SAP may buy Business Objects: The offshoring angle
A few weeks ago, I blogged about “M & A among offshorers" In that blog, an aspect of mergers I omitted was the big consolidation among enterprise software vendors during the recent years. Just a few examples from the past few years: Peoplesoft buying J.D. Edwards, in turn getting bought out by Oracle. Similarly Oracle bought out i-flex and CRM maker Siebel. IBM acquired Rational Software. and Lotus.
Now comes news that “SAP may buy Business Objects.” Bloggers and analysts are certainly vocal about this, move [Sadagopan, John Murrell, barrons, Mark Evans TechCrunch] though many have ignored the strong offshoring angle.
Packaged software adoption in enterprise IT, especially Enterprise resource planning [ERP] systems has steadily grown in recent years. Andrew McAfee had blogged about the homogenizing effect due to the increasing adoption of packaged software by enterprises “After all, this argument goes, firms are increasingly buying commercial software (from vendors like SAP, Oracle, Microsoft, Business Objects, etc.) rather than writing it themselves. Consequently, everyone's business processes should become more similar and undifferentiated, since they're encoded in the same software. IT doesn't separate winners from losers, in other words -- it brings them closer together, and makes it less likely that anyone's going to stand out.”
The offshore / offshoring angle of packaged software and the mergers among ERP vendors is equally interesting, though not many analysts and bloggers seem to focus on it:
- Package implementation. Software services firms, Infosys included, are involved in systems integration and package implementation. The advantage of leveraging offshoring service firms for complex implementations is two fold: the obvious (cost benefits and skill pool) and the not-so-obvious: strong alliances between service firms and product firms. Both together can be potent combination for client organizations
- Offshore Package support. Again a follow-up of the previous point. Leveraging the GDM to provide a 24X7 support to end users in large organizations, many who may be globally distributed themselves.
- Offshoring by product companies. Just a small sampling of product firms that also have captive development centers (a.k.a. offshore development centers, ODC): SAP India - Enterprise Software Systems | Business Solutions, oracle in India, IBM products India
- Offshore market for products and services. The recent InfoWorld article “SAP doubles customers in India” talks about how “SAP has doubled its customer base in India from 1,000 to 2,000 over the last one year. Markets in India and China will play a key role in its drive to sign up 100,000 customers by 2010”
- Any other angle I may have missed….