SAP Buys Business Objects- Is It Really A Change In Strategy?

The news is humming all day about the almost $7B deal between SAP and BO. Most of the bloggers and journalists think that this move breaks SAP’s organic growth strategy. While I would not attempt to evaluate the deal itself (some better qualified people like Joshua Greenbaum or Boris Evelson from Forrester did a great job doing just that), I would like to evaluate the “change in strategy” claim, made by almost everyone.

There are many definitions for strategy: the shortest one I could find (some of my readers asked for shorter posts…) was: ” Long-term action plan for achieving a goal.” It is often confused with tactics, which is the set of different maneuvers that are conducted to support the strategy. Strategies don’t age quickly (for example, the principle of attacking from above or using surprise was true for Hannibal as much as it is true for modern warfare). The tactics used cannot be the same, as they are derived by the technology available for the modern army.

SAP had clearly stated in the past that it wanted to deepen its penetration into the underserved area of the business user: these are the majority of the employees in a company that do not use SAP today. These users are up for grabs, and companies like Salesforce.com or SuccessFactors are feeding on this base. Business user penetration qualifies as a strategy. It is long-term, and it serves a critical goal for SAP growth and success. The moves that support this strategy are tactics: partnering with Microsoft on Duet, the acquisition of OutlookSoft or establishing the business user organization internally–all are tactics that serve the grand strategy.

So in my humble opinion, SAP did not change its strategy. It made a major shift in tactics and moved from organic growth and small acquisitions as a means to support its strategy to a major acquisition. Big deal? Yes. Change in strategy? Not really.

Gadi Shamia

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SAP Buys Business Objects- Is It Really A Change In Strategy?

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