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SAP to pick up Lighthammer Software

German software giant says the deal will help it market tools that connect a manufacturing company's management with its operations.

SAP has agreed to buy Lighthammer Software Development, a maker of business tools for the manufacturing industry, the German software giant said Wednesday.

SAP said that the Lighthammer buyout will further strengthen its position in the market for so-called manufacturing intelligence tools, or analytics software, as well as tools for worker collaboration in the industry.

Manufacturing has long been an area of strength for SAP, where it competes against rivals such as Manugistics Group and i2 Technologies. SAP says it has more than 12,000 customers in the manufacturing business.

SAP executives said that the Lighthammer acquisition will improve their ability to offer products that help connect a manufacturing company's management with operations in its assembly plants and warehouses. In particular, the company said that Lighthammer's technologies would help customers tie their SAP enterprise resource planning (ERP) systems with other manufacturing applications.

According to Sudipta Bhattacharya, vice president of SAP's manufacturing division, customers continue to ask the software maker for smarter ways to streamline operations and more effectively employ business intelligence tools alongside their existing enterprise systems. Buying Lighthammer will help SAP meet those demands, he said.

"SAP's adaptive manufacturing strategy is about enabling manufacturers and production personnel to get visibility into the shop floor and be able to connect more effectively with supply chain operations and better respond to unpredictable demand," Bhattacharya said. "With Lighthammer, we get major building blocks that allow us to identify issues on the shop floor much earlier than before, and it will allow customers to improve performance and lower costs based on a reduced need for custom connectors between applications."

Lighthammer already identified SAP as its top strategic partner on its company Web site, and Bhattacharya said that roughly 70 percent of the company's existing customers are also SAP clients.

The executive said that reducing complexity and software customization demands remains the biggest issue for companies throughout the manufacturing field.

"Integration remains the biggest challenge for these companies, many of which have multiple software systems and widely distributed manufacturing operations," Bhattacharya said. "By creating a homogenous system from which to gather information on production, even within the same facility, you give businesses the ability to react much more quickly to change."

Terms of the deal were not announced. Lighthammer is privately held.

SAP said it expects the buyout to close in July and that all 60 of Lighthammer's employees will remain at their current facilities in Exton, Pa., and become a unit of SAP America and SAP Labs.