SAP just announced it has acquired Pilot Software, a privately held business performance management vendor. Pilot is a nice bite-sized chunk for SAP, with plenty of room for upside growth- it only has 150 customers now, but with access to SAP’s salesforce and distribution channels we can expect significant growth in the near and long term, because organisational overlaps are minimal.
SAP describes the acquisition as a “tuck in”, which makes sense.
Unlike Oracle, but like IBM, SAP is seemingly keen to pursue small deals to fill in technology gaps and skillsets rather than pursuing bigger deals to acquire customers. SAP can potentially grow the Pilot acquisition in the same way IBM has recent software acquisitions. SAP needs some new growth stories to ensure its status with the investor community. IBM’s recent financials make happy reading- SAP and Oracle’s recent outlooks on the other hand have been more cloudy. To help grow its new business SAP should maintain the Pilot salesforce.
Flagship product PilotWorks competes with the likes of Cognos and Business Objects at the dashboard end of the analytics stack, where key performance indicators are at stake. The acquisition will help SAP to compete more effectively against these players, and their partners, notably IBM, and competitors, Microsoft and Oracle.
It will be interesting to see what approach SAP takes to integrating Pilot Software dashboards with its existing Business Information Warehouse platform. One interesting opportunity will be pointing SAP’s scripting language, widget and rich UI communities at the business information enabled through Pilot. Why not extend Pilot’s UI through SAP ERP data using PHP, or position the SAP widget foundation as a primary consumer of Pilot info? There could be some interesting partnering opportunities with Adobe and Microsoft. Another internal opportunity for SAP will be integration of Pilot with its Governance, Risk and Compliance portfolio, and particularly the business controls functionality it acquired with Virsa.
Analytics is a growth market, even if margins are under pressure, particularly in the more mature business intelligence space. Dominant performance management players such as Cognos are growing quite nicely (24% license growth in Q3 07, against the same quarter in 06). SAP will be keen to tap into that.
One major asset will be Pilot’s CEO Jonathan Becher, assuming he sticks around for a while. Why? Because Jonathan is actually a 2.0 thinker, rather than a collect, measure and analyse everything guy. Becher is a social thinker, and doesn’t believe in process for its own sake. Far from it, the Pilot approach is designed to slough off process if its not helping the business. This approach should help SAP customers, preventing them from becoming hide-bound. Pilot could be about SAP process optimisation, as much as business process optimisation, and provide real benefits to customers. We can also see see Pilot as a potential acorn for an SAP IT Performance and Portfolio management play.
Becher’s blog is called Management By Walking Around, which captures some of his and Pilot’s modus operandi. Successful alignment and business execution is based on measuring the right things, rather than making measurement into a mania. Jonathan’s key insight is that less can be more in business intelligence. His aim, I would argue, is nothing less than to socialise business intelligence by ensuring that dashboards align with the needs of the people on the ground, whether they are park cleaners or assembly line workers.
Several years ago, I visited a U.S. government agency that tracked more than 1000 different performance measures representing nearly every aspect of their operations. The measures came from multiple operational systems, a dozen or more Excel workbooks, and several employee and citizen surveys. The entire process was automated, allowing many of the measures to be updated daily or even hourly. The end user interface was also impressive. Traffic lights blinked when they changed from yellow to red. Signal flags waved when items were trending down or when data failed to load properly. And everything was Section 508 compliant. After sitting through a 45-minute demonstration of the state-of-the art system, the presenter asked for questions from the audience. Other attendees asked questions about the total cost to develop the system (10’s of millions), the length of time it took to get into production (more than 2 years), and the underlying technology architecture (CORBA, as I recall). Eventually, I got a chance to chime in and wondered out loud, “What will you do if all of those measures turn red at the same time?” The presenter was visibly stunned. After a long pause, he answered, “I guess we’d all look for new jobs.”
That’s the problem with too much data- not enough prioritisation. On that note- I should go work on some other things. Its a shame the SAP PR/AR team didn’t give me a headsup about related conference calls.
disclaimers: Adobe and IBM Information on Demand are clients, Oracle, Pilot and SAP are not.