SAP Strikes Back
You have to give SAP credit: It doesn't get mad, it gets even. Scarcely four months after IBM took a swing at SAP by buying Trigo, SAP has swung back by acquiring Trigo competitor A2i. And in doing so the battle lines have shifted again in what is proving to be one of the most intensely competitive relationships two partners have ever had.
Acquiring A2i should prove to be a major coup for SAP's efforts not only against IBM, but more importantly in SAP's efforts to upsell new technology to its existing customer base. And there is a good chance that these acquisitions are going to end up being positive for both companies as well.
Not that SAP's A2i acquisition isn't a dead shot aimed straight across IBM's bow. As I mentioned in my column on the Trigo acquisition, the fact that Trigo was one of the relatively few SAP NetWeaver partners had to smart a little when the acquisition was announced.
So you have to give points to SAP for buying a company that's proudly listed on the IBM web site as a major technology contributor to IBM's automotive dealer collaboration solution, as well as being touted as a “ready for WebSphere” partner. It's a new twist on the adage, “The enemy of my enemy is my friend.” When it comes to IBM and SAP, the partner of my partner is my best competition against my partner. Almost sounds too dysfunctional to be true.
But don't think SAP did this for revenge. The reasoning behind the acquisition is pure business. While SAP was caught unawares by the Trigo acquisition, the growing interest in the product information management and global data synchronization markets — particularly for retail and CPG companies — was already known to SAP.
Importantly, IBM's Trigo acquisition triggered an accelerated interest in these markets (also known as PIM and GDS) not just in Walldorf but across the market. The Trigo/IBM folks are as of this writing getting ready to do some serious bragging about their recent wins, and with a large average deal size and very impressive ROI, their success has been turbo-charging not just vendor interest but user interest as well.
That user angle becomes the win/win component of this bipolar partnership/competition that IBM and SAP are engaged in. The solutions that can be driven from these acquisitions, both in the specific PIM/GDS space as well as in the more general functionality targeted by SAP's MDM, are more and more recognized as providing real competitive advantage and cost-savings for retailers and other key customers.
The buzz from these mergers has driven a lot of awareness among prospective customers, who are seriously looking to drive more efficiency into their operations and are starting to consider these kinds of solutions as a must-have. It helps that buzz-concepts like RFID and market dictators like WalMart are providing that extra oomph to the whole idea. Which means that the two companies' at-each-other's-throat competition works to their mutual benefits like a well-oiled marketing machine.
But for now SAP has the leapfrog advantage. IBM bought Trigo to get, in the short term, more PIM/GDS business, and in the long term, to get into the master data market that MDM is after. That long term won't happen right away, though Trigo already has some serious data management chops. SAP, on the other hand, is well into version 2.0 of Master Data Management, and is now ready to put NetWeaver-compatible A2i into the mix for customers looking for both PIM/GDS and MDM. Granted, the two products won't be fully unified until 2006, but the capabilities are there and A2i's use of NetWeaver's apps server and portal will make it look like the two products are already joined at the hip.
So what's next for these two love-birds? The subtext to the two acquisitions has been that both companies have acquired strong vertically oriented technologies with important horizontal capabilities.
With both companies making no bones about their interest in further acquisitions — and with acquisition being the best exit strategy for all the little venture-backed firms that have the products an IBM or an SAP would like to buy — expect more acquisitions in other hot vertical and technology categories. The advantage is now SAP's, but the ball is firmly in both companies' court.
Read more about SAP ERP here.
