Every Memorial Day, the IT industry takes a momentary breather from its usual frenetic level of activity. As a result, the last couple of weeks have been quiet ones for industry watchers like me. Back in mid-May, however, several of the world's biggest application vendors made life interesting for the market in general and iSeries users in particular. That said, let's review what happened and what it could mean for our summer plans.
Infor Acquires SSA Global
On May 15, Infor announced that it will acquire SSA Global in a deal worth about $1.4 billion. The acquisition creates a company that will rake in over $1.5 billion in revenues each year, making it the third-largest enterprise application vendor in the world, behind SAP and Oracle. The combined firms will boast a customer base of around 37,000 organizations, with a large number of them being iSeries users. Indeed, Infor could end up providing software to more iSeries users than any other vendor.
The announcement surprised many observers, as Infor and SSA are companies of nearly equal size that have grown by acquiring dozens of smaller software firms. As such, this was not your typical "big fish swallows small fish" acquisition; it was one shark swallowing another. It will now be up to the remaining shark to digest a plethora of companies that its latest meal was still working to assimilate. Those companies include Baan, Computer Associate's interBiz division, Ironside Technologies, Marcam, and Software 2000. Last summer, SSA also acquired human capital management vendor Boniva Software and customer relationship management expert Epiphany. As for Infor, its iSeries-related holdings include Brain AG, Daly.Commerce, Lilly Software Associates, and Geac, its most recent acquisition before SSA.
Given its vast array of offerings, Infor will face a significant challenge in articulating its product roadmap to its new customers. Fortunately for those customers, both Infor and SSA have similar long-term strategies for integrating their products via a Java-based service-oriented architecture (SOA). While SSA has been more vocal about running its SOA on IBM's WebSphere products, Infor has spoken favorably about WebSphere as well. Now that its fortunes are tied even more closely to iSeries users, the company may consider strengthening its commitment to the WebSphere platform. If it does, it will join its rival Lawson (which closed its acquisition of Intentia in late April) as a committed proponent of WebSphere-based SOAs.
SAP Courts Microsoft and IBM
On the day after Infor and SSA tied the knot, applications giant SAP opened its SAPPHIRE annual user conference with several important announcements. As expected, the vendor officially announced mySAP ERP 2005, a new version of its flagship application that contains over 300 functional enhancements across multiple modules. In addition, SAP unveiled an effort known as Project Muse to create a new, simplified user interface for all mySAP applications. The Muse interface will be rolled out in phases, with the first phase shipping on mySAP ERP 2005 next month.
In addition, SAP and Microsoft took the stage to announce the imminent arrival of the first product from Project Mendocino, a joint initiative to let users access mySAP from their Office applications. The first release, which will be known as Duet for Microsoft and SAP, will ship next month. It will include modules for budget monitoring, time and leave management, and organizational management. More modules will be added in future releases.
Clearly, Duet is an effort on Microsoft's part to increase its share of the desktop and collaboration software used by companies that run SAP. If Duet succeeds, it will do so at the expense of IBM, as many SAP shops are large enterprises that use IBM's Domino, Notes, and Workplace applications. Realizing this, IBM came to SAPPHIRE to demonstrate Lotus Notes access for SAP solutions, a new Notes feature that accesses many of the same SAP functions as Duet. Unlike Duet, however, the new Notes offering is free to licensed users. IBM also unveiled Workplace for SAP Software, a toolkit that enables developers to integrate SAP modules with Workplace applications.
For its part, SAP took two actions to tighten its partnership with IBM at the expense of Oracle, its biggest competitor. First, SAP announced that it would work with IBM to more tightly integrate the upcoming version of DB2, code-named Viper, with the mySAP All-in-One offerings for mid-sized companies. Since roughly 60% of all SAP applications run on Oracle databases, the announcement was a clear attempt on SAP's part to get Oracle out of its accounts. Of course, SAP also would not mind if it created friction between Oracle and IBM, which have developed a closer partnership now that Oracle owns the iSeries-centric JD Edwards applications.
Second, SAP and IBM announced a joint initiative to sell mySAP All-in-One to mid-market companies via their business partner networks. Interestingly, Oracle and IBM formed a similar partnership several months ago to boost sales of Oracle's applications, including JD Edwards, to the same companies. While this is just an educated guess on my part, I believe SAP must have seen that partnership as a threat and sought to neutralize it via a similar agreement with IBM.
While SAP used SAPPHIRE to take shots at Oracle, the archrival used the occasion to fire back a few rounds of its own. On the second day of the event, Oracle announced that it will provide third-party support and maintenance to users of SAP R/3. The company claimed that its new service could cost as much as 55% less than what SAP charges its customers. For over a year, SAP has been trying to woo Oracle users off maintenance contracts with a third-party support offering from its TomorrowNow subsidiary.
Mid-Market Companies in the Crosshairs
If there is one conclusion that I could draw from this week's stories, it is that the competition among application vendors for mid-sized companies in general and iSeries users in particular will heat up considerably in the coming months. As SAP and Oracle mobilize their partners to find new mid-market customers, Infor-SSA and Lawson-Intentia will hit the airwaves to explain what their mergers mean for the same set of companies. All of these vendors will step up the calls they are making on mid-market firms, and many of those organizations will be iSeries shops. Those that are in the market for new software will be aggressively courted by multiple vendors.
This could make the rest of this year a good time for iSeries users to buy new enterprise applications...that is, if they can negotiate the uncertainties that surround the product roadmaps of many vendors. Between the mergers that have become a daily occurrence and the transitions to SOAs that most vendors are planning, it is becoming increasingly difficult for organizations to know where their applications will be one to two years from now. In times like these, many companies wait until the market settles down before investing in new software. However, it is precisely in such times that companies that educate themselves about the market and its risks can win the best prices and contract terms. If your company falls into this second category, I wish you luck as you do your homework. Feel free to drop me a line if you need some advice.
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at
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