There have been two high-drama tech strategy faceoffs in recent times: HP's contested acquisition of Compaq and SAP's decision to grow organically versus Oracle's acquisitive route. Just for the record, I called both of these wrong, believing that HP should stick to it's knitting and that Oracle was buying itself more trouble than growth.In both cases, it turned out that treating the tech world as a maturing market ripe for consolidation was the right approach. HP has profited well by its Compaq acquisition, while Oracle has outpaced SAP thanks to its string of acquisitions.
As a board member of Reportive, I presented to SAP at the beginning of the year and were told that SAP had more than six internal business intelligence reporting products already. Clearly SAP is not lacking for BI technology. Instead, they are following Oracle's lead by acquiring companies with related technologies they can cross sell.
The challenge is that Oracle has Chuck Phillips, a former Morgan Stanley tech analyst superstar (fun fact: his phone number at Morgan was 1-800-MR CHUCK). Chuck has had the enterprise software acquisition market mostly to himself for the last four years and has made the most of it by cherry-picking his acquisitions, including Hyperion and Siebel Analytics in the BI space.
Oracle has also had four years to learn the difficult art of post-merger integration. Any bets on how well the integration between a stodgy German company and an arrogant French company will go?
Earlier this year, SAP politics drove away their internal technology wizard, Shai Aggassi. This effectively eliminated any possibility that their grow from within strategy would work.
Imitation may be the sincerest form of flattery, but in this case, it is flattery that is likely to cost SAP dearly to the benefit of Oracle.
ps. there are several good ZDNet articls on this from Josh Greenbaum, Dennis Howlett and Dan Farber
6 comments:
Chuck ,
thanks for your comment and this link to your blog . From here.
You clearly have a more insides view of the situation.
My comments were really coming from the view I have about Business Value of Business Intelligence , This space has to move to the next level of value add and stop focussing on the plumbing aspects
I may have more of an inside view, but more inside does not always equate to more insight. One of my more significant failures of analysis came in '87 when I turned down an offer to be the product manager for Windows at Microsoft because I thought it sucked and went to work for McKinsey in New York instead.
Well said, Chris. I am curious about this comment though: when you say "SAP politics drove away their internal technology wizard, Shai" are you expressing an opinion based on reading the tea-leaves, or do you know this?
Cheers,
Andrew
Andrew - I have no inside scoop here, so you should write off my seeming allknowingness to typical blogger hubris. Having said that, I have met Shai a couple of times, talked to people who worked in his group and even worked for German companies myself, so I am pretty confident that this was a case of the German hierarchical inertia triumphing over Shai's change program. Or as Shai himself said - "I am a catalyst at SAP, and the definition of a catalyst is that it gets burned up in the reaction."
Regarding integration between German and French companies, it's interesting to look at Airbus -- The German factory built components that didn't fit into the plane when assembled in France. One big "ooops", and the CEO was fired as a result. Here is the story:
http://blogs.zdnet.com/projectfailures/?p=257
Michael Krigsman
http://blogs.zdnet.com/projectfailures
Michael - Airbus is a spectacular example of the challenges of blending cultures in a very high profile joint venture. I was in Paris during the 2005 fireworks - having a board of venture capital directors is nothing compared to having a board consisting of elected officials!
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