Eye on Oracle

Mar 17 2010   3:51PM GMT

If SAP builds it, will they come?

Shayna Garlick Shayna Garlick Profile: Shayna Garlick

Oracle recently made one of its biggest and boldest advancements as a company with an acquisition — the buyout of Sun Microsystems. The deal handed the software giant a handful of industry jewels including Java, MySQL, the number four position among server hardware suppliers, and much more. But according to SAP’s new CEOs, building — not buying — your way to fame and fortune is the way they plan to compete.

At a media event on Monday, co-CEOs Bill McDermott and Jim Hagemann Snabe discussed their plans for SAP, and shared their feelings on Oracle’s acquisition strategy. According to this article, “SAP to shun growth through acquisition strategy,” Snabe says that with Oracle, the industry is “seeing lots of acquisition to build revenue growth, but very little innovation. We have done the opposite.”

But has it worked? According to this article in BusinessWeek, Snabe and McDermott are promising a turnaround in the slow delivery of new products from SAP over the past few years.  While SAP appeared to have no problem criticizing the acquisitions-happy Oracle, they don’t seem completely against acquisitions (even big ones) themselves.

“If an acquisition made sense, we would not shy away from it,” McDermott was quoted as saying. SAP’s multi-billion dollar Business Objects business intelligence product is the company’s only major acquisition in the past few years.

It seems the media is picking up on SAP’s seemingly contradictory stance on this matter. While eWeek entitled its article, “SAP to shun growth through acquisition strategy,” coverage by Market Watch of the same event was entitled “SAP revamp could include large acquisitions: CEOs.”

So, which will it be? We likely won’t know for a year or two, but it’s still hard to imagine SAP, or any company for that matter, taking such an aggressive approach to acquisitions as Oracle has.  Two years ago, we examined Oracle’s “hostile acquisition” strategy and how Ellison has made such an approach acceptable – or at least effective. Ellison, when discussing Microsoft’s failed attempt at acquiring Yahoo, said, “They are copying us. Others would be foolish not to try.”

Do you think SAP will ever try? Or will Snabe and McDermott stick to the idea that building, not buying, innovation is the best approach?

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