Cartesis Acquisition heralds performance management consolidation

Business Objects has announced that it is to acquire Cartesis, arguably the most important pure play vendor in the corporate performance management market (CPM – Business Objects refers to enterprise performance management – EPM) that was (hitherto) left standing. There are two interesting aspects to this: first, the impact on Business Objects and, second, the impact on the market.

The first thing to note is that Business Objects has declared a short-term objective to become a $2bn company. While some of that can be achieved through organic growth not all of it can, and that is why the company has been on something of a spending spree over the last couple of years. Cartesis, with some 1,300 existing customers, will help significantly on that path. Furthermore, Cartesis, like Business Objects, has its roots in France and, while that is by no means a compelling reason for acquisition it certainly can’t hurt.

Actually, Business Objects seems to have a decided preference for buying French companies: there are certainly CPM vendors other than Cartesis that it might have bought; and, as another example, take its acquisition of Medience (an EII – enterprise information integration – vendor), which it bought in preference to its existing partner Ipedo. Of course, Medience was French and Ipedo isn’t.

On the technology side, it will be useful to examine how Business Objects reached this point. The company was relatively late (at least compared to Cognos) to enter the CPM market though the rumours at the time were that this was not for want of trying: the story was that Business Objects had wanted to buy Adaytum but that Cognos pinched it out from under their noses. Whatever the truth of the matter, Cognos certainly got a head start on its long-time rival.

Business Objects, however, has been more acquisitive in this area (and in general) than Cognos, first buying SRC, then ALG (previously Armstrong-Laing) and now Cartesis. Now, while the purchase of ALG provided activity-based management, which was and is distinct from, and complementary to, the capabilities of SRC and Cartesis, these last two have a definite overlap though the former has been more focused on vertical industry sectors (retail, hospitality and so on) whereas Cartesis’ speciality has been on the financial side of performance management, notably in budgeting and planning, financial consolidation and so forth.

So there is a synergy in the sense that the SRC-based software has largely been marketed to line-of-business people whereas Cartesis has typically been targeted at the CFO. Nevertheless, there will be a downside in that this is yet another product suite that Business Objects’ needs to integrate (via adapters and so on, which is easy) and then unify (via a common metadata layer, which is hard) with its other products. Cognos, which tends to rely less heavily on acquisition and more on in-house development is therefore probably better placed in this regard. However, there is no question that this will significantly enhance Business Object’s product offering.

Finally there is a further dynamic here: what we are seeing is the start (?) of the consolidation of the CPM market. Why do I say the start? Because when Cognos acquired Adaytum this was more-or-less a one-off; because SRC was a minor player and because Oracle’s acquisition of Hyperion was really more of a transfer of power than an indication of consolidation. So, what’s driving consolidation now? The advent of Microsoft into the market.

However, how much more consolidation is likely? On the buy side SAP might be a potential purchaser (it has already bought Pilot Software – yes, that Pilot – which was specialising in the dashboard/collaborative side of performance management), as is H-P, though SAS probably isn’t, while other BI vendors are possibilities. On the sell side OutlookSoft is available but Comshare is probably safe in the hands of Infor and there are some minor players. Microsoft probably isn’t interested in OutlookSoft as it could have bought it already if it wanted to. So, who’s for SAP to buy OutlookSoft? Or will it be H-P?