Tioga Venture Blog

Business Objects Announces its Intent to Acquire Cartesis

Business Objects announces its intent to acquire Cartesis
A French leader strengthens its leading position in the BI market

We were very happy to see one of our long standing customers being acquired yesterday by Business Objects, a worldwide leader in BI.

From a top level standpoint, it shows that France can have great success stories in the software world; analyzing one level deeper, this great success relies on an excellent synchronization of 4 major factors involving a controlled level of risk:

Leadership: Didier Benchimol was able to set-up quickly a world class management team and to transform a service driven company into a leading international software company.

People: Cartesis built its reputation on the talent and recognized expertise of many key people with complementary values:
- In product: the internal architecture relies on the Integrated Data Model that provides numerous benefits for the CFO of continuously evolving large companies.
- In Sales: a strong application culture convinced many Fortune 500 companies that there is “value” outside of SAP, Oracle, etc.
- In Consulting: financial consultants were the preferred consultants in the finance department of large companies.

Market: The underlying market for performance management and governance control is a strong market, driven by the reinforcement of financial regulations (Sarbanes Oxley, etc.).

Investment: Gilles Rigal (Apax Partners) lead a consortium of investors and structured the deal in an LBO at the end of 2003 – at this time, it was quite innovative for software companies to be financed with debt.

Main points of the deal:
- Industry’s broadest platform delivering business insight and performance management for both the CFO and CIO
- Total transaction value of €225M (~$300M) in cash
- Expected to be neutral to slightly accretive to earnings for the first full year post closing and accretive thereafter
- Expected to close within 90 days

Congratulations to all the players who were involved in this great French success!

Comments from blogs we like:
Jacques Froissant's Altaïde
Julien Codorniou's Le Codorblog

A few links for more information:
Interview of Bernard Liautaud on Rodrigo’s blog
Cartesis announcement
Business Objects announcement
Journal du Net (en francais) - BPM: Business Objects doit-il racheter Cartesis?
Boursorama (en francais) - Business Objects: conclut l'acquisition de Cartesis

~Julien Mazerolle

ROI is dead

Over the last years, selling software based on ROI has been all the rage. That was probably fallout from the dot com bubble where technology companies went over board. Corporate buyers became more demanding asking for tangible demonstration of value created and references. On the other side of the table, software vendors became increasingly sophisticated in the financial exercise. Some of them developed real mastery of the NPV, IRR and accompanying spreadsheets. And yes, we did push and help our customers go into that direction.

I think this period is over.

Some of the most interesting companies I have looked at recently are not selling ROI per se. They are selling strategic advantage, they are selling differentiation; all that with terrific success in the marketplace. On the other hand, I have been involved with companies focusing on pure ROI sells with limited success. Have customers stopped asking for ROI? Of course not! Buyers will continue to require details on that topic and investment process in corporation will still need one. However, I think it is taking a back seat to other considerations, more strategic in nature. Software vendors will still have to jump through the loop but that cannot be the core of the value proposition. There are probably some good reasons to this evolution : market conditions are much better, specially in high-tech, technology are more mature and have demonstrated value and potential (sometimes in the consumer space) and buyers have become more savvy about buying technology. I am not sure how long this will last, but it is definitely worth taking into account when building a go to market approach.

Frederic Halley