SAP AG announced it is acquiring privately-held performance management software management company OutlookSoft. The purchase price is estimated to be $200 million for the Stamford, CT based company with approximately 700 customers and 250 employees. OutlookSoft’s corporate performance management (CPM) software has a Microsoft Excel-based front end with its analytics capabilities. Its CPM solution targets the CFO office with its planning and financial consolidation applications.

If this sounds like deja vu you’re right. You only have to change a few names and numbers to get a repeat of the Oracle/Hyperion and Business Objects/Cartesis acquisitions. These software vendors are expanding their CPM solutions, particularly, in the financial area and are targeting the CFO office. CFOs have the strongest interest in a corporation to examine its performance and fulfill financial conformance. And, not coincidentally, CFOs have been the primary purchasers of CPM.

Although they are trying to get to the same place, Oracle and SAP are approaching acquisitions from two ends of the spectrum. Oracle has a major acquisition strategy spending $25 billion on 30 acquisitions during the last three years and has purchased PeopleSoft, Siebel and most recently Hyperion Software. SAP prefers to build out its software organically (internally) and pick-up smaller software companies to fill gaps.

What is the impact on customers?

For SAP customers, OutlookSoft expands the financial applications and CPM capabilities that SAP has offered. SAP, Oracle and Infor as ERP vendors are offering their customers an enterprise information management (EIM) platform providing capabilities from data capture (ERP) through information consumption (DW/BI/CPM). The EIM platform will be compelling to many in their respective customer bases. There will certainly be questions about completeness and the total cost of ownership (TCO) raised by their competitors, but it makes for a great customer story.

For many companies a CPM platform independent of their ERP vendors is the preferable solution. (Many companies have multiple enterprise applications from different software vendors, so it would be difficult for them to select a specific ERP solution.) For those companies the absorption of an independent CPM vendor, regardless of the resulting combination by an ERP vendor, is not viewed favorably.

Which customer perspective wins? It’s a big enough market servicing many customer preferences which can support both ERP/DW/BI/CPM/etc platforms and independent CPM software solutions.

Thumbs up or down

SAP has a good track record regarding acquisitions with its strategy of buying smaller companies making it easier with regards to products, customers and employees. The acquisition will most likely be positive for SAP and its customers. How about OutlookSoft customers? If they have SAP it will probably be a long-term advantage for their business analytics needs. If they don’t have SAP it is likely that SAP will support and expand their capabilities for a while but there would not be as many apparent long-term benefits (other than SAP is much larger and can put more resources on the OutlookSoft products, providing they don’t change them radically.)

What is the OutlookSoft acquisition on the marketplace?

Oracle/Hyperion, Cognos and Business Objects/Cartesis have a head start in the financial-oriented CPM space but SAP/OutlookSoft should be able to catch up from a product perspective with their competitors. However, Oracle/Hyperion presents a more formidable challenge since they are more established but, more importantly, offering an information platform from data capture (ERP) through information consumption (DW/BI/CPM) that clearly their other competitors do not have.

Will Cognos stand alone or does it makes strategic sense for it and a potential acquirer to fold it into a bigger platform? Stay tuned…