Business Objects-Cartesis Deal Advances BI-Performance Management Union
2007 shapes up as the year of convergence with Business Objects' following in Oracle's footsteps in acquiring a performance management vendor. Despite all the deal making, it's customers who are driving the BI-CPM combination.
If anyone doubted that the business intelligence (BI) and corporate performance management (CPM) markets are converging, that doubt was erased today as Business Objects announced its intention to buy Cartesis for $300 million in cash. The deal will bring together the largest independent BI vendor with a top CMP vendor with more than 1,300 customers. Business Objects says the combination will also give it an edge over rivals such as Cognos and (more recently) Oracle that have already combined the two technologies.
"We have a complete stack that goes from data integration all the way to financial applications, and with the addition of Cartesis, we have an unmatched portfolio," said Bernard Liautaud, Business Ojects' founder, Chairman and Chief Strategy Officer. "If we look at Cognos, they don't have anything in terms of data integration and data quality… The Oracle/Hyperion platform has a multitude of fairly mediocre products in BI, none of which were best-of-breed [before they were acquired by Oracle]."
Business Object's journey toward combining BI and CPM began in 2005 when the company acquired SRC, a small budgeting, planning and financial consolidation vendor. In a conference call on the deal, which is expected to close within 90 days, Business Objects executives said the company's portfolio will combine dashboard and scorecard functionality from Business Objects; planning, budgeting and profit management "reconciled and integrated" from both Business Objects/SRC and Cartesis; and the financial consolidation and reporting functionality of Cartesis.
Headquarted in Paris, Cartesis operates in 44 countries and has more than 1,300 customers worldwide. The private company does not break out sales and revenue figures, but it's said to be growing most aggressively in North America, where clients include Cargo, Sysco, Pepsi and the Royal Bank of Canada. Despite the company's success, Cartesis CEO Didier Benchimol acknowledged that the firm's lack of BI technology has been a growing liability. "Our systems are handling more and more financial and operation data, so our customers have been looking for more sophisticated tools for analysis," said Benchimol. "We started responding to that call, but it's very clear that getting access to real BI technology and a large portfolio of BI products is going to help us tremendously."
Competitors quickly zeroed in on apparent overlaps in the combination. "The SRC acquisition gave Business Objects planning and consolidation and they already had many of the things they’re acquiring from Cartesis," charged Mychelle Mollot, vice president of corporate strategy at Cognos. Despite Business Objects' statements during today's conference call, Mollot said "they made things more confusing by talking about Cartesis [planning] being used at the [enterprise] level and SRC being used at the divisional level."
Business Objects' CEO John Schwarz countered critics in an interview with Intelligent Enterprise, saying "both companies have built solutions on the same set of [Web services, Java and .Net] standards. We've already been working with Cartesis as a partner, and we're confident that integration will take months, not years."
Schwarz was more focused on the threat from ERP vendors than from BI and CPM competitors, saying, "a battle is looming on the horizon where the big ERP vendors, notably Oracle and SAP, are marketing business intelligence as tools attached to the ERP application. In our view, customers want and need BI and performance management independent of underlying applications. They want to span all of the data in the enterprise and data from outside the enterprise to provide a supervision point for the underlying transaction systems."
With Oracle's purchase of Hyperion now finalized, the Business Object's-Cartesis union in the pipeline, and Microsoft weeks away from introducing its PerformancePoint Server, there's little doubt that SAP and stand-alone BI vendors will be taking a long (acquisitive) look at the remaining performance management vendors. But by most accounts, the trend toward convergence is being driven by customers rather than vendor market maneuvers.
"Customers see BI and performance management as intertwined," said Mallot of Cognos, one of the first vendors to start combining the two technologies six years ago. "It's about understanding what's going on in your business, which is scorecarding, understanding why it's happening, which is BI, and understanding what you should do about it, which is planning. Consolidation is a core process that supports all those by creating the financial view you need for reporting."
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