IT clear-up prompts software mega-mergers

Finance functions are driving consolidation in the business software market,
analysts have said after
Business Objects
and SAP announced a
€5bn tie-up.

David Bradshaw and Helena Schwenk, analysts at IT research house Ovum,
believe the deal is driven by the need for businesses to simplify the structure
of their IT suppliers and streamline IT procurement.

This is particularly the case in the large business market that enterprise
resource planning (ERP) vendor SAP and business intelligence vendor Business
Objects operate in.

‘Large suppliers are attracting ever larger share of customer spending, as
customers try to reduce the number of suppliers to bring some order to their IT
buying,’ Bradshaw and Schwenk said.

A joined-up Business Objects/SAP could make life much easier for current
users and offers potential clients an interesting proposition.

The unified entity should have the capacity to deliver business intelligence,
risk management and ERP software in one package.

FDs swamped with compliance work and growing business complexity will be
crossing their fingers that the Business Objects/SAP deal can deliver on these

The deal, which was announced last week, is the biggest that SAP has ever
done, and could have a huge impact on IT buyers.

SAP’s €4.8bn (£3.3bn) offer for Business Objects has been accepted by the
Business Objects board.

Business Objects itself had just gone through an acquisition spree, snapping
up performance management specialist Cartesis for £153.3m.So why did these two
industry giants decide that the deal was the way to go?

According to Bart Narter, a senior analyst at research and consulting firm
Celent, the purchase of Business Objects could herald a significant change to
the way SAP develops its strategy in the future.

‘SAP, in a manner typical of German companies, prides itself on its own
technology and has previously been reluctant to make acquisitions for an
expanded technology or customer base. This is in marked contrast to the
company’s rival Oracle,’ Narter said.

‘The Business Objects acquisition shows a dramatic rethink at executive board
level. SAP’s bid appears to signal a new outlook with regard to acquisitions for
both a new technology and customer base,’ he added.

Business Objects had issued a profit warning soon before the deal
announcement, and in a rapidly consolidating sector seized the opportunity to
drive growth as part of a larger organisation.

FDs will have an opportunity to make sense of the rapidly changing IT market
today at the second day of the Softworld exhibition, held at the NEC in

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