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Business Objects sweeps up Firstlogic

Business Objects said today it will acquire Firstlogic, the latest move in a market that has seen the marrying of business intelligence to data quality.

Business Objects SA has announced a new addition to its rapidly expanding business intelligence (BI) suite.

Business Objects said today it will acquire Firstlogic and its data quality products. Business Objects, a publicly-traded company with dual headquarters in San Jose, Calif. and Paris, will pay approximately $69 million in an all-cash transaction for Firstlogic, a privately-held company headquartered in La Crosse, Wis. The transaction is subject to regulatory approvals and other customary closing conditions, and is expected to be completed in the second quarter of 2006.

The deal adds data quality technology and services to the Business Objects BI suite, bolstering its enterprise information management (EIM) strategy. The purchase of Firstlogic follows two 2005 acquisitions by Business Objects, including interactive visual analytics vendor Infommersion, Inc. in November and SRC Software in August. In a press release announcing the Firstlogic deal, Business Objects said that the new data quality technology will enable a single, consistent view of enterprise information, improving trust in system data and accelerating compliance initiatives. Business Objects said that they have over 35,000 customers worldwide, while Firstlogic reports 6,000 customers.

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"Business Objects is the only BI vendor that provides a complete EIM solution, enabling trustworthy, timely, and actionable information … EIM will play an increasingly vital role in the business intelligence market," said John Schwarz, CEO of Business Objects in a statement. "As companies face the multiple pressures of regulatory compliance, expanding numbers of data sources, the need for real-time operations, and the ability to link data to performance management initiatives, customers are demanding an EIM solution that can help them scale with these fast changing dynamics."

Analysts cautiously optimistic

While analysts are generally positive about acquisition, the claim of a "complete" EIM solution evokes skepticism.

"[Business Objects] needs to be careful when articulating what they're offering and that's broader data quality integration -- which is something that will help their customers," said Ted Friedman, research vice president at Stamford, Conn.-based Gartner Inc. "But, to say they offer a complete EIM solution is really stretching quite far."

Keith Gile, principal analyst with Cambridge, Mass.-based Forrester Research Inc., agreed the acquisition will help current Business Objects customers and said it could potentially help the company win deals against large competitors like Microsoft, Oracle Corp. and IBM. This acquisition puts pressure on everyone, from other BI vendors to extract, transform and load (ETL) vendors, and will have "interesting and huge ripple effects," Gile said.

"BI isn't just about reporting," Gile said. "The value of the reporting and analysis that is done is dependent on the quality of the data that's being analyzed. This [acquisition] makes Business Objects more attractive to more buyers. Now their data integration mechanism is stronger."

As to whether Business Objects has a "complete" EIM solution now, Gile pointed out, "They don't have the database, so guess what? There's a huge piece of the puzzle missing, but [the acquisition] does makes their entire offering stronger."

Business Objects might be able to compete, but can they sell it? Eric Rogge, vice president and research director with Ventana Research, said the acquisition sends the message that Business Objects is serious about data integration. However, he is interested to see how the company approaches the market. If they focus too much on the large deals, they could lose ground with small and medium sized implementations.

"The real question is, do they have a sales team that can sell data quality?" Rogge said. "I think a lot of it depends upon how well they manage and segment the sales team."

Industry consolidation abounds

The impact of the acquisition on the data quality market is quite significant, Friedman said. With the exception of Trillium, few standalone data quality vendors are left in the market.

The Business Objects-Firstlogic deal comes only weeks after Redwood City, Calif.-based data integration vendor Informatica acquired data quality vendor Similarity Systems, based in Dublin. Some industry analysts had predicted that Informatica would eventually acquire Firstlogic, because the companies had a partnership and had completed some integration between their systems. Last September, FirstLogic was  set to be acquired by Pitney Bowes before the deal ultimately fell apart.

Industry acquisitions and consolidation could complicate decisions for companies, Friedman said, as now they must decide whether to purchase data quality services from their existing data integration or BI vendor or from a competing vendor.

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