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SAP splashes out on BO

€4.8bn buys software firm and strategy change

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Updated: SAP is offering €4.8bn (£3.3bn) for Business Objects - a strategy change for the German company which usually develops technology inhouse rather than making big purchases.

The move is also a boost for the business intelligence market.

Business Objects (BO) will continue to function as a separate company, but will share execs and other resources. BO's CEO John Schwartz will keep his job as well as taking a seat on the SAP board.

SAP is already changing its strategy by moving into software for smaller businesses and has struggled to shift to "on-demand software" - where users access software via a website.

The companies hope the deal will close in the first quarter of 2008 and add to earnings by 2009.

The official statement is here.

Analysts from Ovum said part of the reason for the deal was a response to Oracle's purchase of Hyperion but also a way to squeeze more cash out of existing customers.

David Bradshaw, Principal Analyst and Helena Schwenk, Senior Analyst at Ovum, said: "Large suppliers are attracting ever larger share of customer spend, as customers try to reduce the number of suppliers to bring some order to their IT buying. In some accounts, the purchase might turn SAP from being an 'also ran' into a strategic supplier. However, our experience is that SAP tends to be either a strategic supplier to its customers, or to have such a small footprint that it is barely on the corporate radar screen.

"But a much more important and longer term objective is what we call 'operationalising' the intelligence from the business data, and here Business Objects brings great breadth of BI and performance management capabilities to SAP. Managing processes and transactions efficiently is only half the challenge that the typical business faces - the other half (at least) is trying to decide what the smart thing is to do." ®

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