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Wednesday, May 09, 2007

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.

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