GUEST POST
There's no better time than the present for established enterprise players like IBM, Salesforce, and Oracle to swallow up bleeding-edge business intelligence companies.
From SAP to Microsoft, established players are fighting to be the all-encompassing solution for the enterprise. Yet, they've been stagnating. Hewlett-Packard is trying to architect a seemingly endless turnaround. IBM is culminating a 10-year campaign to focus on high-margin services and software, but at the expense of lost market share in its hardware business. Only now is Microsoft focusing on the cloud, a move that almost looks like too little, too late.
The only way anyone will emerge as a clear winner is through M&A (mergers and acquisitions). And executives have suggested as much — focusing on cloud and big data acquisitions in particular. For the remainder of 2014, I predict a strong increase in M&A activity, particularly in business intelligence.
Rumblings of this have already happened: TIBCO recently purchased analytics and reporting company Jaspersoft for $185 million, Dun & Bradstreet bought cloud-based BI company Indicee, and business planning- and analytics company Tidemark received $32 million in new funding. Tableau, the major public BI player (and a potential hot acquisition target, if it wants to be), announced Q1 2014 growth of 86 percent.
Business intelligence in particular is a crucial piece of the acquisitions pie, if only because current cloud-based BI systems make data more accessible and actionable than before. BI builds links between businesses' massive coffers of big data and the everyday usage that is essential for running a data-driven business. It is just the kind of "new-world" technology that established players need in order to get back into the rink.
Now is the ideal time for these players to swallow up bleeding-edge cloud companies to build their competitive advantage and make up for market share lost during the recent cloud- and mobile disruptions. As always with M&A, the key is to fill the gaps in existing offerings. SAP, traditionally focused on ERP and data warehousing, did exactly that when it bought BI company Business Objects in 2007, a key acquisition that gave SAP the opportunity to integrate with Salesforce before the current "cloud wars" positioned the latter as more of a competitor.
Now that SAP has BI reporting in the bag, it stands to build its repertoire—and competitive advantage—by augmenting its offerings with human-resource and people management, perhaps acquiring something like Evolv. IBM could harness its existing focus on the healthcare sector with a clinician-focused product like the 3D mapping offered by Ayasdi. Salesforce could compete more directly with SAP — and solve users' need to go between multiple screens all the time—by purchasing an integrated, visual dashboarding player with the ability to put everything on one pane (Qlikview and Tableau are examples).
As enterprise demands move away from large, licensed solutions and towards vendors that can pour data intelligence into every niche of the business, a rash of M&A will be inevitable. Global technology spend is slated to hit $2.22 trillion this year, more than the GDP of Italy. Large and small players alike want a piece of the pie.
Lesson learned? Large players that can make the best acquisitions, will win.
Marius Moscovici is the Founder & CEO of San Francisco-based Metric Insights. Follow Marius on Twitter @MetricInsights
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