Update: SAP buys BPM vendor to boost NetWeaver

Technology acquired from Yasu will be integrated into SAP's first BPM product, code-named Galaxy and due to ship in the first quarter of next year

SAP is buying a small Indian software company to help beef up the business process management capabilities in its NetWeaver applications platform.

It is purchasing Yasu Technologies, a maker of business rules management software, which helps ensure that business processes automated through software are in compliance with a company's rules and regulations.

SAP characterized the deal, announced at its Tech Ed conference in Munich, Germany, on Wednesday, as a "fill in" acquisition that would bridge a gap in its technologies. The deal is due to close this month and financial terms were not disclosed.

Several vendors, including SAP, are providing software tools that allow companies to automate common business processes, such as issuing a purchase order or checking inventory levels, with the goal of making them more efficient.

But SAP does not yet offer tools for managing these processes, and buying Yasu will help it to add such BPM (business process management) capabilities to NetWeaver.

SAP will begin pilot tests of its first BPM product, code-named Galaxy, in the first quarter of next year. The technology acquired from Yasu will be integrated with Galaxy around the middle of next year, said Klaus Kreplin, SAP's head of NetWeaver technology.

Yasu's software helps companies to enforce the rules that their business processes must abide by. If a company automates a project approval process, for example, Yasu will send projects under a certain budget to a midlevel manager for approval, and more costly projects to a senior manager.

"The nice thing is, you can define rules and make them available as a service that can be integrated with other applications," Kreplin said.

Yasu was founded in 1999 and has about 120 employees. Customers include the automaker BMW, according to its Web site.

BPM is one of several areas SAP is entering to compete better with its main applications rival, Oracle. SAP will also offer software for building composite applications, called the NetWeaver Composition Environment, and developing hosted applications for smaller companies, called SAP Business ByDesign.

The Galaxy software will be integrated with NetWeaver Composition Environment next year. Eventually that, in turn, will be offered as a part of Business ByDesign, Kreplin said, although he wouldn't say when.

Last week SAP said it would buy business intelligence vendor Business Objects for S$6.8 billion. A few days later Oracle offered to buy BEA Systems, whose software competes with SAP's NetWeaver, for $6.7 billion, but BEA called the offer too low.

SAP CEO Henning Kagermann told the Financial Times of London over the weekend that SAP won't enter a bidding war for BEA, and that its strategy is still to grow its two core businesses -- applications and middleware -- organically.

But he wouldn't rule out further big acquisitions in areas where SAP is not already strong. "We are categorically not excluding further big acquisitions," Kagermann said, according to the Financial Times.

The company also continues to snap up smaller companies. SAP has bought more than a dozen vendors in the past three years, according to IDC, including five in 2005, three in 2006, and six so far in 2007, including Yasu and Business Objects. That compares to more than 30 acquisitions for Oracle, a few of which were much larger deals.

Copyright © 2007 IDG Communications, Inc.