SAP acquires Pilot Software 21 February, 2007 By Patricia Pickett

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Walldorf, Germany-based SAP completed the acquisition of Mountain View, Calif.-headquartered Pilot on February 14 for an undisclosed sum. According to Sanjay Poonen, SAP's Palo Alto, Calif.-based senior vice president and general manager for analytics, the Pilot business will remain completely intact in the same location with no layoffs, and will report to him.

Pilot, which specializes in strategy management software, is a fairly young startup: it was founded in 2002, has approximately 40 employees and serves 150-plus customers worldwide. But quantity isn't as consequential as quality in this case, said Poonen. What SAP is really interested in is how this acquisition will help beef up its own offerings for C-level executives who want comprehensive analytic applications for performance management so they can foster alignment across their organizations, he said.

In a typical organization, either the CEO or operational executives will establish goals and metrics for how the business is to be evaluated in the next year. Metrics could include revenue growth, increased customer satisfaction or increased service levels, among other things, said Poonen. The next step is to start rolling out those metrics and objectives down the different levels in the organization. Each level requires an understanding of what those metrics entail and what kind of budget will be required in order to meet the objectives.

"The metrics, analytics and management of workflow need an application so that people aren't sending spreadsheets and PowerPoints back and forth," Poonen said, adding that Pilot's software "helps pull that all together."

Through the acquisition, SAP intends to strengthen its position in the analytics applications market, Poonen said. "Pilot has some very innovative leapfrog capabilities in the strategy management category," which SAP will integrate with its own software to build out its portfolio. "We've unearthed a diamond," he said.

SAP considers Pilot a "tuck-in" acquisition, meaning that while it is adding innovative technologies and products to its portfolio that are going to "fill in some white space," the vendor is being intentional about not letting the acquisition be disruptive to customers, Poonen explained. "Customers are not going to be asking how to integrate all of these things," he explained. "We don't want to say, 'Here are five different platforms -- now pull them all together.'" The vendor wants to be able to take a reasonable amount of time to rationalize everything and pull things together quickly without enormous efforts, he said.

SAP has stuck to this same strategy in the past with the 2006 acquisition of Virsa Systems Inc., a supplier of cross-enterprise compliance solutions, as well as enterprise manufacturing intelligence and collaborative manufacturing software maker Lighthammer Software Development Corp., acquired in 2005, Poonen noted.

SAP will integrate Pilot's flagship product, PilotWorks, with its own applications. PilotWorks will also sit on top of the NetWeaver platform. The integration is "well underway already," Poonen said, adding that PilotWorks should be on SAP's price list and should start rolling out to the vendor's entire global distribution machine by the end of the first quarter or early Q2 this year.

Current PilotWorks users will be able to continue to use the software without any changes -- the only difference will be the added integration with SAP, from which SAP's customers will also benefit, Poonen said. "Nothing is changing. We are enhancing the solution with further integration, not burdening it." For new SAP customers, Pilot's products will become a key part of the vendor's strategic portfolio, he added.

SAP plans to meet with its partners across the world to discuss how PilotWorks will be made available to the channel. The vendor will also meet with existing Pilot partners in major regions to talk about how they can start to represent SAP services. Partners with Pilot expertise will kick off initial sales of SAP-integrated PilotWorks, and as more SAP partners learn about the software over the next 12 to 18 months, they will join the initial group.

In addition, beyond SAP's current partners, "this will bring us enormous new channel presence," with the potential to bring new partners onboard, Poonen said.

Partners will be able to find opportunities on the services, strategy and consulting side, Poonen said. "They will be able to do a complete strategic assessment of where a business should be moving, and some part of that solution is going to involve implementing the software."