Firms dig deep; go soft

In the space of a month, two business analytics software rivals ”“ both based in Fairfield County ”“ have been snapped up by the rival giants of enterprise resource planning software.
SAP AG is spending by some estimates between $400 million and $500 million to acquire OutlookSoft Corp., a Stamford company that is among the fastest-growing software companies in the country.
OutlookSoft had received $59 million in venture capital funding, with backers including Westport-based Pequot Ventures and the GE Commercial Finance unit of General Electric Co.
The deal follows Business Objects Inc.”™s $300 million purchase in April of Cartesis SA, a French company with its U.S. headquarters in Norwalk.
OutlookSoft had $48 million in revenue in 2005, the most recent year it reported sales figures, and an SAP executive told Reuters that OutlookSoft increased revenue 25 percent last year.
The company ranked third on Deloitte & Touche L.L.P.”™s most recent “Fast 50” list of the fastest-growth companies in Connecticut over a five-year period, trailing only Norwalk online coupon vendor Webloyalty Inc. and Stamford data center company Cervalis LLC of Stamford.
OutlookSoft adds 250 employees to SAP, which at year”™s end had 6,560 employees in the U.S. and nearly 39,400 worldwide.
Both OutlookSoft and Cartesis sell software that allows employees at all levels, or an organization, to monitor their performances against corporate goals, linking with “business intelligence” software that mines data out of central repositories for analysis.
Cartesis has several European customers in its customer base that have significant operations in Fairfield County, including Diageo, Nestle, Royal Bank of Scotland, and Unilever. OutlookSoft”™s corporate customers include UST Inc., a smokeless tobacco and wine merchant based in Stamford.
“This acquisition plugs an important gap in SAP”™s analytics product range, especially in the higher end where SAP has historically been uncompetitive,” wrote Credit Suisse analyst James Clark in a research note, as reported by Bloomberg News.
SAP and OutlookSoft did not disclose financial terms, but Credit Suisse analysts pegged the deal value at $400 million; an unnamed source told Bloomberg News the value was closer to $500 million.
Either way, the deal could be SAP”™s biggest since it bid $643 million for Retek Inc. in 2005, outdueling Oracle Corp. for software that tracks retail merchandise through the point of sale.
The OutlookSoft and Cartesis deals come on the heels of Oracle”™s $3.3 billion acquisition of Hyperion Solutions Corp., where OutlookSoft founder Craig Schiff worked before becoming OutlookSoft”™s first chief executive officer. In its most recent fiscal year, Hyperion had $765 million in revenue and reported having more than 2,700 employees.
In 2005, OutlookSoft hired as CEO Phil Wilmington, who previously led sales and field operations for PeopleSoft, an enterprise planning software vendor now owned by Oracle.
Schiff, who today is an industry analyst as CEO of BPM Partners Inc. in Stamford, said in a Web log that SAP had to do something to answer Oracle”™s Hyperion deal.
“Neither SAP nor Oracle were as strong in the (business performance management) space as the companies they acquired,” Schiff stated. “SAP users will now be far more likely to consider OutlookSoft for BPM.”
OutlookSoft has twice tangled with its bigger rival in court. In 2003, OutlookSoft privately settled claims by Hyperion that it sent e-mail to businesses in the Southeast stating Hyperion would discontinue two product lines, which Hyperion claimed severely damaged its business. In a court rebuttal, OutlookSoft refuted most allegations and denied wrongdoing.
Hyperion again sued OutlookSoft in December 2004, claiming OutlookSoft violated two Hyperion patents relating to financial consolidation, reporting, and analysis applications; OutlookSoft countersued. In August, a judge granted Hyperion”™s motion for summary judgment on the countersuit, but the following month a jury rejected Hyperion”™s claim.