Business Objects to Help SAP Target Business Users

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SAP's acquisition of Business Objects will accelerate its strategy to bring to market a category of software called business user applications.

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Business user applications are targeted at users involved in ad-hoc and collaborative work, which tends to be unstructured, innovative and predictive, Vishal Sikka, SAP's chief technology officer, told reporters on Wednesday on the sidelines of the company's TechEd conference in Bangalore, India. These applications are different from SAP's process-centric business applications such as Business Suite, Business One and Business ByDesign, he added.

Typical examples of this class of applications are planning, financial consolidation and evaluating risk, according to Sikka. These applications are targeted at business users rather than at process workers or task workers like clerks and accountants, he added.

SAP announced in October that it has agreed to buy rival Business Objects for about $6.78 billion. European Commission antitrust regulators cleared the acquisition on Tuesday.

There has been the perception that SAP is acquiring Business Objects for its capability in business intelligence (BI), according to Sikka. "It misses the point," he said. "This [acquisition] is not about BI, but about business user applications. We have been in the BI business for the last 10 years." SAP will continue to invest in BI technology including its analytics engine, called BI Accelerator, he added.

SAP is already offering business user applications, including in the area of governance, risk and compliance (GRC), and corporate performance management (CPM), Sikka said. "We have been already executing on this strategy, and if we had not decided to acquire Business Objects, we would have still got there eventually," he said. There is a large market opportunity in these applications, and SAP is already seeing a lot of demand for its CPM and GRC products, he added.

Business Objects was particularly attractive to SAP because it has a rich set of tools and technologies that are "application and platform agnostic," according to Sikka. After the acquisition is complete, SAP will be merging its business user applications organization into Business Objects, which will operate as an independent entity within SAP.

Sikka said that there isn't a significant overlap between the products of SAP and Business Objects. He added that this is one of the reasons why about 40 percent of Business Objects' customers are SAP customers as well. SAP, for example, has an OLAP (online analytical processing) engine and a central business warehouse that Business Objects does not. Business Objects' warehouse, Rapid Mart, is tailored for the departmental level, which makes it complementary to the SAP offering, Sikka said. Business Objects also has good ad-hoc reporting tools, he added.

SAP also extended its reach into the mid-market for ERP (enterprise resource planning) applications in September with the launch of a hosted ERP software suite called SAP Business ByDesign. The suite has been launched in the U.S., China and Germany, with launches in some other countries planned for the first quarter of next year, said Clas Neumann, president of SAP Labs India. The lab in Bangalore was involved in developing the product.

Business ByDesign is distinct and addresses a very different market from SAP's top-end Business Suite and other business applications, Sikka said.

Partners such as system integrators will start customizing the application for users at the user interface and reports levels, but SAP does not have any plans at this point to let partners host and offer the applications, according to Neumann. "This is a product we will host for now, as we want to move very slowly to make sure everything is right," Sikka said.

Copyright © 2007 IDG Communications, Inc.

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