The Year in Review and a Look Ahead: M&A, IPOs, and Breaking a Million
Friday, December 14, 2007
Bruce Richardson
Welcome to the last edition of First Thing Monday for 2007. It’s hard to believe that another year has raced past. Looking back, 2007 has been a great year for Red Sox fans (and South Africa rugby fans, our Roddy Martin reminds me), and should prove to have been a very strong year for the software industry. When we published our 2007 forecast for enterprise applications, we were looking for this market to grow to $61.1B, an 8% increase from last year. That forecast looks pretty safe.
Next year should be strong, too. Our preliminary 2008 estimates show that total enterprise application revenue should reach $65.4B, up more than 7% from the current year.
Business intelligence deals yield another strong year for software M&A
According to Mergerstat, there were 1,206 software mergers and acquisitions in the first nine months of this year. This is down 7% from the 1,293 deals reported for the first three quarters of 2006. If you’re an investment banker, you made more money this year as the value of the deals for the same period this year tallied $62.8B, up 11% from the $56.4B total for the first three quarters of 2006.
The big software M&A news was the purchase of the Big Three business intelligence (BI) vendors. In March, Oracle acquired Hyperion for $3.3B; in October, SAP bid $6.8B for Business Objects; last month, IBM made a successful offer of $5B for Cognos.
The next question is likely to be “Which company or sector is next?” I’ll decline your offer to name companies, but I will say that I see further consolidation in infrastructure and human capital management (HCM). We could still see an Oracle/BEA deal, or even a Hewlett-Packard/BEA combo. In addition, some of the vendors hovering around the service-oriented architecture (SOA) space are starting to get more attractive as SOA begins to creep into large ERP accounts. There’s not a lot of blockbuster potential, though.
As for HCM, Oracle and SAP are trailing some of the new-wave HCM providers in functionality and sex appeal. This sector appears to be one of the last safe harbors for best-of-breed vendors, at least for now. SuccessFactors and Taleo have each built a customer base of 1,400 companies with performance management and talent management functionality.
As I write this, SuccessFactors’ market cap is close to $735M, while Taleo’s is just above $712M. Taleo is closer to the $100M annual revenue mark, with $77M in revenue for the first three quarters versus $44.1M for SuccessFactors. Both offer their products as software as a service (SaaS). We could see one or both acquired over the next 12 to 24 months. As we were writing this, SAP (through the NetWeaver Fund) was investing in Montreal-based Nakisa, a user interface company specializing in organizational and talent management information visualization (see Christa Degnan Manning’s note below in Market Roundup for more on this).
Longer term, I’m waiting for the first batch of consolidation among the IT services and business process outsourcing (BPO) vendors. Given the high cost of new customer acquisition and the ongoing battle for scarce talent, consolidation appears inevitable. This will take longer to play out, though, thanks to high market valuations, especially for the leading firms in India. As I write this, Infosys is valued at $25B, followed by Wipro ($22.8B), and Satyam ($9B). I couldn’t find a market valuation for Tata Consultancy Services (TCS). TCS is the largest of all of the Indian services firms. This compares to $21B for Accenture, $11.13B for EDS, and $9.9B for Cognizant.
Door to IPO market slightly ajar in 2007
The IPO market opened up again for a handful of select software companies. The must-have new tech stock for 2007 was VMware. When the company made its debut on the New York Stock Exchange in August, the opening share price was $29. The stock closed the first day of trading at $51, giving VMware a market cap of $19.1B. Since then, shares have traded as high as $125.25. Currently, the shares are hovering just below $100, giving the company a valuation of $37.9B. Very nice.
DemandTec also went public in August, opening on a day when the Dow had experienced the “the second-heaviest one-day plunge since 2003,” falling 387 points. Shares of DMAN opened at $10.05, but fell to $9.34 by the end of the first day. Since then, shares have traded between $8.95 and $20.50. The shares are currently trading just under $15.
If DemandTec shareholders also bought Deltek shares when they debuted on November 1, they must have experienced déjà vu. On Deltek’s first day of trading the NASDAQ finished down 64.29 points, the Dow dropped 362.14, and the New York Stock Exchange fell 289.53. Deltek opened trading at $18.00 and closed at $17.95. In the past six weeks, shares of PROJ (Deltek specializes in project-based ERP software) have traded in a relatively narrow band—$15.01 to $18.63, with the current price at $17.20.
SuccessFactors went public last month just before Thanksgiving. Shares of SFSF opened at $10 and rose to $13.25 to end the day. Since then, shares have reached a high of $15.27. It’s trading at $14.75 now.
NetSuite should be the fifth and final enterprise software IPO for this year. On December 10 the company announced an offering of 6.2 million shares of stock at a suggested price range of $13 to $16 per share. Bidders will determine the actual price through an online auction or “Dutch auction” process. Pricing is expected to close December 19.
The fact that I’m excited about five IPOs doesn’t make me forget the craziness of the first Internet bubble. I saw a stat the other day that reminded me that more than 1,100 technology companies had their IPOs during the 1995 to 2000 mania. Now, that was the time to be a banker.
“Million” is the new black
The “new black” analogy is thoroughly overused. I am noticing, however, how many software companies have hit the coveted one million mark. Salesforce.com recently reached one million subscribers. One week later, SAP touted that its Community Network membership had topped one million. SuccessFactors and Taleo brag that their software is used by two million employees and one million employees, respectively, at their corporate customer accounts.
Next year’s theme: convergence of enterprise apps and social networks
Like you, every day I get multiple invitations to join friends on Facebook, LinkedIn, and Plaxo. In the past two weeks, I have also been asked to join Hi5 Networks and Spock.com. Smart companies are looking at social networks and seeing new prospecting and hiring opportunities. They are also looking to use these tools to build tighter links to a wide range of communities, from shareholders to suppliers.
A few months ago, I wrote that salesforce.com is looking to become the “Facebook of the business world.” Last month I wrote about Faceforce, a new tool that links information from your Facebook profile and network to salesforce.com’s software. This could be a little creepy if abused or overused, but I have the power to limit access to my Facebook profile.
A few weeks ago salesforce.com announced Salesforce to Salesforce, the world’s first “multi-tenant business network.” Some of the initial customers are using this technology to connect directly to their reseller networks to share and track leads in real-time, plan and update marketing campaigns, track orders, and share other functions and processes. The intent is to reduce the latency from suspect-to-prospect-to-customer and eliminate any and all manual processes. Rob Bois goes into detail about this below in Market Roundup. The next step should be to layer salesforce.com’s IdeaExchange on top to allow the channel master to solicit ideas for new features and functions or improvements to the indirect channel program.
In the not-too-distant future, I suspect that we will see a Facebook-like application from salesforce.com that will be used to replace static employee intranet sites, extend out to key customers (like a social network site for your major accounts), or provide pages for the sales and service members of key suppliers.
Why? Facebook envy. Even though salesforce.com has reached the one million mark, I suspect that CEO Marc Benioff won’t be happy until he approaches LinkedIn’s 17 million connections or Facebook’s 60 million friends.
Back to goofy company names
Remember the last bubble when it seemed that the name of nearly every startup either began with a small “e” or started with a letter from the end of the alphabet, like V, X, Y, or Z? Ever find yourself confused as to whether Meebo is a new prescription drug or an instant messaging tool? Are you current on all of the new Web 2.0 players? If not, and you have a couple of minutes, here’s a quiz for you.
Coming up: What lies ahead for i2 Technologies?
It’s been over a year since I last met with Sanjiv Sidhu, i2’s founder and chairman, and Mike McGrath, former CEO. We recently flew to Dallas to catch up with Mr. Sidhu and Dr. Pallab Chatterjee, interim CEO. Look for our analysis after the holidays on January 7.
In the meantime, all of us at AMR Research want to offer our best wishes for a safe and happy holiday season. Here’s to a healthy and prosperous 2008! While we won’t be publishing for a couple of weeks, we will still be looking for your feedback and ideas—brichardson@amrreseach.com.
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© Copyright by AMR Research, Inc.
Friday, December 14, 2007
Tuesday, December 11, 2007
Oracle Strengthens Its Application Management Capabilities
Oracle Strengthens Its Application Management Capabilities
The acquisition of Moniforce will widen Oracle's Enterprise Manager portfolio by adding end-user monitoring capabilities. Expect Oracle to become a competitor within the application management market.
The acquisition of Moniforce will widen Oracle's Enterprise Manager portfolio by adding end-user monitoring capabilities. Expect Oracle to become a competitor within the application management market.
Monday, December 10, 2007
SAP Unveils Web 2.0 Look for Its CRM Tool
SAP Unveils Web 2.0 Look for Its CRM Tool
December 10, 2007 (Computerworld) --
BOSTON -- SAP AG, looking to reduce the complexity of its customer relationship management software, last week unveiled an upgrade that adds support for Web2.0-style user interfaces.
December 10, 2007 (Computerworld) --
BOSTON -- SAP AG, looking to reduce the complexity of its customer relationship management software, last week unveiled an upgrade that adds support for Web2.0-style user interfaces.
Friday, December 07, 2007
24 Hours With SAP
SAP brought close to 200 employees to Boston for the company’s Fifth Annual SAP Influencer Summit. The audience consisted of 340 analysts, journalists, bloggers, academics, customers, and software and services partners. Given how closely we follow SAP and how much we write about the company, I can’t say there were a lot of surprises for the AMR Research analysts. Nonetheless, there is still plenty to write about for this week.
My primary interest in attending was to hear the morning keynotes, followed with one-on-one meetings with the top SAP executives, including CEO Henning Kagermann, Dr. Peter Zencke, and the members of SAP’s executive council. Mission accomplished. I was able to squeeze all of the keynotes and the meetings into a single day.
While past summits have been held in Phoenix and Las Vegas, this year’s event was held in Boston at the Westin Hotel, a 15-minute walk from our offices. In exchange for not having to fly to the event, how did we return the favor? Our city greeted the mostly German and Bay Area visitors with a snowstorm upon arrival, followed by subfreezing temperatures for the rest of the week. I wouldn’t be surprised if next year’s event is held in Orlando or returns to Las Vegas.
Rather than risking reader fatigue, I’m going to focus on three core ideas gained from the summit:
- Business ByDesign is the foundation for SAP’s next-generation application platform. It will ultimately replace the SAP Business Suite, albeit gradually and maybe transparently over a 5- to 10-year horizon (or more).
- In the interim, SAP will retain customer loyalty through Enhancement Packs and continued NetWeaver investments that move SAP Business Suite closer to Business ByDesign.
- The business user, critical to SAP’s future revenue stream, may be placing it in a potential showdown with Microsoft.
“I’ve seen the future of SAP software, and its name is Business ByDesign”
In 1974, Jon Landau wrote a memorable line in Rolling Stone that music fans still remember more than 30 years later: “I’ve seen the future of rock and roll, and its name is Bruce Springsteen.”
As you watch Business ByDesign develop, you see the future of SAP software. That’s not only my view, but also the perspective of SAP customers who attended the event. At lunch, I sat with executives from various SAP user groups based in Australia, Mexico, the Netherlands, and the United States. One of the first questions we asked each other was “What did you think of the Business ByDesign presentation?” Within minutes, we had achieved near unanimous consensus that SAP will use Business ByDesign’s model-based development framework to develop the next wave of applications.
Dr. Zencke’s keynote did not focus much on SAP’s future plans for Business ByDesign. He did say that he planned to deliver new model-based applications in 2009, though he did not say whether it would be a new human capital management (HCM) suite or one more closely linked to a specific process (such as trade promotion management and fulfillment). He also said that some of the initial announcements could come as early as next spring during the two SAPPHIRE events (May 4–8 in Orlando; May 19–21 in Berlin).
Business ByDesign continues to evolve. The newest feature to be unveiled was the software’s ability to record, in real time, all the steps and documents in a business process (order to cash or procure to pay, for example). This can be used for visualization, monitoring, analysis, and auditing. For example, how long did it take to fill the last 10 open sales positions, from initial interview to start date? And how long did it take until they closed their first substantive deals? You can model that or use the search capability. That assumes, of course, that all the data is in SAP and not in a third-party application or tied to a manual process.
Of course, maintaining that data increases the overhead. As customers add more users and functionality, we could be looking at significant data volumes and larger data transfers. What will this mean for performance over a hosted, on-demand network? Users may be willing to tolerate relatively slow performance when updating a sales prospect’s record, but they won’t accept it for more mission-critical applications. SAP is well aware of the need for sustained high performance. One executive told me that it was exploring 64-bit caching appliances to better match on-premise performance.
Enhancement Packs: “100,000 man-days” in every bite
SAP has a delicate balancing act between old and new. More than 99% of its 44,000 customers run on one of its three core systems. The company continues to invest a large part of its $2B annual R&D budget into delivering new functionality for the core SAP Business Suite base through Enhancement Packs (EhP) and continued investment in the NetWeaver platform.
The initial idea behind EhP was to deliver continuous innovation to customers without forcing them to undertake costly and time-consuming upgrades. When the concept was first unveiled, SAP pledged that there would be no new ERP release until 2010.
The EhPs are delivered through a “switch framework” that’s analogous to the lights in your office. Customers have the option of turning the new features on or keeping them off. While this might suggest somewhat “lite” functionality, Dr. Kagermann surprised most of the audience by stating that the average EhP required more than “100,000 man-days.” That’s a lot of coding and testing.
A galaxy of side-by-side innovation
On the NetWeaver front, the most exciting news was the new business process management (BPM) suite. Code-named Galaxy, the BPM products are part of the NetWeaver Composition Environment. The tools include a process composer, process server, web editor, rule builder, rule management, rule analytics, and a rule engine. Galaxy will be part of the core NetWeaver platform and will be used for SAP Business Suite, SAP All-in-One, and SAP Business ByDesign.
The continued investment in NetWeaver across all three platforms is part of Mr. Kagermann’s vision of “side-by-side innovation,” where SAP continues to invest in existing and new areas, with the intent of cross-fertilizing the best of both. This will extend to the user interface (UI) strategy. SAP said it hopes to have one primary UI for SAP Business Suite and Business ByDemand within 18 months. This is long overdue. I lost track, but I would estimate that we saw more than 20 different UIs between the demos and the canned screen shots.
How will SAP customers get to the new architecture?
Life was much simpler when SAP launched R/3 at SAPPHIRE in 1991. While R/3 replaced R/2, that was not the original positioning. The new client/server was slotted as software for smaller companies or for remote divisions of larger enterprises that needed a new ERP system. Over time, nearly all R/2 users replaced their mainframes with R/3. Of course, there were at least five years and three major releases before R/3 was close to functional parity with R/2.
Likewise, in the mid to late 1990s, SAP launched the New Dimension products to fill unmet needs around the pillars of customer management, supply chain management (SCM), and the like. Later, these were added seamlessly to the Business Suite. The new upgrades are delivered through the EhPs.
Is Business ByDesign the replacement for SAP Business Suite? It’s not that easy. Today’s SAP Business Suite is designed for dozen of verticals as well as for companies in more than 120 countries. Business ByDemand has minimal vertical capabilities and is only available in a few countries and languages. Yet, the convergence is starting.
Today, the SAP Business Suite and Business ByDesign share the common NetWeaver platform and Enterprise Services Repository and related infrastructure components. Dr. Zencke may well be delivering the 2009 equivalent of New Dimension products using the Business ByDesign development framework. This will give SAP Business Suite users the ease of use, deployment flexibility, and rapid configuration that they want, too.
Here’s the next question: In five years or so when Business ByDesign has reached functional, vertical, and geographic parity with SAP Business Suite, are the Business Suite customers already on Business ByDesign thanks to EhPs, NetWeaver, and new model-based applications? Or, do we begin the next wave of replacement projects designed to reduce the total cost of ownership (TCO)?
In either case, I’ve seen the future.
SAP to battle Microsoft over the “business user”
I suspect SAP will be ecstatic once the Business Objects acquisition closes. The current expected date is January 23, 2008. Business Objects will be a key part of SAP’s plans to sell to the “business user,” a goofy title for what might normally be called “knowledge workers.” The point, though, is that many employees without an SAP seat still need access to information generated by or stored in an SAP application.
SAP has already begun targeting customers that rely on Oracle’s Hyperion for business intelligence (BI) and performance management (PM). The company recently started a one-a-day program with the goal of replacing 100 Hyperion installations in 100 days. Given that there are an estimated 3,500 to 4,000 SAP customers using Hyperion today, this program could have a run that rivals that of Cats on Broadway.
To date, the primary way to touch that business user has been through SAP’s portal. Some companies have also deployed Duet, the software SAP has been developing with Microsoft to link SAP software with MS Outlook.
While Microsoft has a near stranglehold on office automation, SAP acknowledged that it will have to work closely with others, including IBM’s Lotus software, Google applications, and Yahoo!’s Zimbra applications. SAP also said that it is looking at supporting OpenSocial, the proposed widget standard for social networks that’s being promoted by Google, LinkedIn, Plaxo, Oracle, and salesforce.com. Clearly, the desktop is the key to getting to the business user.
One challenge for SAP is the plethora of competition. There are the ubiquitous Microsoft applications on one side, and free Web 2.0 products on the other. SAP is going to have to come up with some very clever pricing and licensing schemes and value propositions to reach the business worker.
…or does Microsoft buy SAP?
You may have seen the recent Reuters headline, “SAP Shares Climb on Microsoft Bid Talk.” A Microsoft-SAP link first surfaced during the U.S. Department of Justice antitrust lawsuit against Oracle. During the trial it came out that Microsoft had initiated discussions with SAP after Oracle made its bid for PeopleSoft. Nothing came of those initial talks.
Talking to the reporter about the latest rumor, I said “Re: one giant buying another … while all things are possible, I don’t see Microsoft buying SAP. Microsoft is more fixated with Google than Oracle. It’s looking for businesses with enormous growth/volume opportunities; SAP doesn’t provide that. Plus, if [Microsoft CEO Steve] Ballmer bought SAP, he would have to continue to invest in SAP’s costly direct sales and service model. That’s counter to his high margin needs.”
Jim Maniscalco, founder and CEO of Nobilis Software, e-mailed me with a contrarian view. Here’s his take:
On the surface I do agree with you that [Microsoft] is most likely focused on acquiring high-growth companies that are on the frontier of Web 2.0 rather than “mature” companies like SAP. Microsoft has a lot to lose with that strategy—namely the dominance it has enjoyed for 20 years. Microsoft overestimates its actual position in the market. If it does not buy SAP and secure its place in the enterprise through SAP’s maintenance revenue, Microsoft and its executive management risk following the same trajectory that Lotus Development Corp. had in the late 1980s through early 1990s. Virtualization, open source, and the commoditization of tools are adversaries that Microsoft can’t defend against with its current business and product model. Only the addition of SAP’s enterprise footprint can extend its leadership role. If not, it is a different company in five to seven years.
I welcome your viewpoint, too.
Coming up: social networks and enterprise software
Next week’s weather forecast includes a flurry of vendors. All of our conference rooms are jammed these days as software vendors rush in to brief us on their 2008 plans. Social network vendor LinkedIn must be watching The Weather Channel. Instead of braving Boston’s subfreezing temperatures, the executives have offered to update us via telephone instead. We will bring you some of the highlights of all the briefings, so look for our analysis next week.
In the meantime, do you think Business ByDesign is the successor to R/3 and the SAP Business Suite, or is it destined to be a midmarket only product? Does SAP have to take on Microsoft directly in order to be successful in the business user market? Or, do the two companies end up merging as Mr. Maniscalco suggests? As always, I welcome your feedback and ideas—brichardson@amrresearch.com.
My primary interest in attending was to hear the morning keynotes, followed with one-on-one meetings with the top SAP executives, including CEO Henning Kagermann, Dr. Peter Zencke, and the members of SAP’s executive council. Mission accomplished. I was able to squeeze all of the keynotes and the meetings into a single day.
While past summits have been held in Phoenix and Las Vegas, this year’s event was held in Boston at the Westin Hotel, a 15-minute walk from our offices. In exchange for not having to fly to the event, how did we return the favor? Our city greeted the mostly German and Bay Area visitors with a snowstorm upon arrival, followed by subfreezing temperatures for the rest of the week. I wouldn’t be surprised if next year’s event is held in Orlando or returns to Las Vegas.
Rather than risking reader fatigue, I’m going to focus on three core ideas gained from the summit:
- Business ByDesign is the foundation for SAP’s next-generation application platform. It will ultimately replace the SAP Business Suite, albeit gradually and maybe transparently over a 5- to 10-year horizon (or more).
- In the interim, SAP will retain customer loyalty through Enhancement Packs and continued NetWeaver investments that move SAP Business Suite closer to Business ByDesign.
- The business user, critical to SAP’s future revenue stream, may be placing it in a potential showdown with Microsoft.
“I’ve seen the future of SAP software, and its name is Business ByDesign”
In 1974, Jon Landau wrote a memorable line in Rolling Stone that music fans still remember more than 30 years later: “I’ve seen the future of rock and roll, and its name is Bruce Springsteen.”
As you watch Business ByDesign develop, you see the future of SAP software. That’s not only my view, but also the perspective of SAP customers who attended the event. At lunch, I sat with executives from various SAP user groups based in Australia, Mexico, the Netherlands, and the United States. One of the first questions we asked each other was “What did you think of the Business ByDesign presentation?” Within minutes, we had achieved near unanimous consensus that SAP will use Business ByDesign’s model-based development framework to develop the next wave of applications.
Dr. Zencke’s keynote did not focus much on SAP’s future plans for Business ByDesign. He did say that he planned to deliver new model-based applications in 2009, though he did not say whether it would be a new human capital management (HCM) suite or one more closely linked to a specific process (such as trade promotion management and fulfillment). He also said that some of the initial announcements could come as early as next spring during the two SAPPHIRE events (May 4–8 in Orlando; May 19–21 in Berlin).
Business ByDesign continues to evolve. The newest feature to be unveiled was the software’s ability to record, in real time, all the steps and documents in a business process (order to cash or procure to pay, for example). This can be used for visualization, monitoring, analysis, and auditing. For example, how long did it take to fill the last 10 open sales positions, from initial interview to start date? And how long did it take until they closed their first substantive deals? You can model that or use the search capability. That assumes, of course, that all the data is in SAP and not in a third-party application or tied to a manual process.
Of course, maintaining that data increases the overhead. As customers add more users and functionality, we could be looking at significant data volumes and larger data transfers. What will this mean for performance over a hosted, on-demand network? Users may be willing to tolerate relatively slow performance when updating a sales prospect’s record, but they won’t accept it for more mission-critical applications. SAP is well aware of the need for sustained high performance. One executive told me that it was exploring 64-bit caching appliances to better match on-premise performance.
Enhancement Packs: “100,000 man-days” in every bite
SAP has a delicate balancing act between old and new. More than 99% of its 44,000 customers run on one of its three core systems. The company continues to invest a large part of its $2B annual R&D budget into delivering new functionality for the core SAP Business Suite base through Enhancement Packs (EhP) and continued investment in the NetWeaver platform.
The initial idea behind EhP was to deliver continuous innovation to customers without forcing them to undertake costly and time-consuming upgrades. When the concept was first unveiled, SAP pledged that there would be no new ERP release until 2010.
The EhPs are delivered through a “switch framework” that’s analogous to the lights in your office. Customers have the option of turning the new features on or keeping them off. While this might suggest somewhat “lite” functionality, Dr. Kagermann surprised most of the audience by stating that the average EhP required more than “100,000 man-days.” That’s a lot of coding and testing.
A galaxy of side-by-side innovation
On the NetWeaver front, the most exciting news was the new business process management (BPM) suite. Code-named Galaxy, the BPM products are part of the NetWeaver Composition Environment. The tools include a process composer, process server, web editor, rule builder, rule management, rule analytics, and a rule engine. Galaxy will be part of the core NetWeaver platform and will be used for SAP Business Suite, SAP All-in-One, and SAP Business ByDesign.
The continued investment in NetWeaver across all three platforms is part of Mr. Kagermann’s vision of “side-by-side innovation,” where SAP continues to invest in existing and new areas, with the intent of cross-fertilizing the best of both. This will extend to the user interface (UI) strategy. SAP said it hopes to have one primary UI for SAP Business Suite and Business ByDemand within 18 months. This is long overdue. I lost track, but I would estimate that we saw more than 20 different UIs between the demos and the canned screen shots.
How will SAP customers get to the new architecture?
Life was much simpler when SAP launched R/3 at SAPPHIRE in 1991. While R/3 replaced R/2, that was not the original positioning. The new client/server was slotted as software for smaller companies or for remote divisions of larger enterprises that needed a new ERP system. Over time, nearly all R/2 users replaced their mainframes with R/3. Of course, there were at least five years and three major releases before R/3 was close to functional parity with R/2.
Likewise, in the mid to late 1990s, SAP launched the New Dimension products to fill unmet needs around the pillars of customer management, supply chain management (SCM), and the like. Later, these were added seamlessly to the Business Suite. The new upgrades are delivered through the EhPs.
Is Business ByDesign the replacement for SAP Business Suite? It’s not that easy. Today’s SAP Business Suite is designed for dozen of verticals as well as for companies in more than 120 countries. Business ByDemand has minimal vertical capabilities and is only available in a few countries and languages. Yet, the convergence is starting.
Today, the SAP Business Suite and Business ByDesign share the common NetWeaver platform and Enterprise Services Repository and related infrastructure components. Dr. Zencke may well be delivering the 2009 equivalent of New Dimension products using the Business ByDesign development framework. This will give SAP Business Suite users the ease of use, deployment flexibility, and rapid configuration that they want, too.
Here’s the next question: In five years or so when Business ByDesign has reached functional, vertical, and geographic parity with SAP Business Suite, are the Business Suite customers already on Business ByDesign thanks to EhPs, NetWeaver, and new model-based applications? Or, do we begin the next wave of replacement projects designed to reduce the total cost of ownership (TCO)?
In either case, I’ve seen the future.
SAP to battle Microsoft over the “business user”
I suspect SAP will be ecstatic once the Business Objects acquisition closes. The current expected date is January 23, 2008. Business Objects will be a key part of SAP’s plans to sell to the “business user,” a goofy title for what might normally be called “knowledge workers.” The point, though, is that many employees without an SAP seat still need access to information generated by or stored in an SAP application.
SAP has already begun targeting customers that rely on Oracle’s Hyperion for business intelligence (BI) and performance management (PM). The company recently started a one-a-day program with the goal of replacing 100 Hyperion installations in 100 days. Given that there are an estimated 3,500 to 4,000 SAP customers using Hyperion today, this program could have a run that rivals that of Cats on Broadway.
To date, the primary way to touch that business user has been through SAP’s portal. Some companies have also deployed Duet, the software SAP has been developing with Microsoft to link SAP software with MS Outlook.
While Microsoft has a near stranglehold on office automation, SAP acknowledged that it will have to work closely with others, including IBM’s Lotus software, Google applications, and Yahoo!’s Zimbra applications. SAP also said that it is looking at supporting OpenSocial, the proposed widget standard for social networks that’s being promoted by Google, LinkedIn, Plaxo, Oracle, and salesforce.com. Clearly, the desktop is the key to getting to the business user.
One challenge for SAP is the plethora of competition. There are the ubiquitous Microsoft applications on one side, and free Web 2.0 products on the other. SAP is going to have to come up with some very clever pricing and licensing schemes and value propositions to reach the business worker.
…or does Microsoft buy SAP?
You may have seen the recent Reuters headline, “SAP Shares Climb on Microsoft Bid Talk.” A Microsoft-SAP link first surfaced during the U.S. Department of Justice antitrust lawsuit against Oracle. During the trial it came out that Microsoft had initiated discussions with SAP after Oracle made its bid for PeopleSoft. Nothing came of those initial talks.
Talking to the reporter about the latest rumor, I said “Re: one giant buying another … while all things are possible, I don’t see Microsoft buying SAP. Microsoft is more fixated with Google than Oracle. It’s looking for businesses with enormous growth/volume opportunities; SAP doesn’t provide that. Plus, if [Microsoft CEO Steve] Ballmer bought SAP, he would have to continue to invest in SAP’s costly direct sales and service model. That’s counter to his high margin needs.”
Jim Maniscalco, founder and CEO of Nobilis Software, e-mailed me with a contrarian view. Here’s his take:
On the surface I do agree with you that [Microsoft] is most likely focused on acquiring high-growth companies that are on the frontier of Web 2.0 rather than “mature” companies like SAP. Microsoft has a lot to lose with that strategy—namely the dominance it has enjoyed for 20 years. Microsoft overestimates its actual position in the market. If it does not buy SAP and secure its place in the enterprise through SAP’s maintenance revenue, Microsoft and its executive management risk following the same trajectory that Lotus Development Corp. had in the late 1980s through early 1990s. Virtualization, open source, and the commoditization of tools are adversaries that Microsoft can’t defend against with its current business and product model. Only the addition of SAP’s enterprise footprint can extend its leadership role. If not, it is a different company in five to seven years.
I welcome your viewpoint, too.
Coming up: social networks and enterprise software
Next week’s weather forecast includes a flurry of vendors. All of our conference rooms are jammed these days as software vendors rush in to brief us on their 2008 plans. Social network vendor LinkedIn must be watching The Weather Channel. Instead of braving Boston’s subfreezing temperatures, the executives have offered to update us via telephone instead. We will bring you some of the highlights of all the briefings, so look for our analysis next week.
In the meantime, do you think Business ByDesign is the successor to R/3 and the SAP Business Suite, or is it destined to be a midmarket only product? Does SAP have to take on Microsoft directly in order to be successful in the business user market? Or, do the two companies end up merging as Mr. Maniscalco suggests? As always, I welcome your feedback and ideas—brichardson@amrresearch.com.
Thursday, November 22, 2007
FT.com / Companies / Europe - US group might bid for troubled SAP unit
FT.com / Companies / Europe - US group might bid for troubled SAP unit
US group might bid for troubled SAP unit
By Helene Laube in San Francisco
Published: November 22 2007 22:56 | Last updated: November 22 2007 22:56
Rimini Street, a US-based provider of software support, said it was interested in buying TomorrowNow, the SAP unit at the centre of a corporate spying scandal.
“We are interested, but we are proceeding cautiously and need to analyse it first,” Seth Ravin, chief executive of Rimini Street, told FT Deutschland, the FT’s sister paper in an interview.
SAP, the German software group, revealed at the beginning of the week that it was exploring options for the troubled unit, including selling it.
Mr Ravin was among the founders of the Texas-based TomorrowNow and sold the company to SAP almost three years ago.
He declined to say whether talks were going on with SAP.
The scandal surrounding TomorrowNow, which like Rimini Street sells software maintenance and support to former Oracle customers, broke when SAP’s arch-rival filed a lawsuit earlier this year accusing SAP of corporate espionage.
In the wake of the scandal, TomorrowNow’s chief executive and several senior member of management resigned on Monday.
SAP is under pressure to announce a swift solution for TomorrowNow in order to avoid further damage to its image.
The announcement was widely seen as unsettling customers relying on long-term software support.
Since SAP’s announcement, Rimini Street had received a dozen enquiries from TomorrowNow customers “exploring a possible transition”, Mr Ravin said.
Customers were uncertain since SAP had not been clear about “what they are doing with TomorrowNow,” he added.
Rimini Street is seen as one of the few potential buyers for TomorrowNow, as most big IT service provider are working in collaboration with Oracle and are said not to be interested.
Copyright The Financial Times Limited 2007
US group might bid for troubled SAP unit
By Helene Laube in San Francisco
Published: November 22 2007 22:56 | Last updated: November 22 2007 22:56
Rimini Street, a US-based provider of software support, said it was interested in buying TomorrowNow, the SAP unit at the centre of a corporate spying scandal.
“We are interested, but we are proceeding cautiously and need to analyse it first,” Seth Ravin, chief executive of Rimini Street, told FT Deutschland, the FT’s sister paper in an interview.
SAP, the German software group, revealed at the beginning of the week that it was exploring options for the troubled unit, including selling it.
Mr Ravin was among the founders of the Texas-based TomorrowNow and sold the company to SAP almost three years ago.
He declined to say whether talks were going on with SAP.
The scandal surrounding TomorrowNow, which like Rimini Street sells software maintenance and support to former Oracle customers, broke when SAP’s arch-rival filed a lawsuit earlier this year accusing SAP of corporate espionage.
In the wake of the scandal, TomorrowNow’s chief executive and several senior member of management resigned on Monday.
SAP is under pressure to announce a swift solution for TomorrowNow in order to avoid further damage to its image.
The announcement was widely seen as unsettling customers relying on long-term software support.
Since SAP’s announcement, Rimini Street had received a dozen enquiries from TomorrowNow customers “exploring a possible transition”, Mr Ravin said.
Customers were uncertain since SAP had not been clear about “what they are doing with TomorrowNow,” he added.
Rimini Street is seen as one of the few potential buyers for TomorrowNow, as most big IT service provider are working in collaboration with Oracle and are said not to be interested.
Copyright The Financial Times Limited 2007
Wednesday, November 21, 2007
SAP To Put “For Sale” on TomorrowNow? | AMR Research
SAP To Put “For Sale” on TomorrowNow? | AMR Research
We’re only a couple of months away from the three-year anniversary of SAP’s purchase of TomorrowNow, a company specializing in third-party maintenance and support of Oracle’s JD Edwards, PeopleSoft, and Siebel software customers. Instead of celebrating, it looks like the couple could be heading for divorce. On November 19, SAP announced that TomorrowNow CEO Andrew Nelson and several other executives were resigning from the company. SAP also said that it was considering a sale of the independent unit. In our view, a sale is likely if only to accelerate the end of the Oracle lawsuit.
On March 22, Oracle filed a complaint in U.S. District Court in San Francisco, alleging that SAP/TomorrowNow had “stolen thousands of proprietary, copyrighted software products and other confidential materials.” Barring a settlement, the trial is headed to court in February. SAP executives would love to eliminate this distraction. It’s a safe bet that Oracle would like to see it continue indefinitely.
Safe Passage on the rocks?
In January 2005, SAP announced its plans to buy TomorrowNow for an undisclosed amount. The press release hit just hours after Oracle had held a press and customer conference to introduce Project Fusion, which I described at the time as “a futuristic product set and architecture designed as the morphing of the next generation of Oracle and PeopleSoft applications.”
TomorrowNow quickly become the centerpiece for the Safe Passage initiative to migrate PeopleSoft customers to SAP. At the time of the acquisition, SAP had 2,000 customers who were using PeopleSoft.
According to people close to the transaction, the TomorrowNow deal was initiated by SAP’s Shai Agassi despite the concern of some executive board members. It was a surprisingly aggressive piece of guerilla marketing for the very conservative ERP leader.
The most logical buyer would be Rimini Street, a TomorrowNow competitor that also focuses on maintenance and support services for JD Edwards, PeopleSoft, and Siebel customers. Rimini Street was founded in 2005 by Seth Ravin, former co-founder of TomorrowNow, who started the company after he sold his 50% stake in his old firm to SAP. For as long as I have known Mr. Ravin, he has been interested in buying TomorrowNow. He may soon get his chance.
It’s a Mad, Mad, Mad, Mad World: The Sequel
How about this for a scenario: Rimini Street succeeds in buying TomorrowNow from SAP and then later sells the whole business to Oracle. Oracle could continue the discounted maintenance program as a way of ensuring that companies remain as customers or switch them back to standard maintenance. As we have said many times before, all things are possible.
Note: We did reach out to multiple sources at Oracle, Rimini Street, and SAP. All declined to comment.
We’re only a couple of months away from the three-year anniversary of SAP’s purchase of TomorrowNow, a company specializing in third-party maintenance and support of Oracle’s JD Edwards, PeopleSoft, and Siebel software customers. Instead of celebrating, it looks like the couple could be heading for divorce. On November 19, SAP announced that TomorrowNow CEO Andrew Nelson and several other executives were resigning from the company. SAP also said that it was considering a sale of the independent unit. In our view, a sale is likely if only to accelerate the end of the Oracle lawsuit.
On March 22, Oracle filed a complaint in U.S. District Court in San Francisco, alleging that SAP/TomorrowNow had “stolen thousands of proprietary, copyrighted software products and other confidential materials.” Barring a settlement, the trial is headed to court in February. SAP executives would love to eliminate this distraction. It’s a safe bet that Oracle would like to see it continue indefinitely.
Safe Passage on the rocks?
In January 2005, SAP announced its plans to buy TomorrowNow for an undisclosed amount. The press release hit just hours after Oracle had held a press and customer conference to introduce Project Fusion, which I described at the time as “a futuristic product set and architecture designed as the morphing of the next generation of Oracle and PeopleSoft applications.”
TomorrowNow quickly become the centerpiece for the Safe Passage initiative to migrate PeopleSoft customers to SAP. At the time of the acquisition, SAP had 2,000 customers who were using PeopleSoft.
According to people close to the transaction, the TomorrowNow deal was initiated by SAP’s Shai Agassi despite the concern of some executive board members. It was a surprisingly aggressive piece of guerilla marketing for the very conservative ERP leader.
The most logical buyer would be Rimini Street, a TomorrowNow competitor that also focuses on maintenance and support services for JD Edwards, PeopleSoft, and Siebel customers. Rimini Street was founded in 2005 by Seth Ravin, former co-founder of TomorrowNow, who started the company after he sold his 50% stake in his old firm to SAP. For as long as I have known Mr. Ravin, he has been interested in buying TomorrowNow. He may soon get his chance.
It’s a Mad, Mad, Mad, Mad World: The Sequel
How about this for a scenario: Rimini Street succeeds in buying TomorrowNow from SAP and then later sells the whole business to Oracle. Oracle could continue the discounted maintenance program as a way of ensuring that companies remain as customers or switch them back to standard maintenance. As we have said many times before, all things are possible.
Note: We did reach out to multiple sources at Oracle, Rimini Street, and SAP. All declined to comment.
FT.com / Home UK / UK - Chief of SAP unit in US quits in spy scandal
FT.com / Home UK / UK - Chief of SAP unit in US quits in spy scandal
Chief of SAP unit in US quits in spy scandal
By Richard Waters in San Francisco
Published: November 21 2007 02:00 | Last updated: November 21 2007 02:00
The chief executive of TomorrowNow, a US unit of SAP at the centre of a corpor-ate spying scandal that has ensnared the German software group in a high-profile lawsuit, quit yesterday, the company said.
SAP also revealed it was looking at options for the troubled unit, including selling it. The newsmarks the latest step in a saga that has represented an unwelcome setback for SAP in its most important market.
The scandal broke when arch-rival Oracle filed a lawsuit this year accusing SAP of corporate espionage. It levelled the claims against TomorrowNow, a Texas-based company acquired by SAP to sell software maintenance and support to former Oracle customers. That gave it a crucial role in SAP's strategy of trying to win over Oracle customers, since the need for continuing support for older software is one of the main reasons companies hesitate to switch suppliers.
According to Oracle, TomorrowNow had used the sign-on details of several Oracle customers to access that company's computers and allegedly remove information about its products.
The German company admitted in July that TomorrowNow had made "inappropriate downloads" from Oracle's machines, although it also said the information had been kept inside the subsidiary and none had been viewed by executives in other parts of SAP.
SAP said yesterday And-rew Nelson, chief executive of TomorrowNow, and "several members of his senior management team" had "chosen to resign". It did not give details.
When the scandal first broke, SAP sent one of its own executives, Mark White, to oversee the subsidiary as executive chairman. Yesterday it said Mr White was working to "assure retention of key managers and support personnel" and safeguard customer support.
Copyright The Financial Times Limited 2007
Chief of SAP unit in US quits in spy scandal
By Richard Waters in San Francisco
Published: November 21 2007 02:00 | Last updated: November 21 2007 02:00
The chief executive of TomorrowNow, a US unit of SAP at the centre of a corpor-ate spying scandal that has ensnared the German software group in a high-profile lawsuit, quit yesterday, the company said.
SAP also revealed it was looking at options for the troubled unit, including selling it. The newsmarks the latest step in a saga that has represented an unwelcome setback for SAP in its most important market.
The scandal broke when arch-rival Oracle filed a lawsuit this year accusing SAP of corporate espionage. It levelled the claims against TomorrowNow, a Texas-based company acquired by SAP to sell software maintenance and support to former Oracle customers. That gave it a crucial role in SAP's strategy of trying to win over Oracle customers, since the need for continuing support for older software is one of the main reasons companies hesitate to switch suppliers.
According to Oracle, TomorrowNow had used the sign-on details of several Oracle customers to access that company's computers and allegedly remove information about its products.
The German company admitted in July that TomorrowNow had made "inappropriate downloads" from Oracle's machines, although it also said the information had been kept inside the subsidiary and none had been viewed by executives in other parts of SAP.
SAP said yesterday And-rew Nelson, chief executive of TomorrowNow, and "several members of his senior management team" had "chosen to resign". It did not give details.
When the scandal first broke, SAP sent one of its own executives, Mark White, to oversee the subsidiary as executive chairman. Yesterday it said Mr White was working to "assure retention of key managers and support personnel" and safeguard customer support.
Copyright The Financial Times Limited 2007
Tuesday, November 20, 2007
FT.com / Companies / IT - SAP shakes up leadership at US unit
FT.com / Companies / IT - SAP shakes up leadership at US unit
SAP shakes up leadership at US unit
By Richard Waters in San Francisco
Published: November 20 2007 02:06 | Last updated: November 20 2007 02:06
The chief executive of TomorrowNow, a US unit of SAP at the centre of a corporate spying scandal that has ensnared the German software group in a high profile lawsuit, quit on Monday, the company said.
SAP also revealed it is looking at various options for the troubled unit, including selling it. The news late on Monday night marks the latest step in an unfolding saga that has represented an unwelcome setback for SAP in its most important market.
The scandal broke when arch-rival Oracle filed a lawsuit earlier this year accusing SAP of corporate espionage. It levelled the claims against TomorrowNow, a Texas-based company that had been acquired by SAP to sell software maintenance and support to former Oracle customers. That gave it a key role in SAP’s strategy of trying to win over Oracle customers, since the need for continuing support for older software is one of the main reasons companies are hesitant to switch between suppliers.
According to Oracle, TomorrowNow had used the sign-on details of several Oracle customers to access that company’s computers and allegedly remove information about its products.
The German company admitted in July that TomorrowNow had made “inappropriate downloads” from Oracle’s machines, though it also said that the information had been kept inside the subsidiary and that none of it had been viewed by executives in other parts of SAP.
SAP said on Monday that Andrew Nelson, chief executive of TomorrowNow, and “several members of his senior management team” had “chosen to resign”. It did not give details about the extent of the departures, or whether SAP had asked for the resignations.
When the scandal first broke, SAP sent one of its own executives, Mark White, to oversee the subsidiary as executive chairman. On Monday, it said that Mr White was working to “assure retention of key managers and support personnel” and make sure customer support was not interrupted.
The signs of upheaval at TomorrowNow appear to represent a victory for Oracle in what has turned into one of the most heated confrontations in the corporate technology market. The US and German software companies have been on a collision course over the past four years, since Oracle embarked on a series of acquisitions to challenge SAP in its core application software market. While confined to an arcane part of the corporate IT market, the bitterness of the rivalry has guaranteed it a prominent place in business press headlines, culminating in the barbs thrown over the corporate espionage suit.
“Our primary focus is TomorrowNow’s existing customers, who will be supported through this management transition,” Mr White was quoted as saying. “SAP is prepared to manage through these changes to ensure that TomorrowNow’s obligations to its current customers are met.”
Copyright The Financial Times Limited 2007
SAP shakes up leadership at US unit
By Richard Waters in San Francisco
Published: November 20 2007 02:06 | Last updated: November 20 2007 02:06
The chief executive of TomorrowNow, a US unit of SAP at the centre of a corporate spying scandal that has ensnared the German software group in a high profile lawsuit, quit on Monday, the company said.
SAP also revealed it is looking at various options for the troubled unit, including selling it. The news late on Monday night marks the latest step in an unfolding saga that has represented an unwelcome setback for SAP in its most important market.
The scandal broke when arch-rival Oracle filed a lawsuit earlier this year accusing SAP of corporate espionage. It levelled the claims against TomorrowNow, a Texas-based company that had been acquired by SAP to sell software maintenance and support to former Oracle customers. That gave it a key role in SAP’s strategy of trying to win over Oracle customers, since the need for continuing support for older software is one of the main reasons companies are hesitant to switch between suppliers.
According to Oracle, TomorrowNow had used the sign-on details of several Oracle customers to access that company’s computers and allegedly remove information about its products.
The German company admitted in July that TomorrowNow had made “inappropriate downloads” from Oracle’s machines, though it also said that the information had been kept inside the subsidiary and that none of it had been viewed by executives in other parts of SAP.
SAP said on Monday that Andrew Nelson, chief executive of TomorrowNow, and “several members of his senior management team” had “chosen to resign”. It did not give details about the extent of the departures, or whether SAP had asked for the resignations.
When the scandal first broke, SAP sent one of its own executives, Mark White, to oversee the subsidiary as executive chairman. On Monday, it said that Mr White was working to “assure retention of key managers and support personnel” and make sure customer support was not interrupted.
The signs of upheaval at TomorrowNow appear to represent a victory for Oracle in what has turned into one of the most heated confrontations in the corporate technology market. The US and German software companies have been on a collision course over the past four years, since Oracle embarked on a series of acquisitions to challenge SAP in its core application software market. While confined to an arcane part of the corporate IT market, the bitterness of the rivalry has guaranteed it a prominent place in business press headlines, culminating in the barbs thrown over the corporate espionage suit.
“Our primary focus is TomorrowNow’s existing customers, who will be supported through this management transition,” Mr White was quoted as saying. “SAP is prepared to manage through these changes to ensure that TomorrowNow’s obligations to its current customers are met.”
Copyright The Financial Times Limited 2007
Monday, November 12, 2007
Thursday, November 08, 2007
Aberdeen Group:Acquisition-Mania Generates More Questions than Answers
Aberdeen Group:Acquisition-Mania Generates More Questions than Answers
A recent flurry of acquisitions has the top two ERP vendors locked in a battle for market share. Not satisfied with what has become the "run of the mill" acquisition of competitive ERP players and complementary applications, both SAP and Oracle have upped the ante and ventured outside the realm of the conventional acquisition. On October 7, 2007 SAP announced its planned acquisition of Business Objects, a leading supplier of Business Intelligence (BI) and Corporate Performance Management (CPM) solutions. Not to be out-done, Oracle followed five days later with its own move to acquire BEA Systems, a market leader in enterprise infrastructure software. And now, on October 17, 2007 SAP counters with yet another announcement that it will acquire YASU Technologies, a privately held provider of business rules management systems.
A recent flurry of acquisitions has the top two ERP vendors locked in a battle for market share. Not satisfied with what has become the "run of the mill" acquisition of competitive ERP players and complementary applications, both SAP and Oracle have upped the ante and ventured outside the realm of the conventional acquisition. On October 7, 2007 SAP announced its planned acquisition of Business Objects, a leading supplier of Business Intelligence (BI) and Corporate Performance Management (CPM) solutions. Not to be out-done, Oracle followed five days later with its own move to acquire BEA Systems, a market leader in enterprise infrastructure software. And now, on October 17, 2007 SAP counters with yet another announcement that it will acquire YASU Technologies, a privately held provider of business rules management systems.
Monday, October 29, 2007
FT.com / Companies / IT - Oracle walks away from BEA offer
FT.com / Companies / IT - Oracle walks away from BEA offer
Oracle walks away from BEA offer
By Richard Waters in San Francisco
Published: October 29 2007 00:45 | Last updated: October 29 2007 00:45
Oracle late on Sunday carried through on its threat to drop its $6.7bn offer for BEA Systems, though it did not rule out renewing its bid if shareholders succeed in pressuring the embattled software company to put itself up for sale.
It also issued a thinly veiled invitation to Carl Icahn, the activist shareholder who has become one of BEA’s biggest shareholders, to launch a proxy battle to force BEA’s hand.
“If the BEA shareholders are unhappy with the behaviour of the board, it is up to those shareholders, not Oracle, to take the appropriate action,” it said in a statement late on Sunday.
The comments came minutes after 5pm California time, the deadline set by Oracle for BEA to agree to its $17-a-share offer. BEA had already said it planned to let the deadline lapse, and that it would not consider a sale for less than $21 a share.
Oracle said that its offer had now expired, and that BEA shareholders should “not assume” it would renew the bid at that price in the future. “Over time many things can change,” the company said. “BEA’s business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere.”
Mr Icahn called on BEA’s board late last week to start negotiations with Oracle rather than let it walk away. He has also indicated he will take legal action to prevent BEA from taking any actions that would make it less vulnerable to a takeover.
“They are vulnerable to a proxy fight and they know it,” said one shareholder, who said that the BEA board was likely to accept a bid below the $21 it has held out for.
However, any attempt to force BEA’s hand is likely to be complicated by the investigation that is currently underway into its accounting for stock options. While that review continues, the company is not able to file accounts or hold a shareholding meeting, effectively putting it into limbo.
Copyright The Financial Times Limited 2007
Oracle walks away from BEA offer
By Richard Waters in San Francisco
Published: October 29 2007 00:45 | Last updated: October 29 2007 00:45
Oracle late on Sunday carried through on its threat to drop its $6.7bn offer for BEA Systems, though it did not rule out renewing its bid if shareholders succeed in pressuring the embattled software company to put itself up for sale.
It also issued a thinly veiled invitation to Carl Icahn, the activist shareholder who has become one of BEA’s biggest shareholders, to launch a proxy battle to force BEA’s hand.
“If the BEA shareholders are unhappy with the behaviour of the board, it is up to those shareholders, not Oracle, to take the appropriate action,” it said in a statement late on Sunday.
The comments came minutes after 5pm California time, the deadline set by Oracle for BEA to agree to its $17-a-share offer. BEA had already said it planned to let the deadline lapse, and that it would not consider a sale for less than $21 a share.
Oracle said that its offer had now expired, and that BEA shareholders should “not assume” it would renew the bid at that price in the future. “Over time many things can change,” the company said. “BEA’s business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere.”
Mr Icahn called on BEA’s board late last week to start negotiations with Oracle rather than let it walk away. He has also indicated he will take legal action to prevent BEA from taking any actions that would make it less vulnerable to a takeover.
“They are vulnerable to a proxy fight and they know it,” said one shareholder, who said that the BEA board was likely to accept a bid below the $21 it has held out for.
However, any attempt to force BEA’s hand is likely to be complicated by the investigation that is currently underway into its accounting for stock options. While that review continues, the company is not able to file accounts or hold a shareholding meeting, effectively putting it into limbo.
Copyright The Financial Times Limited 2007
Saturday, October 27, 2007
FT.com / Companies / IT - Icahn criticises BEA over Oracle bid
FT.com / Companies / IT - Icahn criticises BEA over Oracle bid
Icahn criticises BEA over Oracle bid
By Richard Waters in San Francisco
Published: October 27 2007 03:30 | Last updated: October 27 2007 03:30
Activist investor Carl Icahn turned up the heat on BEA Systems on Friday, pressing the embattled software company to let shareholders decide on a $6.7bn bid from Oracle if no better offers emerge.
His call came after BEA had declared that it was quite prepared to let Oracle walk away rather than start negotiations at the price that is currently on the table.
Mr Icahn’s intervention late on Friday came as the two software companies prepared for a weekend of brinkmanship over the unsolicited bid. Oracle has promised to abandon its offer, of $17 a share in cash, by Sunday afternoon if BEA does not either accept the terms or agree to let its shareholders vote on the proposal.
For its part, BEA on Friday released a terse letter that repeated its view that the price “significantly undervalues” the company, and that it therefore assumed the offer would expire this weekend. The biggest independent maker of the “middleware” used to build internet-based applications, BEA has held out of a price of $21 before it will enter negotiations.
Rather than risk losing the premium represented by the Oracle bid, BEA should launch a full auction of the company, Mr Icahn said.
“If a topping bid emerges, then all the better,” he said. “But if no topping bid arises it should be up to the BEA shareholders to decide whether to take the Oracle bid or remain as an independent company.”
One person familiar with the matter said BEA had held discussions with other technology companies since Oracle went public with its offer earlier this month. However, the nature of those discussions, or whether another bidder might emerge, was unclear.
Few rival bidders would be able to match the sort of cost savings from a deal that Oracle could achieve, according to analysts. One of the few that could, IBM, is BEA’s biggest rival, making it likely that any offer would attract anti-trust attention. The scale of the potential savings have led some analysts to suggest that Oracle could pay over $20 a share for BEA and still generate short-term financial benefits for its shareholders.
Copyright The Financial Times Limited 2007
Icahn criticises BEA over Oracle bid
By Richard Waters in San Francisco
Published: October 27 2007 03:30 | Last updated: October 27 2007 03:30
Activist investor Carl Icahn turned up the heat on BEA Systems on Friday, pressing the embattled software company to let shareholders decide on a $6.7bn bid from Oracle if no better offers emerge.
His call came after BEA had declared that it was quite prepared to let Oracle walk away rather than start negotiations at the price that is currently on the table.
Mr Icahn’s intervention late on Friday came as the two software companies prepared for a weekend of brinkmanship over the unsolicited bid. Oracle has promised to abandon its offer, of $17 a share in cash, by Sunday afternoon if BEA does not either accept the terms or agree to let its shareholders vote on the proposal.
For its part, BEA on Friday released a terse letter that repeated its view that the price “significantly undervalues” the company, and that it therefore assumed the offer would expire this weekend. The biggest independent maker of the “middleware” used to build internet-based applications, BEA has held out of a price of $21 before it will enter negotiations.
Rather than risk losing the premium represented by the Oracle bid, BEA should launch a full auction of the company, Mr Icahn said.
“If a topping bid emerges, then all the better,” he said. “But if no topping bid arises it should be up to the BEA shareholders to decide whether to take the Oracle bid or remain as an independent company.”
One person familiar with the matter said BEA had held discussions with other technology companies since Oracle went public with its offer earlier this month. However, the nature of those discussions, or whether another bidder might emerge, was unclear.
Few rival bidders would be able to match the sort of cost savings from a deal that Oracle could achieve, according to analysts. One of the few that could, IBM, is BEA’s biggest rival, making it likely that any offer would attract anti-trust attention. The scale of the potential savings have led some analysts to suggest that Oracle could pay over $20 a share for BEA and still generate short-term financial benefits for its shareholders.
Copyright The Financial Times Limited 2007
Friday, October 26, 2007
The Future of Software? Think Visual Apps | AMR Research
The Future of Software? Think Visual Apps | AMR Research
The days of static applications will soon be over, as will 2D screens that look like forms or reports. The future is coming and it’s far more visually appealing.
Since the start of this year, we’ve been tracking a wide range of companies and concepts that will change how we think about and use software. This week, we introduce Forterra Systems and provide some insights from recent meetings with IBM and salesforce.com.
The days of static applications will soon be over, as will 2D screens that look like forms or reports. The future is coming and it’s far more visually appealing.
Since the start of this year, we’ve been tracking a wide range of companies and concepts that will change how we think about and use software. This week, we introduce Forterra Systems and provide some insights from recent meetings with IBM and salesforce.com.
Wednesday, October 24, 2007
FT.com / Companies / IT - Oracle issues BEA deal ultimatum
FT.com / Companies / IT - Oracle issues BEA deal ultimatum
Oracle issues BEA deal ultimatum
By Richard Waters in San Francisco
Published: October 24 2007 03:48 | Last updated: October 24 2007 03:48
Oracle on Tuesday threatened to walk away from its proposed acquisition of BEA Systems by Sunday unless the embattled software company agreed to a deal.
While the threat wiped nearly 4 per cent from BEA’s share price by mid-afternoon, the stock still stood above the $17-a-share Oracle offer, pointing to a belief on Wall Street that the brinkmanship had not seriously damped the prospect of a deal and that Oracle or another buyer would still end up paying a higher price.
“Oracle has no interest in a long, drawn-out process to acquire BEA,” Chuck Phillips, Oracle’s president, wrote in a letter addressed to the company’s board on Tuesday. The letter followed what Oracle said had been another rejection by the BEA board of its all-cash offer.
BEA rejected the latest approach, repeating its earlier claim that the offer “seriously undervalues” the company and adding that it was open to “a transaction that appropriately reflects BEA’s value, reached through a reasonable process.”
The attempt to bring a quick end to the BEA battle is in stark contrast to the fight over PeopleSoft, the deal that launched Oracle’s ambitious attempt to force consolidation in parts of the business software market. That fight lasted 18 months, in part because Oracle had to persuade a court to overturn a US antitrust objection to the deal.
Though he started by offering $16 a share for PeopleSoft and insisting at one point that that was his “final” price, Larry Ellison, Oracle’s chief executive officer, eventually paid $26.50 a share to win over the PeopleSoft board.
Justifying the offer for BEA, Mr Phillips said it represented a 21 per cent premium to the price the day before the proposal was announced and a 44 per cent premium to the level before activist investor Carl Icahn disclosed in August that he had bought a stake in the company.
Mr Icahn, BEA’s biggest shareholder and a critic of the company’s management, has been pressuring BEA to find another buyer.
Copyright The Financial Times Limited 2007
Oracle issues BEA deal ultimatum
By Richard Waters in San Francisco
Published: October 24 2007 03:48 | Last updated: October 24 2007 03:48
Oracle on Tuesday threatened to walk away from its proposed acquisition of BEA Systems by Sunday unless the embattled software company agreed to a deal.
While the threat wiped nearly 4 per cent from BEA’s share price by mid-afternoon, the stock still stood above the $17-a-share Oracle offer, pointing to a belief on Wall Street that the brinkmanship had not seriously damped the prospect of a deal and that Oracle or another buyer would still end up paying a higher price.
“Oracle has no interest in a long, drawn-out process to acquire BEA,” Chuck Phillips, Oracle’s president, wrote in a letter addressed to the company’s board on Tuesday. The letter followed what Oracle said had been another rejection by the BEA board of its all-cash offer.
BEA rejected the latest approach, repeating its earlier claim that the offer “seriously undervalues” the company and adding that it was open to “a transaction that appropriately reflects BEA’s value, reached through a reasonable process.”
The attempt to bring a quick end to the BEA battle is in stark contrast to the fight over PeopleSoft, the deal that launched Oracle’s ambitious attempt to force consolidation in parts of the business software market. That fight lasted 18 months, in part because Oracle had to persuade a court to overturn a US antitrust objection to the deal.
Though he started by offering $16 a share for PeopleSoft and insisting at one point that that was his “final” price, Larry Ellison, Oracle’s chief executive officer, eventually paid $26.50 a share to win over the PeopleSoft board.
Justifying the offer for BEA, Mr Phillips said it represented a 21 per cent premium to the price the day before the proposal was announced and a 44 per cent premium to the level before activist investor Carl Icahn disclosed in August that he had bought a stake in the company.
Mr Icahn, BEA’s biggest shareholder and a critic of the company’s management, has been pressuring BEA to find another buyer.
Copyright The Financial Times Limited 2007
Tuesday, October 23, 2007
SAP to Bolster Business Rule Capabilities With Yasu Buy
SAP to Bolster Business Rule Capabilities With Yasu Buy
SAP's offer to acquire Yasu will bring business rule engine technology to NetWeaver customers. This smart, if late, acquisition will challenge the status quo of the BRE and business process management technology markets.
SAP's offer to acquire Yasu will bring business rule engine technology to NetWeaver customers. This smart, if late, acquisition will challenge the status quo of the BRE and business process management technology markets.
Friday, October 19, 2007
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
SAP Software Sales Soar 16% | AMR Research
SAP Software Sales Soar 16% | AMR Research
SAP posted another strong quarter, as expected, for its third quarter ending September 30. Software and software-related service revenue topped 1.74B euros, up 16% in constant currencies from the year-earlier period. Total revenue was 2.42B euros, up 13% in constant currencies. Translated to dollars at the rate of this writing, SAP’s revenue came in at $3.46B. SAP repeated guidance of 12% to 14% growth for the full year.
There were at least two departures from previous earnings calls. For one, the call was audio only, compared to previous video broadcasts. Secondly, there are normally three presentations: the opening set of financial results from CFO Werner Brandt, additional color from CEO Henning Kagermann, and a review of global sales performance from Deputy CEO Leo Apotheker. If you go to SAP’s website, you will only see Mr. Brandt’s slides.
Mr. Apotheker had several interesting statistics that didn’t make it into the slides or the press release. The number of new contracts increased 22% from the year-earlier period. New customers accounted for 26% of order entry. Midmarket customers represented 34% of the new contracts. The number of deals greater than 5M euros was 20% versus 33% for 3Q06. Last year, there were more deals in the 10M to 20M euro range; Mr. Apotheker said that the 20% figure was more typical. The number of deals less than 1M euros was 46% versus 36% last year. This is due to increased sales to smaller companies.
It would be helpful to have a bit more color on the number of contracts signed. SAP closed the second quarter with 41,200 customers and ended this quarter with 43,400, an increase of 2,200.
SAP posted another strong quarter, as expected, for its third quarter ending September 30. Software and software-related service revenue topped 1.74B euros, up 16% in constant currencies from the year-earlier period. Total revenue was 2.42B euros, up 13% in constant currencies. Translated to dollars at the rate of this writing, SAP’s revenue came in at $3.46B. SAP repeated guidance of 12% to 14% growth for the full year.
There were at least two departures from previous earnings calls. For one, the call was audio only, compared to previous video broadcasts. Secondly, there are normally three presentations: the opening set of financial results from CFO Werner Brandt, additional color from CEO Henning Kagermann, and a review of global sales performance from Deputy CEO Leo Apotheker. If you go to SAP’s website, you will only see Mr. Brandt’s slides.
Mr. Apotheker had several interesting statistics that didn’t make it into the slides or the press release. The number of new contracts increased 22% from the year-earlier period. New customers accounted for 26% of order entry. Midmarket customers represented 34% of the new contracts. The number of deals greater than 5M euros was 20% versus 33% for 3Q06. Last year, there were more deals in the 10M to 20M euro range; Mr. Apotheker said that the 20% figure was more typical. The number of deals less than 1M euros was 46% versus 36% last year. This is due to increased sales to smaller companies.
It would be helpful to have a bit more color on the number of contracts signed. SAP closed the second quarter with 41,200 customers and ended this quarter with 43,400, an increase of 2,200.
Wednesday, October 17, 2007
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle Seeks to Consolidate the Middleware Market With BEA Deal
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.
Tuesday, October 16, 2007
FT.com / Companies / US & Canada - Executive departure may delay Oracle plan
FT.com / Companies / US & Canada - Executive departure may delay Oracle plan
Executive departure may delay Oracle plan
By Richard Waters in San Francisco
Published: October 16 2007 22:46 | Last updated: October 16 2007 22:46
Oracle’s ambitious plan to unify the software applications it assumed through acquisitions appeared on Tuesday to be heading for a delay, following news that the executive in charge of the project is to leave the company.
John Wookey’s elevation two years ago to run Project Fusion put him in one of the most high-profile positions in the company following its purchases of PeopleSoft, Siebel Systems and other smaller companies.
By unifying these companies’ software applications on a single-code base, Fusion is intended to create integration between the various products, making it a central part of Oracle’s long-term strategy to compete with SAP.
Oracle refused to comment on Mr Wookey’s position. Yet one person close to the company said he would leave early next year, after a transitional period. The job of overseeing the Fusion work has been passed to Thomas Kurian, who will combine it with responsibility for Oracle’s middleware, the software layer on which the applications depend.
The shake-up has also led to greater responsibilities for Charles Rozwat, executive vice-president of server technologies.
The upheaval has prompted speculation that Fusion has fallen behind schedule. Large parts of the software seem likely to appear next year as planned, according to the person close to Oracle, though this person stopped short of saying the entire project would be completed next year.
Copyright The Financial Times Limited 2007
Executive departure may delay Oracle plan
By Richard Waters in San Francisco
Published: October 16 2007 22:46 | Last updated: October 16 2007 22:46
Oracle’s ambitious plan to unify the software applications it assumed through acquisitions appeared on Tuesday to be heading for a delay, following news that the executive in charge of the project is to leave the company.
John Wookey’s elevation two years ago to run Project Fusion put him in one of the most high-profile positions in the company following its purchases of PeopleSoft, Siebel Systems and other smaller companies.
By unifying these companies’ software applications on a single-code base, Fusion is intended to create integration between the various products, making it a central part of Oracle’s long-term strategy to compete with SAP.
Oracle refused to comment on Mr Wookey’s position. Yet one person close to the company said he would leave early next year, after a transitional period. The job of overseeing the Fusion work has been passed to Thomas Kurian, who will combine it with responsibility for Oracle’s middleware, the software layer on which the applications depend.
The shake-up has also led to greater responsibilities for Charles Rozwat, executive vice-president of server technologies.
The upheaval has prompted speculation that Fusion has fallen behind schedule. Large parts of the software seem likely to appear next year as planned, according to the person close to Oracle, though this person stopped short of saying the entire project would be completed next year.
Copyright The Financial Times Limited 2007
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