Rumors circulated last week that Business Objects was going to be acquired by Oracle and that IBM was considering acquiring Cognos. Business Objects stock jumped 11.5% on Wednesday based on these rumors. Besides these firms, their competitor Hyperion is also speculated to be an acquisition target. And its not just Oracle and IBM that are considered to be potential acquirers, Microsoft and SAP are also being mentioned in these rumors.
Were these rumors started by the stock analysts or were the stock analysts reporting on what they had heard? Since it was revealed during the PeopleSoft versus Oracle court proceedings that Business Objects was on Oracle’s list of potential acquisition targets the rumors seem plausible.
Do these acquisitions make sense?
From an acquisition perceptive: Oracle, SAP and Microsoft already have BI offerings but it’s tough not to see the benefit of acquiring one of the major BI pure-play vendors. These companies offer excellent product portfolios and large numbers of customers. Product overlap…sure but Oracle seems to be handling that well in regards to their enterprise application acquisitions and all of the BI pure-plays have their own experience in folding in acquired technology into their product offerings. Although IBM does not have significant BI or enterprise application offerings today, with their recent software acquisitions it is likely that BI is being considered to expand its software portfolio. BI would be a complementary offering to the data integration capabilities through their acquisition of Ascential and other companies. In addition, BI offers further systems integration opportunities for IBM’s services organization. (You may argue that it may be better to be tool-agnostic but the margins are in the software business and that’s why they are on their current software acquisition binge.)
Ironically, the major BI pure-play vendors revamp of their product offerings, both through acquisitions and organic development, over the last several years may have made them potentially more attractive for takeover. These integrated BI product offerings helps the acquirer from having to do their own lengthy systems integration if they had to pursue a strategy of purchasing multiple best-of-breed niche BI vendors and integrating their product.
If any of these acquisitions do occur, then the acquirers missed an opportunity over the summer to purchase these companies on the cheap. The BI vendors stocks are lower than their 52-week high they have all significantly bounced back recently from their 52-week lows.
From a customer perspective: It always causes customer concerns when one of their significant software suppliers is acquired. Certainly, that supplier’s competitors use the “fear factor” to try to grab customers. However, in the long run it may be better for its customers to have more robust and complete offerings from large, enterprise vendors encompassing BI, data integration, databases, enterprise applications and other infrastructure software. The software landscape has countless examples of larger firms and broader software offerings enabling a much more productive environment for business and their IT staffs.
All this is just speculation. None of these acquisition rumors may take place or maybe different players may be involved. Whether they do occur or not, the BI industry still has many smaller BI software vendors that offer terrific products that can meet the needs of customers who do want to shop from the mega-software vendor.