SAP-Teradata Announcement Reflects Pressure on SAP vs. Oracle

The recent SAP-Teradata announcement that SAP's (SAP) BW (Business Warehouse) will be ported to Teradata (TDC) comes only one week after Oracle's (ORCL) public bid to acquire Sun Microsystems (JAVA). The press release was light on details - e.g., shipment dates, channel issues, scant mention on either company's website, and in the short term was of greater benefit to Teradata, which extended its ability to re-sell the SAP/Business Objects BI products.

Given the tactical nature of the announcement, and the practical reality that it will be at least 6-9 months before customer beta testing of the SAP/Teradata combo, MGI Research sees minimal short term benefit of the announcement to SAP, and minor impact to IBM or Oracle. In the bigger picture, the event highlights the tectonic shift that will occur if Oracle closes the Sun transaction. We re-iterate our view that Hewlett-Packard (HPQ) or IBM are likely bidders for SAP within the next 24-36 months.

Absent from the announcement was any reference to a deal around demand forecasting - a known weakness for SAP, particularly in retail and in spite of its Khimetrics acquisition, and a relative strength for Teradata. The lack of any news means the expected Teradata/SAS partnership may still go forward.

The deal underscores the emerging reality that Oracle will effectively distance itself from SAP, and now compete head to head with HP and IBM if it finalizes the acquisition of Sun. HP's relationship with Oracle will cool, and the HP/Oracle Teradata-killer product is likely relegated to the junk heap of joint development projects. Oracle's strong MGI scores through 30+ acquisitions large and small points to its ability to innovate through acquisitive growth combined with operational efficiency.

For a company that historically possessed tremendous strategic vision and world-class execution, SAP increasingly looks tactical and lacking a coherent strategy. SAP abandoned Cognos as the two companies were working joint go-to-market efforts when SAP launched its bid for Business Objects, pushing Cognos into the hands of IBM. Global 2000 CIOs are eager to reduce their supplier base, and without a broader product set or a clear edge in innovation, SAP is at risk of losing its seat at the table of industry leaders inside the enterprise.

MGI Research believes IBM is an innocent bystander in this announcement - neither benefiting significantly from it, nor feeling any pain from SAP/Teradata announcement-ware.

Bottomline: The SAP-Teradata announcement does little to alter the rapidly changing industry dynamics in which Oracle is emerging stronger than ever, with impressive MGI-X scores, and SAP is playing a reactionary game in which it is unclear if it can or will compete via acquisition or internal development. If Oracle is successful in integrating Sun (and it maintains ownership of the hardware assets), IBM and HP will be under pressure to make a run for SAP - a logical combination for both companies. Teradata may be a tuck-in acquisition for a larger player, or more likely, simply an industry orphan with a robust installed base and maintenance revenues.

Comments

[palaina:]

It is a shame people feel qualified to express such strong, unfounded opinions about things like this with little or no actual knowledge. It is no wonder they also do not sign their name to it. There is very little in this article that is either valid or valuable.

Apr 30 08:42 AM