German vendor SAP is set to buy Business Objects in order to combine its ERP software with the French company's BI products. SAP said that it planned to offer their customers real-time information about their businesses.

Acquiring Business Objects will allow it to move into the BI market, and offer integrated software, far faster than through co-innovation, said SAP CEO Henning Kagermann. "Customers have demanded an integrated, end-to-end business process landscape," he added. "The biggest driver was definitely growing new business."

There is little overlap between the two companies, Kagermann said. "There are opportunities on the top line so that we won't need heavy restructuring." .

Business Objects will continue to operate separately from its new parent, the companies said. "We will operate as a standalone entity within the SAP Group," said Business Objects CEO John Schwarz.

"This business intelligence solution will be available in a more integrated fashion for the SAP customer, and in a standalone manner for the non-SAP customer," Schwarz said.

SAP's business software rival Oracle bought another BI vendor, Hyperion, earlier this year.

Schwarz said SAP and Business Objects' combined reach through resellers to midmarket companies will help them compete effectively.

"Together we have almost 5,000 business partners. I think it will be a formidable force as we put our solutions together," he said.

SAP extended its reach into the mid-market last month with the launch of a suite of hosted ERP software called SAP Business By Design.

SAP couldn't say, however, when the company would be able to offer the integrated software.
"Give us a little time," pleaded Kagermann. "This is not a finalised transaction. Until it is closed both companies will plan how to do it and talk."

SAP has valued the company at €4.8 billion (US$6.78 billion), a 20 percent premium on the overnight valuation. SAP expects to close the deal in the first quarter of 2008, subject to regulatory approval.