SAP Buys KXEN

SAP announced today that it plans to acquire KXEN in a deal that will close in the fourth quarter.  No purchase price was announced.  Since one recently laid-off employee characterized the company’s prospects as “circling the toilet”, this seems like a case of bottom-feeding by SAP.

KXEN has struggled to position and sell its InfiniteInsight analytic software.  The vendor’s black-boxy approach has little appeal for hard-core analysts, who prefer tooling that offers greater control over the analytics process.  At the other end of the value chain, business executives are not interested in analytics, but in business solutions.

Hence, KXEN is neither fish nor fowl as a standalone company, but its technology is worth something to an enterprise vendor such as SAP, who say they will embed KXEN in applications for managing operations, customer relationships, supply chains, risk and fraud

KXEN has never been terribly forthcoming about details of its technology.  The software is server-based, with database integration primarily through ODBC and PMML.   KXEN has an established partnership with SAP Sybase, but for model scoring only in a “run-beside” architecture.   SAP says it will integrate KXEN with HANA, but I suspect that will also be in a run-beside architecture, since KXEN adds little to SAPs’ in-database Predictive Analytics Library.

Update:   Several analysts have commented on SAP’s move, including Curt Monash.  Monash correctly distinguishes between analytic programming languages (such as SAS or R) and analytic applications such as KXEN’s InfiniteInsight.  (There is a third category, which I call the analytic workbench, that is designed for users who have some understanding of analytics but would rather not program.  SPSS Modeler is an example,)

Monash also rightly throws cold water on SAP’s ability to embed KXEN in business solutions, pointing out InfiniteInsight’s lack of tooling needed for risk applications.  I’d go farther to say that KXEN has no credibility outside of Marketing Campaign Management, where SAP CRM is sadly stuck behind IBM/Unica, SAS, Neolane, Teradata Aprimo, Oracle and Pitney Bowes.

Advertisements

4 comments

  • I agree with many of your point Tom. However, these guys do have some valuable IP and given SAP’s weak offering for Predictive Analytics (in spite of all the hype to the contrary) KXEN could be a much better engine for them going forward. I have expected a consolidation for some time now as both IBM/SPSS and SAS have shored up their dominant offerings in the market, leaving everyone else to compete for an ever-decreasing piece of the pie. I wish both parties a lot of luck in this merger of synergies.

  • Thanks for the comment. If it wasn’t clear in the post, I agree that KXEN’s IP is worth something when embedded in business solutions; that’s what it was designed to do in the first place.

    My point is simply that KXEN made no sense as a standalone company. This is not because IBM and SAS have strengthened their analytic software, but because the solutions into which KXEN can be deployed are increasingly controlled by enterprise vendors (such as IBM, Oracle and SAP). Since Oracle and IBM have strong analytic software and SAS is a player in the solutions market, it appears that SAP was the only logical buyer for KXEN.

    I also agree with your assessment of PAL, though I suspect that PAL is good enough for users who lack the clout to justify purchasing something other than SAP.

  • Thank you! this feedback is useful. I truly appreciate the value add from the earlier comments.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s