July 21, 2005

This just in: Business Objects Inc. is to acquire SRC Software, which provides B2B reporting services, financial planning and budgeting products to the business community. The deal is said to be worth $100 million.

Such products are particularly important to companies with a lot of SKUs, a lot of customers, and a mix of different prices.

If you've got any appreciable amount of each, the pricing and margin combinations are already well past what a spreadsheet could comfortably handle, and the stakes are high. For example, if you make a pricing change without matching it against anticipated margins, you could end up being locked into a money-losing relationship with a customer.

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Business Objects isn't the first business intelligence company to bundle such software into its larger proposition. Rival Cognos went the same direction earlier, in its acquisition of Adaytum back in late 2002.

It was an acquisition publicly pooh-poohed by Business Objects CEO Bernard Liautaud, who in 2004 told the media outlet CRN that the Cognos acquisition of Adaytum was "a mistake... We are focused, they are diversified."

Regarding his own company's acquisition of SRC Software, Liautaud stated that "Adding financial planning, budgeting, and consolidations to our portfolio marks a logical step in our evolution."

He did not address the apparent inconsistency of his past position on Adaytum with his current position on SRC, and why Business Objects' strategic position regarding non-core business intelligence should have changed between 2004 and today.

Going further, the same challenges Liautaud foresaw for Cognos RE Adaytum now apply to Business Objects. As he himself said in 2004, financial planning and budgeting is "...dominated by companies like SAP and Hyperion."

In the face of these views, Liautaud might have been more explicit about the way in which SRC fits in with Business Objects' strategy and competitive positioning.

Source: Line 56