SAP has recently announced that it plans to purchase French business intelligence company Business Objects in a cash deal of slightly more than $6.8 billion dollars, a considerable premium reflecting the added value SAP see in this union.

This move comes shortly after Oracle announced its own foray into business intelligence space with the purchase of Hyperion and is SAP's largest acquisition to date.

At the close of trading on the 8th of October SAP had shed 5% over fears of the ERP giant moving away from the organic growth strategy that has served it so well to date. But these are interesting times...

This marks a high water mark in the ongoing and furious competition between these two players, and more specifically between Henning Kagermann, SAP's chief executive and Larry Ellison of Oracle, in what is shaping up as an ongoing struggle for outright dominace within the sector.

In the past twelve months we have seen the ongoing court battle over Espionage charges, the listing of Ellison's NetSuite and the drive by SAP to enter the Software-as-a-Service market with force. (Even though they have suggested doubts over the profitability of the model within the mid-size business space)

The Business Objects acquisition makes good sense on so many fronts. As a leading business intelligence solution globally this gives SAP inroads into revenue generation in additional markets, as well as giving it the capability to cross sell and integrate their product offerings for better end-to-end service.

A common complaint for many years from SAP users has been that it is great for putting stuff into, but not so great for getting it out of again.

SAP has stated that the two companies will continue to work as stand alone companies, with their own strategic goals and market focus. However, the disruptive effect on other players in the market will be large.

Other leading players like Cognos will be feeling the squeeze from both Oracle and SAP and may itself become in play for a company such as Infor. (A surprisingly large third player in this match up) More concerning for others within the ERP/EAM space is for players such as Mincom a significant player in asset-intensive industries, who have made a lot out of integration with the product.

These impacts alone are considerable, but over time there will be another possibly larger and more disruptive effect.

A swathe of companies have built business intelligence capabilities into their SAP - integrating products and services in an effort to gain leverage off the difficulties from getting information from SAP. These companies will now be looking down the barrel of shrinking revenues as the marketing and sales cycles for these two products converge. Also, watch for a dramatic increase in Business Objects capable consulting companies.

Equipment, Maintenance and Technology is a leading business blog for asset-intensive industries. (c) Lassiter Group 2007