SAP vs. Oracle – Game On!


Everybody Loves a Game

With Oracle’s ongoing series of high profile acquisitions, including PeopleSoft/JD Edwards, Siebel, and now Hyperion and Agile Software (product life-cycle management – PLM) amongst others, it is tempting to speculate that SAP would be gearing up to unleash some of its $3.1B cash horde (as of 12/2006) on some big buys of its own. Of course, Oracle’s strategy hinges on its ability to integrate their acquisitions, something they have been executing fairly well. While SAP’s strategy is one of accretion, more like the growth of a coral reef than the assimilations of the Borg.

The part of us that loves the epic clash of the “Miracle on Ice” at the 1980 Winter Olympics wants to see SAP and Oracle in the end game. But in the computer/business world, we rarely get to witness this. But not for lack of wanting. Witness the religious wars of XBox vs. Playstation vs. Wii; Windows vs. Linux vs. Mac; Google vs. Yahoo!; Pepsi vs. Coke. The emotions are every bit as intense as the Steelers vs. the Cowboys, but you never get the satisfaction of the final seconds ticking off and a field goal to win the game.

Mad Speculation

So, how would we want the Oracle vs. SAP game to play out? For starters, maybe you’d want to see SAP counter Oracles moves by buying up Business Objects or Cognos in the BI arena, maybe to counter the Siebel buy, Mercury Interactive (recently bought by HP) in test automation, and who knows what else.

Will it happen…probably not any time soon. It’s not their philosophy. SAP may wind up with Mercury, but only after integrating with them over time. They are building out their own Netweaver platform that is taking on the BI players (at least among SAP customers). Their recent purchase of BI vendor, OutlookSoft was meant to beef up its own technology, not to bring in a fully featured solution like Business Objects. Their warehouse management system is gaining some notoriety with Coke being one of the successes.

The BIG BUY is just not their style. SAP makes buys when buying becomes an overwhelmingly obvious move.

Is a full-on acquistion strategy within the realm of possibility for SAP? Certainly, but not likely until after a leadership change. With the recent resignation of CEO-apparent, Shai Agassi, and the selection of Léo Apotheker as deputy CEO, SAP’s acquisition strategy is likely to be altered in the future. The company has historically been led by people with a bent toward software development as opposed to M&A. Check out the BusinessWeek article here.

The End Game?

The real beauty of this game is that the customer wins. As long as SAP and Oracle are vigorously competing, the customer gets innovation and improvement. Ultimately, everybody loses if the game ends.

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