Denis’ Blog

Late 2007 rumors raised about a possible acquisition of SAP by Microsoft. The two companies denied. Would such an acquisition make sense? Is it the time to think about it again?

Well, this deal would make a lot of sense:

• It would consolidate the Sharepoint growth, sharepoint being a very exciting front end for corporate SAP
• It would accelerate Office 2007 adoption, for the same reasons
• It could accelerate SAP adoption in the SMB market, a key market nowadays. Leveraging SAP and Officce 2007 to boost SaaS for SMB is a viable option.
• For the three previous reasons, it would offer new growth opportunities while creating a quite unique value proposition
• The two companies have been collaborating for years, and a merger would have a chance to be successful
• It would put pressure on IBM, Oracle & RedHat on enterprise servers for SAP installations

Of course there are also good reasons for this operation not to happen. The corporate market is maybe not the most important nowadays for Microsoft, and Microsoft could have other strategic bets.

So. What do you think? Will it happen?

It’s done. Microsoft today announced that they bid on Fast Search & Transfer. FAST is public and Microsoft has still almost 60% to acquire on the market, but I am confident they will.

This is great news:

1. Now the position of Microsoft in the Gartner Magic Quadrant will be justified . No seriously the enter of MS at this position in 2006 was..well..very optimistic. Call that anticipation…. Whatever the problems of FAST have been, this is a good technology, a technology that delivers. With the raising success of MOSS 2007, Microsoft will now be able to find needles in haystacks
2. They offer a 43% premium. I hope you read my previous post on the subject .
3. Autonomy stock price soared of 10%, and this is not over. I really hope you read that post. :-). More than that, this news is a very good news for Autonomy. It confirmed it is a very potential targets AND it will help Autonomy to consolidate on the short term its position on the high end market.
4. This will accelerate the idea that Enterprise Search is now an important topic. Say bye bye the Search Engine OEM in portals, bye bye to poor search abilities in ECM. Microsoft will push hard and will now attack Filenet and Documentum in the middle-end ECM market, Google in the Enterprise Search space.

Now let’s analyze what could happen:

• Google will have to accelerate. The Google GSA still lakes key Enterprise grade features like mapped security, usable clustering and business vocabularies management features. It is time to deliver for Google if they want to win more that Mini and GSA to index a few To of HTML
• Small players will have to react: Coveo or Sinequa were betting a lot on the MOSS 2007 integration. Well, I guess they will have now more difficult relationships with MS :-).
• “Visionaries” players like Exalead, Vivisimo or Endeca have a good opportunity to position themselves as the last independent players. It will be tough since on the low end Google is there, and on the high end Autonomy and FAST are confirmed as established leaders.
• IBM will strengthen its offer. I do not see another acquisition for them in that field. They are late, but their recent involvement in the UIMA open project tends to demonstrate that they will adopt the same strategy as the one they executed with Eclipse/Websphere Application Designer
• Oracle and SAP will have to move. Autonomy? Endeca?

I would bet Endeca acquired by Oracle and Autonomy by SAP. Only one beer on it. What do you think?

A few months ago I’ve already won two packs of beer, since my friend Christophe was betting on the acquisition of Capgemini by Infosys. I won, and I am insisting: Wipro will not buy Capgemini. Let’s do the maths : Wipro market capitalization is USD 20 Billion. Capgemini is around USD 8,5 billions. Most the valuation of Wipro and its Indian counterparts is based on their two digits growth/profitability. Why would Wipro shareholders want to loose value with a top player averaging these magic figures?

Moreover, Capgemini has more than 70.000+ people, with strong position in Europe. India players will try to acquire US IT integrators first. EDS? CSC? Not easy. Their market cap. is around USD 10 billion, and they work a lot for militaries. I would bet on smaller players like Sapient.

There will be 40.000 Capgemini people working in India by 2010. Capgemini will be 100.000+ people strong.The race is just starting. I take that bet. No acquisition of Capgemini in 2008. And Sapient will be Indian by the end of 2009.

A pack of beer?