SAP-Business Objects Deal Advances Move Toward Smart AppsSAP-Business Objects Deal Advances Move Toward Smart Apps

"It's a pivotal day in the history of these two companies," said Business Objects CEO John Schwarz of SAP's planned $6.8 billion acquisition of the BI vendor. He might as well have been speaking about the history of two IT environments, that is, transaction management platforms and decision-support systems, that have experienced a tectonic shift closer together with this deal and with the many consolidations in BI market in 2007. It's a shift that comes largely in response to customer demands, with the lines between the two worlds blurring as organizations call for decision-making intelligence to be built right into business processes and applications.

So what do you get when you bring transactional/process management systems together with BI and analytics? The results vary and fall under terms ranging from operational BI and analytic applications to various flavors of performance management. For SAP and Business Objects, this new breed of "smart apps," for lack of better term, is being put forward as the real benefit of the union.

"We want to keep Business Objects as an independent entity while also leveraging synergies," says SAP CEO Henning Kagermann. "We have customers who would love to have the combination of the world's best transactional solutions and business intelligence solutions from a single supplier. We'll leverage the analytical skills of Business Objects and our deep vertical know-how to deliver end-to-end business processes with embedded analytics."

SAP and Business Objects alluded to development in areas such as governance, risk and compliance and well as corporate performance management, but to many, their presentations were long on vision and short on specifics. "The deal is remarkable for how late it the game it came together and how much they've left to be decided down the road," says Gartner analyst Daniel Sholler, pointing to overlaps between the Business Objects portfolio and SAP infrastructure as well as among the multiple performance management applications in both portfolios.

Nonetheless, Sholler buys into the analytic app vision saying, "there's no question that the foundation of the business intelligence market have been completely revised, and the growth opportunity is in the synergy between transactional systems and BI. That's what's selling."

Forrester, too, sees more blurring of BI and transaction/process management ahead, and IDC calls it "intelligent process automation." "It's all about infusing BI into the workflow of applications, whether they are HR, finance or whatever," explains IDC's Dan Vesset. "That's where SAP can really make a mark because it controls the applications, and with Business Objects it will also have the BI tools."

Business Objects competitor SAS gives an analytic spin to much the same analysis, albeit with one important qualification. "The analytics and applications environments need to be one and the same, but that doesn't mean that an acquisition has to take place to make that happen," says Jim Davis, senior vice president and chief marketing officer. "If you just look at components like query and reporting, they're becoming a commodity. Our success has been based on things like fraud detection, price optimization in retail, churn management in telco and campaign management in marketing. The apps have analytics in them, but it's not analytics alone."

Between this year's completed and pending acquisitions, the BI market is forever changed and many of the remaining independents in the field are deemphasizing BI and underscoring analytics (in the case of SAS) or performance management (in the case of Cognos). Ironically, that leaves Oracle, Microsoft and now SAP (with Business Objects) as the standard bearers of a changed business intelligence landscape.

"Both Oracle and Microsoft are pushing the term 'BI,' but what they mean by it is analytic applications and data warehousing and tools," says Vesset. "BI is not going away as a marketing term and certainly not as a technology, but it now has a broader meaning."