Thursday, September 14, 2006

A Tale of Two Acquisitions: Alterian and Business Objects

Acquisitions form the never-ending background noise of the technology industry. Some illustrate such obvious trends they are barely worth noting, while others hint at something important. This week brought one of each.

On September 11, Alterian ( announced its purchase of Nvigorate (, one of the better established developers of marketing resource management systems. In doing so, Alterian confirmed its strategy to expand the scope of its products to become a comprehensive system serving all marketing department needs. Alterian had signaled this intention by purchasing email marketing software vendor Dynamics Direct on May 25. The logic behind this strategy is impeccable—it’s easier to sell new products to existing customers than to sell new customers on existing products. But just about every other major marketing software vendor is taking the same approach, so the competitive advantage is almost nil. What’s worse, plenty of other vendors, including analytics heavyweights like SAS and SPSS and enterprise software giants like SAP and Oracle, already offer product lines that incorporate all of marketing and a great deal else. I remain skeptical that enough buyers want a broad-scope marketing system, but not a broader-scope analytics or enterprise solution, to provide the marketing-only vendors with a healthy long-term business.

On September 13, Business Objects ( announced an agreement to acquire Armstrong Laing Limited, known as ALG Software, a specialist in profitability management and activity based costing solutions. This can also be read as a conventional product line extension, and it may be nothing more. But it does bring to mind the critical role that accurate profitability measurement plays in optimizing business results. In particular, profit per customer and profit per interaction can only be measured meaningfully with an activity-based approach. Thus, intentionally or not, Business Objects is positioning itself to provide a key building block for effective customer value optimization This will ultimately make Business Objects much more important to its clients than the simple, and easily duplicated, convenience of combining several marketing management functions within a single offering.

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