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Ventana Research believes SAP’s acquisition of OutlookSoft is a positive step that will help the company play a larger role in the performance management software market. OutlookSoft’s software provides capabilities for planning, budgeting, forecasting, statutory consolidation and reporting. We attribute a large part of its success to users viewing it as less expensive and easier to deploy than the software of market leader Hyperion. While its application has a range of capabilities, OutlookSoft has emphasized budgeting and planning, and we believe this has been the main reason why people bought the software. SAP, of course, has planning and budgeting software in its mySAP enterprise resource planning (ERP) suite. However, it has had limited uptake because, in our judgment, while the software has a wealth of features and functions, most companies’ processes are not advanced enough to use them in a way that would justify the time and cost it takes to deploy.

OutlookSoft reports that it has more than 700 customers, ranging from large multinationals to midsize companies. SAP software integrates with Microsoft Office, and OutlookSoft adopted a Microsoft foundation for its technology and application design. The combination thus likely will appeal to SAP users who want to make more effective use of Office, particularly the Excel spreadsheet. For OutlookSoft’s owners, being acquired is a better option than taking the company public. Although thriving, the performance management software market also is consolidating, with Oracle having bought Hyperion and Business Objects set to acquire Cartesis. This would have made a public offering risky.

Planning and budgeting are core components of business performance management. All of the major enterprise application software vendors have made clear their intentions to play a bigger role in this area over the coming years. In the past, SAP has been intent on going it alone, preferring to build its own capabilities in major software categories. The success – so far – that its archrival Oracle has had in building out its enterprise application software presence through acquisitions has demonstrated that under the right conditions, buying can be a more effective strategy than building. SAP’s purchases of Pilot Software and now OutlookSoft show that it is modifying its strategy. We expect there will be more deals to come.