The Walldorf, Germany-based enterprise applications vendor, which already owns 70% of SAP SI, plans to buy the remaining 30% for 20.40 euros ($24.90) per share, about 220m euros ($269m) cash. The plan is to integrate the services company into the mainstream SAP operation, reversing a decision SAP made in the late 1990s to put systems integration out of house.
SAP SI was founded in 1997 when three German IT services companies in which SAP had a major stake merged, with the objective of helping integrate third-party software with SAP’s own applications. Since then, SAP has gradually opened up its own application architecture and directed major development effort at building the NetWeaver integration platform, the most comprehensive version of which was launched last week. These developments, coupled with signs that NetWeaver is gaining traction in the market, has eliminated the need for an external service.
Integration is an increasingingly important area of activity and has become the leading front in the competitive efforts of enterprise application vendors such as SAP, Oracle and PeopleSoft. The acquisition also underlines just how serious SAP is about the NetWeaver platform, following last week’s announcement that NetWeaver has been packaged into a more palatable single-product, single-price offering, and will be the base on which all SAP’s applications will be architected.
The acquisition also confirms another change in SAP’s business strategy. Last week CEO Henning Kagermann said that the company had changed its opinion on acquisitions and now sees them as part of the company’s growth strategy. However, it does not plan to use acquisitions to gain market share, its intention is to make small add-on purchases aimed at improving its access to vertical markets, particular customer groups, geographical regions or to fill technology gaps. It plans to double its liquid funds from 2.5bn euros ($3.06bn) by the end of the year to fund acquisition activity. Although it can acquire by stock swap, it is anticipated that acquisitions will mainly be cash based.
This article is based on material originally published by ComputerWire
