Merger will simplify plans, says Business Objects

Business-intelligence software customers may find that their buying decisions are easier after Business Objects' planned...

Business intelligence software customers may find that their buying decisions are easier after Business Objects' planned acquisition of rival Crystal Decisions.

The company said the $820m (£509m) merger, announced on 18 July, will give it the lead in the business intelligence market and open up new cross-selling opportunities and wider geographic penetration.

Additionally, Business Objects hoped to be able to attract companies looking to standardise on just one business-intelligence applications supplier.

Although both suppliers offer reporting products, they serve different needs, said John Olsen, president and chief operating officer of Business Objects.

He explained that Crystal's products are used by IT professionals to design reports and send them out cheaply to tens of thousands of users, whereas Business Objects' applications are tailored to power users who need to format their own queries on the fly and do extensive dicing and slicing of the data.

There are no existing plans to phase out any applications and all rollouts will continue as scheduled, Olsen said. While the integration roadmap will take several months to cobble together, he predicted that the first step will be to roll out a portal giving users access to both companies' reporting applications from a single interface.

That announcement was reassuring to David Rewerts, IT systems analyst at Principal Financial Group. Although Principal uses Crystal software, it is primarily standardised on Business Objects, relying on products such as the WebIntelligence application.

The combined resources of the companies would most likely result in better efficiencies of scale and improved research and development efforts, Rewerts said, adding that it also demonstrates the business health and long-term viability of Business Objects.

"One of the things we really look at when looking at suppliers is their market strength," he said. "Anytime they show their financial strength just helps build our story [internally]."

Such optimism is not universal, despite the official reassurances.

"I have yet to see a merger of companies making similar products in which one or both products weren't significantly affected," said Charles Castleberry, assistant director of IT architecture at Los Angeles-based Fox Filmed Entertainment, a subsidiary of Fox Entertainment Group.

The company uses Crystal products for decision support. Given its widespread use, Castleberry expects to see Crystal Reports continue to be used for report development and simple deployment, possibly even replacing Business Objects' own development tool.

On the other hand, it is likely that the Business Objects analytical tools will become more widely used, as that technology is the company's forte.

From an industry point of view, this is just the beginning of widespread consolidation aimed in part at fending off Microsoft, said analyst Eric Rogge at Ventana Research.

It also means that smaller suppliers may either fade or be acquired, as companies such as Business Objects and Cognos roll out more integrated product lines, he added.

Meanwhile, Hyperion Solutions announced a deal to acquire query and reporting tools supplier Brio Software in a cash-and-stock transaction valued at about $142m. Hyperion expects to complete the purchase of the company by the end of the year.

The two suppliers have a combined revenue of $613m during the past 12 months, according to Hyperion.

Jeff Rodek, Hyperion's chairman and chief executive officer, said that the acquisition of Brio will give his company a full set of data analysis tools for supporting both strategic and day-to-day decision-making related to corporate business performance. Hyperion also signed a separate agreement that lets it start reselling Brio's products immediately.

Marc L Songini writes for IDG News Service

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