SAP swoops on Business Objects

So SAP swoops on Business Objects, and yet another segment of the market sees independent competition disappear, leaving just one independent, in the form of Cognos, and a handful of niche players looking to hold share against the software titans. Consolidation in the IT market looks inevitable in any sector, but what comes next for the business intelligence sector?

The deal was undoubtedly a good one for SAP. Whether or not they were really spooked by Oracle's purchase of Hyperion earlier in the year, the company management was aware that BI was a major hole in their solution set, and they have taken a bold step to fill it. Once the heavy lifting of an ERP project has been done, adding a BI solution on top is an easy sell.

The financial markets might not like the idea of SAP having to take on debt until sometime in 2009, and there are other questions, but Business Objects brings market leading expertise in its segment into SAP's portfolio, and in a boom area like BI, SAP should make their money back soon enough.

There are some concerns over whether SAP can manage the merger. It is the first large scale merger for the company, marking a major change in strategy, and a lack of expertise in M & A could prove disastrous.

Locally, the recent changes for SAP in the region probably means that Business Objects here will have more independence for longer than it would otherwise, as SAP looks to settle its new operations before worrying about its acquisition. To an extent, SAP doesn't have to absorb Business Objects though, and the company has said that's not completely their plan. As a standalone unit, the plan is to allow Business Objects to continue to be platform agnostic, while taking the best pieces of its technology and integrating them into the NetWeaver stack.

However, some degree of integration has to take place, and in a few years time, if R&D efforts are combined, it is difficult to imagine that SAP will continue to give Business Objects free rein. The ERP is always going to be the lion's share of any customer's spending, and it is hard to imagine SAP not wanting to get the most out of all those customers. It seems likely that it will be a couple of years before SAP really has to swallow Business Objects, which is when any culture clash between the two will tell.