With this mornings announcement of SAP announcing it's intention to acquire San Francisco based analytics vendor KXEN, we may witness the beginning of the fall season for acquisitions by the usual suspects.
Actually - that prize may go to IBM - who finalized its acquisition of Trusteer the other week - but more on that later.
Real vs faux analytics
To clarify this post to the novice reader - we only refer here to the real analytics - the one that according to the definition either recommend an action - or even perform an automated action. That's what the Greek -tics suffix is all about... Unfortunately some marketeers found that analytics is a nice new word open for abuse as a buzzword and re-purposed it for the dinosaurish sounding reporting and the ancient BI and the more recent dashboarding. All of these are not analytics as we mean it here... and analytics as KXEN provides them. Look forward to Jonathan Becher and team to sort this out, clean it up and land on the true analytics side soon. (More on this here.).
SAP and Analytics
This is a long story that I won't put down in this blog - but it was a story that was finally coming around. SAP has gone from having no story (before the Business Objects acquisition), to a wrong story (when it was partnering with SPSS), to a confusing story that needed to be explained - but was turning to the better.
Again - I won't dive into the details - but a complex story it is. And what it was lacking was the necessary tool aspect to build analytical applications - the tool you want to give - ideally the business user - a tool in the hand to have a chance to solve a complex business question in order to take the actions to steer towards the desirable outcome.
So far no vendor in the analytics field has been able to give these tools in the hands of business users, best case the power users, and I have blogged about the quest for the holy grail of analytics before...
The case for KXEN
KXEN has built a suite of analytics products mainly around scoring algorithms and data mining - and the good news is that these are easy to understand for business users... almost any person going through higher statistics or business classes has solved decisions with weighting and scoring and at least heard of data mining.
So with KXEN SAP gets tools that allow to drive to analytical decisions not only for classic on premise data, but also unstructured data - both of which SAP could not easily do before and in most practical circumstances would have to resort to an R built model. And while R is a good choice for SAP overall - it only caters to the geeky data modeller and statistician - not to the end users...
Additionally the forays of KXEN into sentiment analysis and recommendation as well as the Genius product that is catered for marketers - provide interesting products for SAP to leverage. Most interesting will be the packacked apps that KXEN has built... on top of salesforce.com.
One SAP interna
It's surprising that the quote on the press release comes from unusually low in the organization - Michael Reh - which may point to a less board centric communication stategy, but potentially also a more collegiate and decentralized acquisition strategy. The hope is that this is not a signal of less importance of analytics for SAP.
The competitive angle
One cannot think of SAP acqiring KXEN without the IBM acquisition of Trusteer. We blogged earlier that SAP wants to be a technology company - and then you need to react if one of your key competitors - and IBM has become that for HANA in the last 3-6 months - does a strategic acquisition that propels them forward. And KXEN is a good reaction - that even passes IBM given the higher end user focus of KXEN over Trusteer.
And then it makes - ahh - the irony - SAP a salesforce partner. A large group of KXEN's executives team comes from salesforce.com (BI / Reporting tools and Service Cloud) and KXEN had (rightfully) decided to put a number of their models in the cloud on top of salesforce.com. Let's expect grown up reactions from both companies and we see another co-opetition relationship forming. The fun fact will be that it will SAP's KXEN running on the salesforce cloud infrastructure using data in an Oracle database.
Implications for Customers
There is no reason for KXEN customer to fear the acquisition - assuming SAP will secure the management and expertise diligently - and if concerned - secure support and commitments now for as long as can be negotiated. But understanding what SAP plans to do with KXEN on top of HANA will be interesting and probably valuable for KXEN customers - so they should wait and see at least for these plans to crystallize soon.
For SAP customers looking elsewhere confused and potentially disillusioned by the current state of analytics - this is exciting news and they should press hard for the road map of integrated offerings.
Implications for Partners
While many services companies in the IT field maybe looking at how successful IBM is acquiring analytics companies and making a services play out of the business - it's too early to tell if SAP can create a similar services ecosystem around analytics. In general it's worth watching and looking for value added services that can be build or productized on top of HANA.
Implications for SAP
SAP gains a very good analytics company and now needs to maximize the return for mutual benefit of customers and ecosystem. It has taken a long time to create a good analytics story - now, one can only hope it becomes a great one.
MyPOV
A good and fitting acquisition for SAP that will make HANA a better competitor in the (true) analytic space with SAP gaining a end user friendly tool, some interesting packaged apps and a thorough data mining and scoring engine and expertise. If you are a fan of (true) analytics like yours truly - then this is a great move.