SAP, Business Objects announce first joint products

SAP and Business Objects have announced the first joint products from their merger, although the planned tight integration of the companies' software will take longer to achieve.

SAP agreed to pay US$6.8 billion for the business intelligence vendor in October. It has now secured more than 87 percent of Business Objects' shares, more than enough to control the company, CEO Henning Kagermann said at a press conference on Wednesday.

Business Objects is now a division of SAP led by its former CEO, John Schwarz. The plan is to integrate its analytics technology more tightly with SAP's business applications, but also to keep selling standalone products that work with other vendors' software.

"While we'll clearly align ourselves to SAP, we are equally committed to non-SAP customers, platforms and environments," Schwarz said. "Our intention is to have a business intelligence solution on top of Oracle that's better than Oracle's own business intelligence solution."

The companies announced nine software packages that will go on sale this month and combine products from Business Objects and SAP. They include Financial Performance Management, Governance, Risk and Compliance, and Visualization and Reporting.

The financial package, for example, includes strategy management and planning tools from SAP and financial consolidation and profit management tools from Business Objects, said Doug Merrit, the head of SAP's Business User division.

Those products were already sold separately, and the packages don't involve any significant integration work. They are intended to give the companies' sales teams something to go out and sell -- although customers should also see a pricing benefit compared with buying the products separately, Schwarz said.

The long-term goal is to integrate the companies' software more tightly to form what Kagermann called a "closed loop." The idea is that SAP users, acting on information from Business Objects' analytics tools, will be able to more quickly adjust underlying business processes running in SAP Netweaver, Kagermann said.

SAP will also offer Business Objects' tools as part of its new suite of on-demand business applications for medium-sized enterprises, called Business ByDesign. The team developing Business ByDesign "will be able to pick the best from the Business Objects portfolio and merge it into Business ByDesign," Kagermann said.

Business Objects already offered its products on demand and had 70,000 subscribers at the time of the acquisition, Schwarz said. The job of merging the BI tools into Business ByDesign has not yet started, however, he said.

Business ByDesign is still very new. SAP aimed to have about 100 customers live on the system by the end of 2007, a modest target, and its goal for 2008 is "to prove that we can build a profitable volume business," Kagermann said.

SAP's news coincided with the announcement from its biggest rival, Oracle, that it reached a deal to buy middleware vendor BEA Systems for $8.5 billion.

BEA is in a different business from Business Objects, but Oracle's move to expand itself further through another big acquisition only helps to validate SAP's decision to acquire Business Objects. It was the biggest deal in SAP's history and broke the vendor's tradition of not acquiring large companies.

SAP bought Business Objects for its technology, not its customers, Kagermann said Wednesday, although he sounded pleased about the new customers that SAP will gain.

"After you eliminate the joint customers, we'll have by far the largest installed customer base in the world. There will be probably more than 60,000 customers using one of our products," he said.

Asked about the BEA deal, Kagermann seemed reluctant to be drawn away from discussing SAP's own merger, but he did take a quick jab at his rival.

"So far we are competing very successfully in the market," he said. "I was a bit surprised [by the BEA acquisition] because Oracle has said they are the leading technology company, and now they are acquiring technology, which is interesting to me."

SAP Deputy CEO Leo Apotheker was more outspoken. "He has to pay more and more for less and less," he said after the press conference, referring to Oracle CEO Larry Ellison. BEA is "not really that big," he said.

Kagermann reiterated that SAP's strategy is to grow its core businesses -- applications and middleware -- organically, but it won't rule out another big acquisition to strengthen the company in a new market.

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