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Commentary

Behind Business Objects' Latest SaaS Deal

Yesterday's announcement by Business Objects that it has acquired software-as-a-service (SaaS) provider Nsite was as remarkable for what it didn't say as what it did say. Yes, Nsite is a SaaS vendor, and that should sound good to Wall Street. And yes, Nsite provides "an on-demand applications platform" as described by the press release, but that's about as generic as saying "Nsite is an information technology company." Here's why the deal is important.
Yesterday's announcement by Business Objects that it has acquired software-as-a-service (SaaS) provider Nsite was as remarkable for what it didn't say about the company as what it did say.

Yes, Nsite is a SaaS vendor, and that should sound good to Wall Street. As I point out in "SaaS and SOA: Together Forever," SaaS is one of the hottest categories in IT, expected to account for 25 percent of the business software market by 2011, according to Gartner, up from 5 percent last year. And yes, Nsite provides "an on-demand applications platform" as described in the press release, but that's about as generic as saying "Nsite is an information technology company."As we detailed in our 2005 review, Nsite is very specifically a on-demand process management platform that lets you create automated, Web-based routing and approval workflows for applications such as quote-to-cash processes, sales discounts, expense reporting, travel authorizations, invoice authorizations and time sheets. So why would Business Objects be interested in that?

One could speculate that lurking behind the scenes is Business Objects' interest in business process management (BPM), another hot category that is growing as fast as 40 percent per year by most estimates. Confirming widespread rumors about acquisition talks, Metastorm CEO Bob Farrell recently told me that "every major BI player has talked to every leading BPM player, including us." But all that talk has only led to partnerships thus far: Business Objects with Lombardi, Metastorm, Pegasystems, Savvion, TIBCO and Ultimus; Cognos with EMC, FileNet, IBM and Savvion to cite just a few examples.

In embracing BPM, BI vendors actually get their hands on business process decision points, and that's a fit with the trend toward operational BI. By putting BI and business activity monitoring at those points, you get better-informed decisions. Indeed, Steven Lucas, vice president of strategic markets at Business Objects, confirms that this deal is all about operational BI. "Every single one of these applications is BI centric," he explains. "Nsite has dashboarding as the first thing that you see when you log in, and they have a report builder built into the suite."

In contrast to the major BPM suite vendors, Nsite focuses on relatively simple processes that are well-suited to the on-demand approach, so those BPM partners aren't likely to be threatened by the Nsite deal. True to the press release, Nsite's real value to Business Objects is in its SaaS infrastructure, SaaS customers (27,000 of them) and SaaS expertise. Combine that with Crystalreports.com (which is actually a SaaS delivery/conventional software hybrid) and you have a better launching pad for many more SaaS offerings.

In particular, Business Objects covets Nsite's integration capabilities. "They have an extensible platform," says Lucas. "The applications themselves are nice, but you also have expense report integration, HR integration and invoice integration, which are all things that we do business intelligence off of today. If we want to integrate with a third-party data source, whether it's on premise or online, they have a very nice Web service interface to do that very easily."

This deal clearly gives Business Objects a big leg up in SaaS delivery, and you can expect more BI-informed CRM- and simple ERP-type applications (rather than complex, end-to-end business processes a la BPM). This fits the small- and midsize-enterprise market that is the sweet spot for SaaS, and it's also a fit for Business Objects' Crystal customer base.Yesterday's announcement by Business Objects that it has acquired software-as-a-service (SaaS) provider Nsite was as remarkable for what it didn't say as what it did say. Yes, Nsite is a SaaS vendor, and that should sound good to Wall Street. And yes, Nsite provides "an on-demand applications platform" as described by the press release, but that's about as generic as saying "Nsite is an information technology company." Here's why the deal is important.