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Analyzing the SAP/Business Objects acquisition and product roadmap

What does SAP's acquisition of Business Objects mean to existing SAP clients, Business Objects clients and prospects considering new business intelligence and performance management offerings?

This article originally appeared on the BeyeNETWORK

During the rapid roll-up of performance management and business intelligence vendors in 2007, some of the acquisitions left the casual observer astonished in terms of the scope and potential product overlay of the combined companies. As each of the acquisitions has its own series of strategy and execution challenges, the SAP/Business Objects acquisition seemed to have more product overlap compared to its competitors at Oracle/Hyperion and IBM/Cognos. Although the execution of the integrated product strategy will play out over the coming 12-36 months, it is noteworthy to comment on the decisiveness of the work done to date as the combined team announced an integrated product road map for the business performance optimization offering at Business Objects, an SAP Company.

First, a little perspective on the challenge. At the beginning of 2007, SAP already had a full line of performance management offerings as part of their strategic enterprise management (SEM) product range, integrated tightly with SAP ERP systems. This included budgeting, reporting and some basic financial consolidation capabilities. SAP had already acquired Pilot Software in 2007 for its strategy rollup and mapping capabilities. Also in 2007, SAP announced the acquisition of OutlookSoft, a unified application for stand-alone budgeting, planning and basic financial consolidation, largely based on an Excel interface. Independent of SAP’s moves, Business Objects was also busy, with the acquisition of ALG, SRC Software and then later in 2007, Cartesis. On its own, Cartesis had acquired INEA, resulting in additional planning solutions. The net outcome of these acquisitions was at least 6 possible planning solutions, 3 financial consolidation solutions and a variety of scorecard and data visualization tools.

Step in the product rationalization strategists. From a client perspective, a first impulse is to feel assured that the product platform that you are using is the one that will be supported and invested in going forward. Unfortunately, that cannot be the case with a wide array of overlapping products. Although SAP/Business Objects will continue to support multiple products in the short to medium term, they needed to make some hard decisions on what they are going to sell moving forward. Although it may be fine to stay on a “supported” product platform, you have to realize that it will mean that the most advanced product enhancements you can expect in the future will only involve software bug fixes and that you will have hotline support available to you if you have questions. But you cannot expect significant new investment on this platform – the company will eventually prefer to see you migrate over to the new “go to” platform going forward.

So on with the decisions.

On the performance management front, the team split the range of capabilities into four areas: profitability and cost management, strategy management, planning/budgeting/forecasting and financial consolidations.

On the profitability management side, the combined entity will be betting on the former BusinessObjects Activity Analysis offering, which resulted from the earlier ALG acquisition by Business Objects, and it will be referred to as Profitability and Cost Management. SAP Business Profitability Management will be phased out in the short term.

For strategy management, there were a variety of alternatives to choose from, and the SAP Strategy Management platform (formerly Pilot Software) is the platform of choice going forward, and it will retain the same name. The SEM BSC (Balanced Scorecard), and BusinessObjects-PM (Performance Management) will be supported in the short term, but both will be eventually sunset. The BusinessObjects-OM (Objectives Management) functionality continues to be supported as a standard feature within the Profitability and Cost Management solution, but it will not be further developed.

For financial planning, there was a treasure trove of alternatives within the combined organization. Going forward, the SAP-BPC (Business Planning and Consolidation) solution (former OutlookSoft) will be the platform of choice and will retain the same name. Again, existing BusinessObjects-Planning XI R2 (formerly SRC), BusinessObjects Planning Ext (formerly INEA) and SEM-BPS (Business Planning System) solutions will be supported in the medium term, but you should not expect any advanced development beyond bug fixing and basic maintenance.

Finally, possibly one of the more contentious areas of decisions involved the go forward financial consolidation offering. Although several of the acquired technology platforms boasted some form of financial consolidation capabilities, one of the “crown jewels” in financial consolidations was found with the BusinessObjects Financial Consolidation offering (the former Cartesis platform). Built on European roots with a solid understanding of complex intercompany, multicurrency and global statutory reporting requirements, the Cartesis platform is a functionally rich platform and stands up to the best in the industry. It is for this scenario that it will be positioned to new customers. However, where customers are looking for a unified consolidation and planning solution with rapid deployment, BPC will be positioned as the lead product. In addition, SAP’s SEM-BCS (Business Consolidation System) platform will also be supported in the short-to-medium term. So in the financial consolidations area, three solutions will be supported going forward, and decisions will be made for the lead product for new clients from two choices depending on the deal type. This 2-pronged strategy will eventually be eclipsed by a next generation financial performance management (FPM) suite in the latter half of 2009, but there is definitely a bit of road in front of the team before getting to executing on the plan.

On the business intelligence (BI) side, decisions were a bit easier. Business intelligence capabilities that existed within the SEM offering at SAP will continue moving forward. The only notable transition would take place with the SAP BEx line of applications, which will be gradually discontinued over a 5-7 year period. For OLAP analysis, BEx Web Analyzer and Excel Analyzer will morph with the BusinessObjects Voyager offering into a premium product code-named Pioneer. For dashboards, further enhancements to BusinessObjects Xcelsius Product will be given top billing going forward, and for master data management(MDM), BusinessObjects Data Quality offering will morph with the SAP MDM offering to create a combined data management quality platform in the medium term. Although this combined offering will offer SAP customers an enhanced offering, it is important to note that Data Quality and MDM will continue to be available as stand-alone offerings.

So what does this mean to existing SAP clients, Business Objects clients and prospects considering new business intelligence and performance management offerings going forward? For SAP clients, this is a very positive outcome. Your performance management and business intelligence options have increased as you consider add-on capabilities over time. For Business Objects clients, you are probably in pretty good shape if your investment platform is in the business intelligence area. The challenged clients will be those on the sunset platforms that will eventually be phased out. You should be confident that SAP will likely provide good support for your investment in the medium term, but in the long term you will likely have to make a decision to migrate off of your system onto a more standard offering. You should anticipate pressure to upgrade to major new releases over a relatively short period of time as the integration work proceeds. From experience, vendors typically make that migration attractive from a software licensing perspective, but it becomes more challenging when you consider the professional services costs of migration – where only the most important clients get preferred treatment on the new platform implementation costs. Finally, for prospects going forward, the combined SAP/Business Objects clearly stands with the elite 3-4 top performance management and business intelligence providers. During this period of transition, be extra diligent in getting specific support terms in any commercial contracts and recognize that you are in the driver’s seat in terms of negotiations. Remember, everything is negotiable. You will be able to get a good sense of how the lead vendors are executing on the integration of their offerings by insisting that they show how their solutions can match your unique business requirements – versus permitting them to dazzle you with canned product demonstrations and screen shots.

Let the buyer beware. Do not take your performance management or business intelligence decision lightly, or you could come up on the short-end of a product decision that will only last 2-3 years without needing additional investment or a painful migration process. Also, note that this road map may be accurate today, but even the best laid plans change over time. Either hire expertise on your team that is very current with the product plans of the lead vendors or consider external expert advisors to help you validate your final decision. Successful performance management implementations are able to scale to more users, more data and extend into different types of applications over time. Be careful to avoid ending up with a solution that can't grow with your business.

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