| IBM acquisition of SAP rumours surface |
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| by Stan Beer | |
| Saturday, 22 April 2006 | |
  
According to UK-based research group Ovum, although SAP was ahead of market expectations on revenues, with an increase of 18% year-on-year to €2.04 billion, the profit figures came in below expectations, with an operating profit of €409 million, a fall of 1.6% over Q1 2005. Ovum comments that the undershoot in profits has caused renewed speculation that IBM is going to buy SAP. However, the rumour is not new and Ovum believes that there are factors against the merger, not least because IBM has a very strong consulting business in Global Services, which would object to being forced to give up its applications vendor neutrality. Being an SAP owner, would mean Global Services would find itself locked out of doing work on projects involving SAP's rivals Oracle, Microsoft and others. On the plus side, however, as Ovum points out, is that IBM may be tempted to build a complete stack of software in a similar manner to what Oracle has speculated on doing recently, with its Linux musings. Ovum has even speculated that Microsoft may one day become a buyer of SAP. What Ovum does not say, however, is whether the IBM Global Service business could be viewed as an inhibitor for the rest of IBM's business as a technology provider. IBM makes about the same profit today as it did six years ago. The lack of growth in the company has been a subject of discussion recently. In order to grow, IBM needs to get into new technologies and new markets. If IBM has to stay out of a potential growth market because its services business wants to maintain vendor neutrality in software and hardware, then perhaps it is time to look at how the services business fits in to the rest of the organisation. And even whether it should be spun off as a separate company.{moscomment} |
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