Business Objects to Buy SRC

By Dennis Callaghan  |  Posted 10-03-2005
Business intelligence software developer Business Objects announced plans Wednesday to acquire planning and forecasting software developer SRC Software, a departure from the company's previously stated strategy to remain focused on BI.

The all-cash acquisition is expected to close later this quarter and is valued at approximately $100 million.

In SRC Software Inc., Business Objects SA will get a company that develops applications for planning, budgeting, forecasting, reporting and scorecarding, across both departments and vertical industries, including financial planning, retail, health care, hospitality, insurance and manufacturing.

Based in Portland, Ore., SRC was founded in 1995 and has about 1,200 customers, with annual revenues in the $25 million to $30 million range, according to Business Objects CEO Bernard Liautaud.

"This [acquisition] is consistent with our strategy to be the sole provider of business intelligence in the enterprise and develop a strategic relationship with our customers," said Liautaud, in San Jose, Calif.

"You have to have a full solution for all elements of performance management. In order to have a complete solution in [business performance management], you need to have planning and budgeting."

Liautaud said the deal would give Business Objects more access to CFOs at companies and allow it to win larger and more strategic projects as well as compete more effectively in the midmarket.

But the acquisition required Liautaud to backtrack on previous comments he's made that Business Objects did not need an offering for financial planning and budgeting, though chief rivals Cognos Inc. and Hyperion Solutions Corp. both had products in that area.

In an interview with eWEEK last fall Liautaud said that Business Objects was content to let customers choose their financial budgeting and consolidation applications and would provide metrics and scorecarding applications to run on top of them.

"We're a BI company—we don't need to do anything else beyond BI," Liautaud said at the time.

Click here to read more from an eWEEK interview with Liautaud.

He further suggested in that interview that Cognos, which bought planning and budgeting software company Adaytum Inc. in 2002, had "lost their soul" by extending beyond BI into that area.

Liautaud defended his company's acquisition Wednesday by pointing out that SRC offered technology for enterprise-wide planning, not just financial planning.

But he gave little explanation for his change of heart, beyond conceding that the timing was just better for Business Objects to move beyond the BI space since it had completed the integration of technology acquired from Crystal Decisions Inc. in 2003 with this year's XI release.

"I think today we feel that we're entering the [BPM] market at the right time for us," he said. "We feel we had to establish leadership in the BI space and now we have a strong platform. It's important not to do everything at the same time."

Liautaud rejected suggestions by financial analysts that Business Objects was late to the BPM market.

"If Hyperion and Cognos say we're late, it doesn't matter," he said. "We have today a much stronger offering, that's integrated, it works already, and it's superior to what those two companies are offering. We're moving into territories we couldn't play in before, the competitive landscape is moving in our favor."

Business Objects has a partner relationship in place with SRC and Liautaud said the products already are well integrated, though he intends for SRC to be run as a separate business unit with Business Objects.

"We feel very good about the level of integration we have at this point," he said. "We have seamless workflow between planning, reporting and dashboarding. Going forward, there are a number of things in XI we intend to leverage and put more power in the platform, but we'll do that over time. Right now, nothing prevents us from selling this as a fully integrated product line."

Dave Marmer, vice president of field strategy and support at Cognos, maintained that Cognos has a "three-year lead" on Business Objects in delivering an integrated performance management offering.

"I congratulate Business Objects on making a needed acquisition and keeping up with the market," he said, in Burlington, Mass.

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