One year on from SAP’s $6.8bn acquisition of Business Objects, how has the integration of the French business intelligence vendor into the German ERP vendor faired?
CBR spoke to SAP’s Marge Breya, executive vice president and general manager, Business Intelligence Platform, about the takeover.
As with any acquisition, questions were asked about the reasoning and validity of the deal. Breya believes that the progress made since the deal was announced has demonstrated that it was the right move.
But what about revenues? Prior to the Business Objects acquisition, SAP’s fourth quarter 2007 sales came in at $3.2bn, up 10%.
Business Objects posted sales of $444m in its fourth quarter of 2007, the last quarter before it was bought.
So in theory, SAP should have seen something in the region of $3.6bn (SAP’s $3.2bn Q4 plus Business Objects’ Q4 of $444m = $3.6bn+). That’s not taking into account quarterly variations or their respective growth rates, but it gives some idea.
SAP’s results for the first quarter of 2008, which included Business Objects’ figures from January 21 onwards, saw total combined sales of ‘just’ $2.5bn. Even its latest third quarter, announced October 28, saw sales of ‘only’ $2.7bn. A far cry from the $3.6bn per quarter that was perhaps anticipated when SAP bought Business Objects.
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Nevertheless, SAP’s Breya is unbowed, arguing that the acquisition has been a great success: “Integration is firing on all cylinders and we’ve met our milestones. We only started in January so it’s not yet been a year,” Breya said.
“Normally a company and its workers will be worried during acquisition periods, especially given that this was the first acquisition of this size that SAP had been involved in. But people are happy and confidence is good.”
Loss of independence is something that companies will experience during a takeover and Breya says Business Objects was no different: “It’s a bit like when you get married. At first, there is a notion of wanting to retain your independence but eventually you realise that you belong together.”
The most difficult aspect of the acquisition was integrating the different systems used by SAP and Business Objects. The move was eventually completed in July 2008, and was done in-house with a few extra personnel recruited to boost man-power during the integration, says Breya.
The SAP – Business Objects acquisition was one of a spate of BI takeovers in a relatively short time. Oracle purchased Hyperion in March 2007 for $3.3bn, and in September that year Applix was taken over by Cognos for around $300m. Cognos itself was then acquired by IBM in November 2007 for $5bn.
SAP’s acquisition of Business Objects was announced in October 2007. Breya refused to be drawn on whether BOBJ had spoken to other companies before agreeing the SAP deal, but she did say she was not surprised that software companies rushed to snap up BI technologies.
“Each company needed and wanted BI capabilities and the market was growing. It was a target for investment,” she said. “Companies need tools to take the guess work out of making decisions. They need to know who their best customers are, their best platforms.”
It is for those reasons that Breya thinks the BI industry will survive the current economic gloom. “Analysts’ projections often put BI three to four points above other software markets, sometimes more. I don’t think BI will be on the cut-list at companies,” she said.
