SAP AG (NYSE: SAP), a major provider of e-business software
solutions, and TopTier Software, Inc. (privately held) have
announced that the two companies have signed a definitive agreement for
SAP to acquire TopTier, subject to the approval of antitrust authorities.
TopTier has been an SAP partner since 1999 and parts of its technology
are already integrated and available within the SAP enterprise portal
offering, the mySAP Workplace.
the terms of the agreement, SAP will acquire all of the outstanding shares
of TopTier for approximately $400 million in cash. TopTier will become
a wholly owned subsidiary of SAP upon closing, which is expected to occur
during the second quarter of 2001. TopTier generated approximately $20
million of revenue in 2000 and SAP anticipates recording a charge resulting
from acquired in-process research and development that will not exceed
$50 million. SAP expects the acquisition to have minimal impact on 2001
earnings per share.
states that this is a further step in its strategy, which includes building
market-leading positions in the enterprise portal, customer relationship
management, supply chain management and marketplace sectors. This acquisition
strengthens SAP's leadership in the enterprise portal market and increases
SAP's ability to broaden its user base. The acquisition will also provide
SAP with a strong engineering staff experienced in the portal market and
a large installed base of enterprise customers, including Daimler
Chrysler, Hewlett Packard, GMAC, Universal
Studios and Wells Fargo Bank.
to the vendor, the TopTier technology fits seamlessly with the mySAP Workplace
to deliver up-to-date, role-based information, applications and services,
and enables further integration of heterogeneous applications beyond those
announcement makes it clear that SAP is intent on extending its role as
the major player in the enterprise resource planning (ERP) space, with
footholds in business intelligence, customer relationship management (CRM),
supply chain management (SCM), e-Business, and any other area where they
see a potential synergy in the future. Its efforts to become a "one-stop
shop" will give other vendors a strong incentive to acquire or develop
similar capabilities, in as many areas as they can afford.
believes that momentum in the area of mergers and acquisitions, particularly
between ERP, business intelligence, and enterprise application integration
(EAI) vendors will continue with a vengeance. As the big players get bigger,
the smaller entries will fall out of the running. The best defense against
being "all things to all people" will continue to be strongly focused
vertical offerings where the ability to do one thing very well will outweigh
the ability to do everything "at least a little".
Customers evaluating major enterprise software acquisitions will continue
to have a basic set of three options:
- Buy everything
from one vendor, a virtual "one stop shop". This should (we emphasize
"should") eliminate many of the integration headaches. The quintessential
example of this vendor approach is Oracle.
- Buy "best
of breed" applications, and rely on application integration software
to tie everything together. This may allow for more latitude in product
choices, but requires the greatest degree of customization by both the
vendors and the customer.
- Buy as
much as you can from a single vendor, and contract with them to integrate
any missing components. This may ease the integration effort by putting
the vendor "on the hook" to make everything work together.
What it all
comes down to is the fact that data that is not transformed into knowledge
is at most dangerous, and at least not very useful. Having your enterprise
data (i.e., ERP) in a monolithic application with no way to find out what
it really means, or to apply it to other applications (i.e., CRM) will
not help solve your business issues. A decision must be made early in
the technology selection process as to which general approach to application
integration is correct for your talent pool and business requirements,
and which one will yield the fastest return on investment.