SAP: Boosting Its CPM Credentials

SAP has announced its intent to buy privately held corporate performance management (CPM) vendor OutlookSoft, continuing a streak of consolidation activity in the performance management sector, and the latest development in SAP's duel with Oracle. While financial terms of the deal were not disclosed, industry pundits estimate it to be worth between $200 and $500 million. The acquisition is expected to close in June. Connecticut-based OutlookSoft was founded in 1999 by former executives of Hyperion, one of the pioneers of CPM and recently purchased by Oracle, to develop software that helps companies align their business strategy to operational metrics. For the last two years, SAP has been crafting an integrated suite of business software aimed at CFOs, an audience that has eluded its mainstay ERP applications, says Madan Sheina, principal analyst of BI technologies at Datamonitor. The strategy started with the release of the mySAP ERP 2005 suite (which includes financial applications), followed by SAP's purchase of compliance software vendor Virsa Systems, then in February by its acquisition of BI stalwart Pilot Software to add strategy management and operational performance tools to its expanding NetWeaver BI and analytic stack. The idea now is to combine all these products into an integrated suite for CFOs, said Doug Merritt, SAP's head of business user development, in a written statement. By adding OutlookSoft, Merritt said, "we will have the most disruptive and defining suite in the industry." This deal is the latest illustration of the contrasting approaches of SAP and Oracle as they wrestle for corporate customers and market control, with the rivalry now spilling over into a CPM market rife with acquisitions. The SAP acquisition follows Oracle's recent $3.3-billion purchase of Hyperion, completed in March. SAP's interest in OutlookSoft probably intensified after Oracle bought Hyperion and Business Objects announced its plans last month to buy performance management provider Cartesis for $300 million, says Forrester analyst Paul Hammerman. "With all the movement in this space, SAP was under the gun to fill the gap in its lineup," he says. SAP's CPM arsenal now resembles a three-legged table, Sheina says. "SAP can now boast a power triangle of financial products for CFOs," she says. From a competitive perspective, Sheina says "both companies are looking to grow their market share in more corners of the enterprise applications space, but in contrasting ways. SAP is executing a series of small tuck-in acquisitions of niche players, such as Pilot, to flesh out the white spaces in its product lines. Oracle is going after the larger blockbuster deals, such as Hyperion." Related articles: Oracle Is Set to Purchase Hyperion BI and PM: Two Sides of the Same Coin The Big Picture

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