Monday, 8 October 2007

US obesity spreads to Europe

In the last three years, Oracle has gone on a veritable feast - spending upwards of $25b buying its largest competitors. From JD Edwards, Peoplesoft, Retek, Siebel and Hyperion as well as a host of smaller companies (like Bridgestream and Netsure Telecom in the last few weeks)

Conversely, its "European" rival - SAP - has maintained a strict "build it in house" approach. Until today when it announced a friendly £3.3b bid for French business intelligence software company, Business Objects. At a 20% premium to Friday's closing price, most analysts thought it a "good" price which was unlikely to see any counter bid. Conversely, SAP's shareholders weren't so pleased - knocking SAP down c5% today.

It wasn't all that long ago that Microsoft and SAP admitted they had themselves been in discussion. Indeed, Microsoft and SAP are strong partners (jointly battling the mighty Oracle in the business applications space)

Of course, as we all know to our cost, making a successful bid is just the start of the journey. Integration is always more difficult than most expect. I'm not suggesting that Oracle is the master at this but, you have to hand it to them, they do have a lot of experience in such matters. SAP, on the other hand, are but virgins. Not just a virgin but a someone who said they would never willingly engage in such activity!

It's also interesting that "Big Eat Big" is now the 'norm' in software. But it still hasn't happened in IT Services. As I showed a few weeks back, the Top Ten IT Services players are pretty much the same bunch as 10 years ago (just the positions have been juggled) My guts tell me that we might be entering a stage where Software obesity spreads to IT Services. But, as I have often said, if you predict something long enough it always comes to pass!

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