Update: Business Objects to buy ALG Software

Business Objects is stepping up its efforts in the area of corporate performance management software with an acquisition and the integration of some existing applications with its business intelligence suite.

Performance management software helps big companies with sales, payroll, staffing and capital expenditure planning. Business Objects said its license revenue from such products jumped 70 percent in the first half of the year from the same period in 2005.

The company said on Tuesday its U.K. subsidiary has agreed to buy Armstrong Laing, which makes profitability management software, for about £30 million ($56 million) in cash. It expects to close the deal by the end of the year subject to regulatory approvals and other conditions.

Armstrong, better known as ALG Software, has about 400 customers including American Express, British Airways, and Heineken, and had total revenue last year of about $19 million. Its customers use its software for profitability management, activity-based costing and business performance measurement.

Activity-based costing is hard to do and was one of the motivators for buying ALG, said Mark Doll, Business Objects senior vice president for global services. It helps financial managers figure out the costs associated with making changes to a business, such as adding a few thousand extra salespeople.

"I can now hypothetically play around with different ways of looking at the business, change the way I apply resources. That can drive millions of dollars in client value," he said.

Business Objects has also completed a two-year project to integrate its performance management applications with its data analytics suite, BusinessObjects XI. Many of the applications were acquired in 2005 when it bought SRC Software for $100 million.

The integration means customers can take data from the planning, budgeting and other performance management applications and combine it more easily with the reporting and analysis tools in BusinessObjects XI. The applications are aimed mostly at financial companies and finance managers at big businesses.

Business Objects has dual headquarters in Paris and San Jose, California. It's considered Europe's second-largest independent software company, after Germany's SAP. It's competitors include SAS Institute and Hyperion Solutions.

ALG Software is privately held, with headquarters in Atlanta and offices in Cheshire, the U.K. It has about 120 employees who are expected to join Business Objects when the deal is completed, Doll said.