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Tuesday, March 27, 2007

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.

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