Everyone’s a Winner

Feature Article | April 30, 2008 by Stephan Magura

Henning Kagermann, Co-CEO SAP AG “By combining our portfolios, we can give customers a clear, up-to-date overview of their business.”

SAP INFO: Mr. Kagermann, how does the Business Objects acquisition fit into SAP’s growth strategy?

Henning Kagermann: It’s the right step at the right time. In recent years, we’ve done our homework, introduced a comprehensive business process platform, and the totally new SAP Business ByDesign solution to round off our offerings for small and midsize enterprises.

And, by the way, we’re already the market leader here. We have identified the segment for business-user software as another pillar of our growth strategy. It’s a rapidly growing, strategically significant market. Business Objects has a first-class portfolio that will optimally complement our own. The acquisition is a unique opportunity.

SAP INFO: Some observers think SAP has changed its strategy and is veering away from organic growth.

Kagermann: We have already shown that we can outperform the competition by growing organically – and we will continue to do so. So our strategy hasn’t changed. We have always said that we wouldn’t rule out a strategic acquisition if the opportunity arose to invest in a corner of the business software market in which we were not yet the market leader. Business Objects is such a strategic acquisition and will make us the market leader from day one.

SAP INFO: What do you think of the financial markets’ reaction? There was some criticism, after all.

Kagermann: The financial analysts believe that we must first show that we can handle this kind of transaction successfully, without hurting shareholders. SAP hasn’t made an acquisition of this magnitude before. But on the basis of how it has gone so far, I’m very confident.

The financial markets will, of course, be watching extremely closely to see whether the acquisition generates further growth. What’s more, we must prove that we can use the synergies profitably. This is what we have set out to do, and what we will achieve.

SAP INFO: Analysts estimate that the U.S.$15 billion market for business intelligence is growing at an annual rate of eight to 12 percent. Why is analytics such a hot topic at the moment?

Kagermann: Its growing importance is due to the logical progression of how companies use IT. First, they need to organize their business processes by establishing transactions and procedures and gradually improving. Standard reports become an integral part of software operation. Once companies have got the most out of the traditional standardization and automation processes, they need to differentiate themselves to support their further growth.

They can do this with IT by implementing new types of applications – such as composite applications – or innovative IT architecture concepts. Or, they can stand out from competitors by making decisions faster and more intelligently, thanks to more detailed and insightful reports. In turn, these reports result in improved business processes. That is why analytics has become such a crucial topic.

SAP INFO: What is the difference between analytics and “closed-loop business performance optimization?” What does this term refer to?

Kagermann: Brilliant analyses and insights into the company don’t really help CEOs if they can’t have the necessary decisions implemented quickly. We’re now closing this loop: By combining the portfolios of SAP and Business Objects, we can give customers a clear, up-to-date overview of their business. Moreover, they’re in a position to act on their decisions immediately thanks to these reports.

This is enabled by the flexible SAP business process platform, on which all our applications – such as those in SAP Business Suite – are based. Delays, and even gaps between analysis and adjustment, can be overcome. That is what is meant by closed-loop business performance optimization.

SAP INFO: Any acquisition gives the companies involved the chance to learn from each other. What can SAP learn from Business Objects?

Kagermann: Our strength has always been our ability to integrate; this is something closely associated with the SAP brand. What’s more, we propagate the openness of our systems – that is, they are open to non-SAP systems. We achieve significant successes with these qualities, and in this order. It’s the other way round at Business Objects.

There, the approach is for their own products to be independent of the underlying systems from the start. Their analytical layer can run on legacy and third-party systems of any kind. This requirement influences how they design, program, and even test their software. This is definitely an area in which we can learn from each other.

We will also benefit by being able to make our established products more user-friendly in the future – as is typical in the business user segment. We have already managed this very well with the new SAP Customer Relationship Management 2007. Whenever we introduce changes though, we always bear in mind that our customers deploy SAP software to run their mission-critical processes. Stability is, and will remain, the utmost priority.

SAP INFO: The SAP user organizations have barely touched on the Business Objects acquisition as a topic so far. What effects will there be for the partner ecosystem?

Kagermann: As soon as the integration is more advanced, both SAP and Business Objects will discuss it with the user groups in greater detail. I see good opportunities for partners to grow with the enlarged SAP customer base. Partners that succeed in adapting to the combined product portfolio can bundle their services and carve out a niche for themselves – and that goes for both Business Objects partners and SAP partners. It will be in the interests of joint customers to keep the interfaces to a minimum.

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