The rash of consolidations across all industries seems a bit unprecedented. The technology sector has not escaped this trend. Oracle has made huge acquisitions over the last few years, including PeopleSoft and Siebel - and then again this year with Hyperion. The standing phrase in 2007 has been, “All roads end in Redwood Shores.” Not to be outdone, SAP made an extremely uncharacteristic, massive acquisition of Business Objects. And then, before you knew it, IBM gobbled up Cognos. Even the clickstream category is consolidating as Omniture acquired Visual Sciences.

The questions remains: What does it mean for us? Is consolidation good for users? Will we get new functionality or easier implementations? Should we cheer on the next big acquisition or hope it never happens?

Really Big Companies

Most concerns are from users who rely on the technologies that the big guys (Oracle, SAP and IBM) have scooped up. Some fears are listed here.

Will this technology start to only work with its parent company’s technology? For example, will Business Objects only work with SAP, will Cognos only work on DB2 and will Siebel only work on Oracle?

  • Concern addressed: In general, this is not likely to happen in the short term (i.e., three years). It would be a financial disaster if these companies cut off their customer base and would drive the acquisitions into the ground if they were to only focus on one type of source technology. Oracle and IBM are as much tool vendors as application vendors and will remain fairly technology agnostic. Oracle actively sells its BI suite in non-Oracle environments, SAP has typically not been real agnostic, so Business Objects users probably have the most to fear.

Will I see value in the integration of these companies? The promise of an acquisition is that it will fill a hole in their suite - making life easier for those organizations that own the entire suite. Will this actually happen for me?

  • Concern addressed: This will most likely take a long time. These large companies do not move very quickly. Coupled with cynical employees, an unknown direction and organizational chaos, integration will take some time. In some ways, SAP is the least experienced in these types of acquisitions. In other ways, Oracle has made the largest mess by tripling down in business intelligence (BI) technologies with Oracle legacy, Siebel and Hyperion. With that said, however, Oracle has made bold moves in the last few months to make Siebel Analytics (now Oracle Business Intelligence Enterprise Edition) the standard for its enterprise resource planning (ERP) applications.

Will I see more bureaucracy and slower response time due to these acquisitions?

  • Concern addressed: Yes. When SAP bought Business Objects, Cognos issued a whole range of communications about the advantages of being the last-standing independent BI company. Only weeks later, they were gobbled up by IBM. It is hard to say if these acquisitions will have any material impact on users of an entire suite. I think the following may come true, however:
    • IBM will benefit from Cognos acquisition. Many of my diehard IBM clients are extremely excited by the acquisition because where they were once confused about what their corporate standard should be, now it’s easy - go with IBM.
    • Oracle customers will reap the most benefit from an integrated suite. Oracle will most likely be in the best position to integrate analytics, marketing, database, customer relationship management (CRM) and ERP. And they will do it faster than most - with great technology to boot. If you are an Oracle customer and have not seen OBIEE, you should get a demonstration.
    • In the short term, Business Objects customers who don’t own SAP will sweat the most. Hopefully, SAP’s speed will ensure they don’t suffer for several years.

In general, push your vendor to keep you up to speed with the vision, production direction and actual software integration and features. This will help you make investment decisions in the short term.


Customer Intelligence Boutiques

So who is left and where does that leave us, especially from the customer intelligence point of view? CRM, database marketing, analytics, Web analytics, personalization, lead management and campaign management remain extraordinarily fragmented marketplaces. Innovation, price competition and creative suites have been the name of the game with these vendors; however, they have been busy as well.

Lyris has the most deliberate and articulated vision. Lyris has aggregated email delivery, clickstream and content management in order to provide turnkey (read: easy implementation) e-marketing solutions for the middle market. Questions arise on how realistically they can integrate all of these products and whether they have enough components to add value to middle-market organizations.

Aprimo has tried to bolster their campaign management product with the acquisition of DoubleClick assets, but in talking with their executives, it is unclear where the suite is headed and if they are merely chasing the marketplace. Regardless, they are still deemed the player to beat in marketing resource management (MRM), with companies as large as Wal-Mart placing their bets on them.

Unica aggregated a couple different companies and raised eyebrows when they purchased a hosted MRM solution while they already had their own version of MRM in Affinium Plan. 2008 will be the year that Unica’s suite will gain traction. As customers master campaign management, the demand for real-time offer optimization (interact), MRM (plan), campaign optimization (optimize), email marketing (emessage), and marketing dashboards (insight) will increase rapidly.

Many clients ask me, “Where does SAS fit into this equation?” I have a message for them: Not sure. SAS usually grows their own, though their campaign management application was acquired. But they don’t make headlines doing deals.

In summary, the consolidation is disappointing as much as it is exciting, and you may or may not benefit as a result.

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