Buying KXEN will strengthen SAP in predictive analytics. KXEN will gain much-needed scale, but KXEN's customers should note that customer satisfaction with some releases of SAP's business intelligence products has been low.
On 10 September 2013, SAP announced that it plans to acquire KXEN, a provider of predictive analytics technology for line-of-business users and analysts. SAP expects the deal to be completed in 4Q13.
Acquiring KXEN and its strength in predictive analytics will make SAP a real competitor in this market, one in which it has lagged behind. The deal will enhance SAP's ability to bring predictive analytics to business users, as KXEN's technology automates key modeling and analytical tasks. SAP's customers will benefit from the capabilities of InfiniteInsight, KXEN's flagship product, and Cloud Prediction, its cloud-based platform.
The acquisition is designed to complement SAP's existing advanced analytics. Although Securities and Exchange Commission law prevents SAP from making a full road map available until after the acquisition completes, it's not obvious to us how KXEN will complement SAP Predictive Analysis using R and SAP Hana. We question SAP's ability to go to market with two independent products in the predictive analytics space.
SAP plans to incorporate KXEN technology into its cloud and on-premises applications built on Hana, including SAP Fraud Management, SAP Smart Meter Analytics and SAP 360 Customer.
This deal indicates that SAP is willing to pursue an acquisition model to fill gaps in its business analytics portfolio — and it is likely to make further acquisitions. Before SAP acquired it, Business Objects used to buy vendors when it needed a capability, such as Infommersion (for its Xcelsius visual dashboard) and Crystal Decisions (for embedded and pixel-perfect reporting). But this created an unwieldy codebase. It appeared, until this announcement, that SAP had changed to a more organic development model that resulted in a more manageable codebase (with SAP Lumira, SAP Predictive Analysis and SAP BusinessObjects Design Studio).
KXEN has been a disrupter in the predictive analytics space (see "Cool Vendors in Analytics, Business Intelligence and Corporate Performance Management, 2007" ), but alone lacks the scale and resources to compete strongly as vendors flood into the advanced analytics market. The acquisition will give KXEN the access to organizations and the scale it needs to be a force in this market.
The acquisition is likely to be mixed news for KXEN customers, judging by the low customer satisfaction rate for some versions of SAP's business intelligence (BI) products (see "Survey Analysis: Customers Rate Their BI Platform Vendors, 2013" ). Much will depend on SAP's road map.
We don't expect that SAP will promote KXEN to those on non-SAP architecture, such as Teradata, salesforce.com and Oracle. We believe that KXEN's cloud strategy will become central to SAP's predictive analytics solutions.
SAP customers: Consider KXEN if you have been assessing other predictive analytics solutions.
SAP Predictive Analysis customers: Watch closely, as we believe the planned acquisition makes the future of this product uncertain.
KXEN customers: Be cautious given SAP's track record for customer satisfaction with some versions of its BI products.
Those selecting vendors: Wait until SAP publishes its road map before considering it for predictive analytics. In 12 to 18 months, the combination of SAP and KXEN could make it a real contender.
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"Vendor Rating: KXEN" — The company's focus on rapid development of predictive models makes it a compelling option for organizations requiring large numbers of models, or for those looking at complex issues influenced by large numbers of diverse data types. By Gareth Herschel
"Survey Analysis: Customers Rate Their BI Platform Vendors, 2013" — Our survey on the experience of BI professionals with 34 vendors shows that SAP has work to do to improve the experience for customers. By Rita Sallam