SAP seems to have changed its growth strategy. In contrast to what we mentioned only three weeks ago, they are now acquiring the French-American business intelligence software provider Business Objects SA for 4.3bln EUR, which is a 20% share price premium. This acquisition seems to be the result of the heated battle with Oracle for the enterprise software market.
Whatever you hear from both companies in press releases or public statements is likely to be quite irrelevant from now on, since PR has become part of their psychological warfare toolkit. Analysts BTW don't seem to think that this acquisition will help SAP in the future against Oracle. It is merely a catch up since, with Hyperion, Oracle has already acquired a Business Objects competitor. Time to market and speed in general are crucial in the business software markets - not necessarily a strength of Germans, but at least they seem already to be pretty good at changing their strategy when it is required.

The WSJ (subscription required) has a nice write up on the challenges that the German software company SAP faces in its globalization efforts.

Palo Alto

Walldorf

India

The second blog post this week about a lawsuit. This time Oracle is suing SAP about stealing access to computer data. The whole story sounds a bit funny, but while I have no doubt that the allegations are probably true every time I read about Orcale vs. SAP, I remember one of my encounters more than 10 years ago. At that time I was in Hong Kong and planning a large data center. I was able to witness how Oracle bad mouthed SAP, and how SAP fought an undercover political battle - both trying to win over the key account for whom I was working. As we can read, the arguments between them continue, and whoever sues whom I have made up my mind about the ethics of both of them - and those have not changed much at all it seems...

Hasso Plattner will open a new 100 million EUR fund to support German IT startups who first have to move to its incubator center in Potsdam near Berlin. Interesting note from the fund's investment manager Eran Davidson, with which we can only concur:

"If the young company has a market chance they will open a US office first. There they are made familiar with the hard market conditions. Germans are too slow in marketing, they must present themself more aggressive, risk more and think more global."

SAP has long been an unusual European star. They have not only managed to achieve continued growth but also to withstand their aggressive rival Oracle by stealing customers from its acquisitions Peoplesoft and Siebel. Also, unlike anyone I know of in Europe, SAP manages to forge partnerships with rivals in some territories while competing in others (e.g. IBM is SAP's biggest business partner internationally while heavily competing for ERP consulting jobs in Germany). The other example is Oracle itself, with whom they always had to work together interfacing to its database while at the same time Oracle was pushing hard into the ERP business and using all imaginable (often unethical) business practices to win deals.

Now SAP showed again that it is up to fast-paced competitive global market challenges announcing a plan on how they intend to double their market cap by 2010. This would mean a growth from 43 bln EUR to 86 bln EUR in just 5 years. To make sure their employees are motivated, unusually high incentives have been granted to the board and the first and second tier management, totalling 300 million EUR. Initiator has been once again the man who started it all: Hasso Plattner. Half of the growth SAP wants to achieve with new SME customers, while the other should come from its new development platform Netweaver.

Judging by today's announcement of SAP and Microsoft working closer together with software that was started a year ago as the Mendocino project, both companies seem to have found good matches. SAP is looking to get into more businesses and onto user PCs while Microsoft wants to get a bigger foot into the ERP market. The still to be released Value Packs (2nd half 2006) will integrate mySAP ERP functions with MS Office applications. It remains to be seen whether this will have an impact on both companies' goals, but at first sight this could be a good fit.