SAP agrees 4.8-billion-euro buyout of Business Objects
PARIS (AFP) - Germany's SAP, a world leader in business software, announced late Sunday that it had agreed with France's Business Objects on a buy-out worth just over 4.8 billion euros (6.8 billion dollars).
Context & Ripple Effects
The buyout lands weeks after SAP's September 2007 launch of Business ByDesign, the on-demand offering aimed at companies of 100–500 employees inside what SAP sizes as a $15 billion mid-market segment. Adding Business Objects gives SAP an analytics layer to sell alongside that mid-market push rather than building one organically.
It also lands three months after SAP disclosed that its TomorrowNow subsidiary had improperly downloaded proprietary Oracle software — an admission made amid an ongoing corporate espionage dispute with its arch-rival. A €4.8 billion move into business intelligence raises the stakes in that relationship considerably.
First-order effects
- Business Objects shareholders receive €4.8 billion ($6.8 billion) and the French company's business-intelligence portfolio and installed base fold into SAP's product line.
- SAP pivots from its historically organic growth model to large-scale M&A, with Leo Apotheker — named Deputy CEO in the March 2007 board reshuffle — part of the leadership executing the shift.
Second-order effects
- Oracle must now contest business intelligence directly against a rival whose subsidiary admitted downloading its code in July 2007, hardening an already hostile competitive dynamic.
- Business Objects' footprint among mid-sized firms becomes a distribution asset for the Business ByDesign strategy, letting SAP bundle analytics with its new on-demand ERP for the 100–500 employee segment.
Third-order effects
- If the pattern holds, enterprise application vendors compete on suite breadth through acquisition, turning business intelligence from a standalone category into a standard component of the ERP stack.
- A German buyer absorbing one of France's flagship listed software companies points toward consolidation pressure on independent European enterprise software vendors, who face a choice between selling and competing against integrated suites.
The trend: Enterprise software is consolidating as ERP leaders buy adjacent layers such as business intelligence rather than developing them in-house.