattner adds business software is the most hated product currently on the market and says that there's a surfeit of technology, but we have no clue how to develop user-centric products. SAP now recognizes that good design runs deeper than appearance.
This clearly reflects the fundamental shift that’s happening in the minds of the industry leaders and by extension in the software market itself. As I wrote, the pressures of competition & pricing makes companies try out new models – these sometimes force companies to think for the customers as well – no more proof is needed to be convinced about massive changes that are bound to happen in the enterprise landscape. SAP was not an early embracer of SaaS model and for some time allowed other players to take the lead in the market. Hasso talked about the latest SAP on-demand initiative focused on SME segment. He is pretty insightful when he says,” “Software companies cannot dictate what is happening... If we can follow fast enough and get great new ideas and apply them, the market will decide..It is very hard to deviate from where you are successful. You have to maintain the success but you have to simultaneously think about the future.”
The interesting challenge for the CRM software players is that while there is a wave of interest in on-demand software, enterprises are not so sure of completely switching towards embracing the on-demand model – this despite heavy duty push by high flying players like SFDC. Various studies show that the adoption rates of on-premise to on-demand in mature categories continue to be in the ratio of 4 :1 and is not showing signs of a reversal in the near future. Clearly both the models shall co-exist and customer may have a choice of moving between the models to meet growing business requirements. The best approach is to provide more choices so one may not cannibalize the other ( as Plattner seems to indicate) but could help in increasing the installed base. This way SAP gets the protection of not missing a shift in technology delivery models.

Labels: Emerging Technologies, Emerging Trends, Ondemand, SAP

SAP Buys Out OutlookSoft

I wrote this brief note for sandhill.com on SAP acquiring OutlookSoft. BI/CPM is clearly the fastest growth area in enterprise application space today. The consolidation in the BI space was expected for sometime. I wrote immediately after the
oracle -Hyperion deal that Outlooksoft looks promising. I heard their CEO Phil Wilmington present at Enterprise 2006 , on why predictive performance management is the next killer enterprise application and how OutlookSoft has the competitive technology advantage. The company was chosen as one of the next big thing winners in the meet. OutlookSoft’s focus was providing modernized solutions for the CFO leveraging Web 2.0 technologies to enable collaboration across the enterprise and delivering real-time, predictive analytics capabilities and finance-ready business process flows, using an extensible library of procedures guiding business users through all performance management activities and facilitating collaboration. This is an important function in an enterprise enabling, “closing the loop” between analytics and operation.

In essence, SAP's purchase of OutlookSoft is more or less a quick move in protecting its installed base following Oracle’s acquisition of Hyperion. In the recent past Hyperion had been seeing SAP as the competitor in many deals and so the acquisition of Outlooksoft, a company where ex-hyperion executives are key people running it, makes sense from SAP perspective. Besides, this is also significant as this gives the opportunity for SAP to protect itself against moves by ORCL to penetrate into SAP's installed base since a large number of them already use Hyperion’s consolidation capabilities. While public details of valuation are not available, informed sources indicate a valuation of $250-350mn, probably representing about 6-8x the street estimates of $40mn in LTM revenues.

SAP has always stayed away from large-scale, multibillion-dollar acquisitions and looks at buying focused smaller companies that fits in their vision of meeting enterprise information needs. It’s a cash acquisition and moving forward, integration challenges, from a product technology perspective would be the key – organizational challenges may be less given that OutlookSoft used to have a small operation while culturally adjusting into the SAP world would have been clearly assessed by Outlooksoft team. The 700 + customers of OutlookSoft would now be eager to see support and investment plans for the future – particularly the non- SAP customers of Outlooksoft. Overall a good move for all involved herein. Now we have to see how the rest of the gang in the BI & CPM space( particularly BO & Cognos) prepare to respond to this. Please read the full notehere.

Labels: Emerging Trends, Mergers And Acquisitions, OutlookSoft, SAP

Enterprise Software System : More Innovation Ahead

Innovative software ecosystem is propelling the recovery and growth of the high tech industry – this is the key message of the sandhill customer survey of enterprise software users. Pointing out that innovation is happening at the industry level and not at the product level –MR in his opening note at Software 2007 said the innovative streak can be seen in advances in the form of SaaS, SOA, Vertical Apps, Enterprise 2.0, Delivery innovation etc. Taken as a whole – these have far reaching effects when these intersect.

Such a model of innovation gives more than adequate role for small players to participate and at a time when IT spend is expected to be more or less flattish, the investment commitment made for software in the sandhill.com administered survey shows an increased outlay for software purchase! Good news indeed. This time the event has become really big with internal pavilions & innovation showcase areas. It was good to see Hasso talking about the new SME focused product that SAP is all set to unveil – the key is this is fully centered on on-demand model(though on premise model shall also be supported). Plattner says the yet-to-be-named project involves a completely new code base different from SAP's existing suite - this is a massive one - Hasso says that this has been under development for over three years, with more than 3,000 developers. Key takeaway - The system shall have all services exposed - this means that all features of the software will be accessible either through a Web browser or through “smart client” software - additional functionaliites would be rendered here.

HP’s Shane Robinson succinctly captured the shifts that are happening forcing giants like HP to shift their R&D allocation from software – hardware ratio of 30:70 to 70: 30 today. Some of the shifts he brought out are quite interesting:

Consumer Vs Enterprise to Consumer + Enterprise
Hardware Vs Software to Hardware + Software
Individual Productivity to Communication + Collaboration
Connecting Devices to Connecting users to services

And a few more…

No wonder all the recent acquisitions of HP is in the software field. Mark Benioff was his usual self – very articulate & humorous while the CIO panel moderated by Ernest von Simson, Senior Partner, Ostriker von Simson with Panelists - Neil Cameron, CIO, Unilever; Rob Carter, CIO, FedEx; Patricia Morrison, CIO, Motorola; Tony Scott, CIO, The Walt Disney Company was quite focused and had a great advice to vendors:
Tony Scott,Disney: Drop this "we are the greatest in the world" thing and give me an implementation strategy so I can bring this across my company.
Motorola: 12k engineers and we have tons of software that isn't warranted and indemnified. My plea to the industry is quality. The amount of time we put down bugs.
Neil Cameron,Unilever: Fantastic. Absolutely.
Rob Carter, FedEx: Every time we add something new, we get more cost an complexity. This is a relationship oriented business and you have to cut through the noise, provide technology migration strategies. We just don't have time for all the opportunities that come at us.
Bullishness, growth, innovation, a sense of recognition that small players would also begin to not only survive but also force change on the larger ecosystem – all bode well for the enterprise software industry’s future.

Labels: Emerging Trends, Enterprise Software, Innovation, SAP, Software 2007

Shai Agassi Quits SAP

I wrote a quick note for sandhill on Shai Agassi's exit from SAP. Clearly the most articulate of the SAP management team and perhaps the most feared by its opponents, Shai helped SAP achieve great strides( I do know about the existence of a dissenting minority on this). SAP is such a massive software – perhaps the most complex business application software ever developed and sold as a package to date and making it grow with changing technology shifts is no easy job and only the most courageous and visionary can ever take charge for driving such initiatives. Shai was a stellar person attempting such a thing to make it happen for SAP. In fact his leadership helped in many ways SAP to gain entry into the famous enterprise software club – MISO. The days ahead for SAP is quite interesting to watch. The full effects of Oracle’s acquisitions shall begin to be felt more and more in the days to come. For a company of the size & stature of SAP, obviously there is a lot of talent within to continue the operations and it can always tap external talent as the need may be(but perhaps this may not happen – when some think that this is needed the most). Well established corporations with mature product lines like SAP will face inflection points in their lifetime – for some SAP is nearing that, we have to see, how this giant makes it moves. That would have ramifications across the enterprise software sector – the reach infact extends not just the tech world but perhaps the entire business ecosystem, around the world. Read the full note here.

Labels: Enterprise Software, SAP, Shai Agassi

SAP & Amdocs : Coming Together?

There are speculations that Amdocs may be acquired by SAP. While, I do not know whether this is true – I do think that the deal (if it happens) makes sense. Amdocs itself has rolled up few players in the past and in the process consolidating the space. The solutions cover arenas like billing, CRM and potentially into integrated customer management. Ask any Telco – one would know how important this is to them. The opportunities centered on Amdocs has forced players like IBM to work closely with it. Amdocs has decent presence in the sector with a well established customer base. For Amdocs, it is a good time to evaluate options as unless they have wider range of offerings, their ability to mine the account with cross-selling and up-selling options look limited. Telecom is a high spend area and SAP definitely needs a strong presence there and Amdocs could give it that leg up. Rival, oracle acquired portal infranet almost an year back to capitalise on such opportunities. We have to see how SAP sees this market opportunity. This is a big ticket acquisition -considering Amdocs valuation is around 7-8 billion USD. They may view the fitment,I guess, more from the engineering perspective(nothing wrong about it). SAP needs some sizzling momentum – in this case there lies an attractive proposition as well – a good entry into the high spending telecom space. I guess the price of US$7 bn+ could be a big dampener, unless Amdocs wants to sell part of its business - which again,I guess, they may not do considering that most of their business are in mature and mature-to-twilight zone. Amdocs is not too cash rich to make acquisitions that can make a difference and so it makes sense for them to encash on a good exit option, if it presents itself.

Labels: Enterprise Software, SAP, Telecom