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On Monday 23rd April 2007 Business Objects announced its intention to acquire Cartesis for $300m in cash. At over 2.5 times Cartesis’ annual revenues the offer was too attractive for Cartesis’ main financial backers, venture capitalists Advent and Partech, to turn down.
I know Cartesis well – they regularly brief me and I was the only analyst at their Athens user conference in October 2006 (see Cartesis shows off its French flair). I stated then: “I suspect their role model is leading BI vendor Business Objects which started as a 2-man start-up in a bedroom in Paris, and is now a truly international player with a $1bn+ revenue. Ironically enough this heavyweight and its protégé may well be meeting each other in the marketplace soon, given Business Objects’ recent announcements of new products and initiatives for the BPM market.” I forecast they would meet as combatants rather than bedfellows for the reasons outlined below.
Cartesis has filled out its CPM platform through acquisitions such as Inea and AIS in July 2005. In October 2006 Cartesis signed an OEM partnership agreement with Panorama to provide the analytics piece of Cartesis 10. Cartesis has now pretty much reached the stage of having a rounded “whole CPM product” proposition. Likewise, Business Objects has followed the same strategy via acquisitions of SRC and ALG and also has now a very credible all-round CPM offer. The conclusion? Panorama will soon be replaced by Business Objects’ own BI solutions, followed by an elegant roadmap showing the “fusing” of the two companies’ product lines into the Business Objects XI platform. In reality however there is plenty of product line restructuring and integration work yet to do.
So what has Business Objects really bought? Well first of all it has bought an even larger installed base in France. Most of Cartesis’ 1300 (mainly large) customers are based in France. However, as Business Objects pretty much owns the French BI market, Business Objects will increase its “share of wallet” within large French companies rather than gaining a significant number of new customers.
Business Objects has also bought a heavyweight financial consolidation application, which it was lacking, and this should become central to Business Objects’ CPM suite.
Finally, Business Objects has bought 200 financial consultants (of which 120 are in France). Given that Business Objects’ objective is to greatly increase its services business, this should be a boon.
These are all “nice to haves” but are not necessarily drivers of a strategic acquisition, such as the access to a new innovative technology, or gaining new strategic customers in a growth market segment might be. I suspect the real driver was a knee-jerk reaction by Business Objects to offset Oracle’s acquisition of Cartesis’ arch rival Hyperion (see Oracle and Hyperion: is there really a strategic fit?). Certainly analysts were briefed on Cartesis’ new products and marketing initiatives less than a week before the acquisition announcement, which implies an opportunistic quick deal as opposed to the fruits of a longer term discussion.
It’s a short walk between the Head Offices of Business Objects and Cartesis on the North West side of Paris. One can imagine the clinking of red wine glasses at a local restaurant on a sunny spring afternoon to celebrate the deal. All eyes will now be on Ottawa, Canada and asking “where to now, Cognos?”