SAP to Acquire Inventory Optimization Vendor SmartOps

SAP announced on Friday evening its intention to (finally) acquire SmartOps, a move much anticipated for some time. The most enduring mystery about this is not that it happened, or why, but why SAP waited so long to make the move.

SmartOps had established a leading position in the inventory optimization space, and had obviously formed a very close relationship with SAP, who realized long ago that SmartOps fulfilled a very real supplementary inventory optimization capability to the SAP suite.

After wrestling early on with the pros and cons of linking its fortunes to a single vendor, SmartOps, has betrayed no second thoughts since announcing its appointment as an SAP reseller in mid-2009.

There is likely to be speculation whether the timing is related to the maturation of the SmartOps business and products or the evolution of the relationship between SmartOps and SAP (and the people in both companies), whether it is simply the alignment of other stars between the two companies, or whether the competitiveness of the inventory optimization space (where TEC sees a few vendors doing well) moved SAP and SmartOps to act.

The SAP–SmartOps official announcement focuses the rationale for the acquisition on a synergistic aligning of technologies between the two companies. SAP hints at the possibilities of leveraging SAP’s HANA in SmartOps’ inventory optimization, while SmartOps is quite excited about its new Enterprise Demand Sensing cloud-based analytics solution, and how this can be integrated with SAP solutions. With SAPPHIRE still 3+ months away, SAP and SmartOps have some time (but not a lot) to further develop some ideas and messaging for how their respective technologies hooked more closely together create new opportunities.

When TEC briefed recently with SmartOps, we heard considerable excitement from the team about its Enterprise Demand Sensing. SmartOps feels that this new technology and solution puts the company at a technical crossroads, which may provide further rationale for the timing of this acquisition.

The fact remains that this move does not come as a real surprise to us or to almost anyone else who has been watching the space. Edwin Lange, then executive vice president with SAP, joined SmartOps board in 2004 (SmartOps was founded in 2000), and the two companies sales efforts have become more closely aligned over the years (particularly from SmartOps’ perspective.)

There will be some interesting developments to watch for from SAP’s acquisition of SmartOps. TEC is continuing to talk with both companies, and will be following these developments closely. What are your plans for SAP, or SmartOps, this year, and how does this affect your thinking? What do you wish you knew? Let’s discuss.
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