QUESTION & ANSWER

Oracle's plans to buy Hyperion: Business intelligence and corporate performance management software vendors react

By Hannah Smalltree, News Writer 12 Mar 2007 | SearchDataManagement.com

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How is your organization reacting to the news of Oracle's plans to buy Hyperion? How do you anticipate that it will affect your company and your customers?
Anthony Deighton, vice president of marketing, QlikTech International AB, a Radnor, Pa.-based BI vendor, via email: Such a move confirms that the traditional, standalone OLAP-based BI business model is dead. As the stack players swallow the traditional BI players, QlikTech will have many more opportunities to demonstrate the benefits of in-memory analysis to companies [that] might be concerned with merger announcements like this or, even worse, might find themselves feeling neglected by these ever-growing stack vendors.

Piet Loubser, senior director of market intelligence, Business Objects SA, a BI/CPM vendor with dual headquarters in Paris and San Jose, Calif.: At a high level, it doesn't change much in the way we view the competitive landscape. It definitely offers short-term opportunities for us to exploit the confusion that exists in the Hyperion customer base. If you consider Hyperion BI, customers have had a fairly rough ride over the last three years. [Cited the Brio acquisition, increased maintenance fees and the System 9 "enablement fee."]

Russ Cobb, vice president of marketing, SAS Institute, a Cary N.C.-based BI/CPM vendor: We've already seen a loosening up of our sales cycle -- customers wanting to get us in the door sooner and wanting to take another look at SAS. There's just more uncertainty about Hyperion. I think customers will be looking at SAS increasingly, as speculation continues to swirl about who's next [to be acquired.] We're private. We'll remain independent. Do we need to be acquired to increase our tech portfolio? No. If we were acquired, would we be in a better position to serve our customers needs? No.

Mark LaRow, vice president of products, MicroStrategy Inc., a McLean, Va.-based BI vendor, via email: The acquisition will have little impact on the BI platform market and can be positive for the independent, pure-play BI vendors, like MicroStrategy.

What do you think this means for the BI/CPM market?
LaRow, MicroStrategy: This acquisition will pressure BI vendors [that] have diversified into [CPM] applications, such as Business Objects and Cognos. With the entry of Oracle, SAP and Microsoft into the [CPM] applications market, we think Business Objects and Cognos will find themselves increasingly in direct competition with these software giants. BI vendors like MicroStrategy, [which] have steered clear of [CPM] and continued to invest in a differentiated BI platform, will see little competitive impact.

For more on Oracle's plan to acquire Hyperion Read expert opinions about Oracle's plans to buy Hyperion Learn what the Oracle-Hyperion deal could mean for SAP customers Check out how SAP says it plans to respond to the Oracle-Hyperion deal Get more information about why Hyperion's fit with Oracle Fusion is unclear

Gerry Cohen, chief executive officer and president, Information Builders Inc., a New York-based BI/CPM vendor: I think Oracle is a great marketing company, and they're probably going to push that they're No. 1 in BI. The truth of the matter is there's not a lot of BI product involved here, largely because Hyperion is almost totally a financial software provider.

Loubser, Business Objects: As a result of Hyperion's strong position in financial performance management, the market was defining performance management as financial performance management. With Hyperion moving into the Oracle bucket, it takes that pure-play out of the market and opens up the opportunity to redefine the market for enterprise-wide performance management (including workforce, supply chain and other areas).

Deighton, QlikTech: Today, there are still too many standalone players touting out-of-date technology as their only offering. That approach -- and the associated business model, where more than half a vendor's revenue is from services rather than software sales -- is obsolete. It's only natural for these players to be absorbed. [Note: Hyperion was essentially a services company, with only 38% of its revenue coming through license sales in 2006.] Continued consolidation will eventually lead to a face-off of "stack" players and innovators. We may eventually see the stack players acquiring the innovators.

How would you recommend that organizations change their BI/CPM strategies in light of this news?
Mychelle Mollot, vice president, market strategy and strategic communications, Cognos, an Ottawa-based BI/CPM vendor, via email: It comes down to independence. There's a Goldman Sachs study out that showed that more than 60% of CIOs preferred to purchase their business intelligence from an independent vendor -- not an application or database vendor. If that's the case, then users need to think long and hard about committing to an Oracle-Hyperion solution.

Loubser, Business Objects: Companies will have to look at BI from a strategic point of view, where it spans every process, every person, any application and any database. Neither of these two organizations have had enterprise capabilities for BI. Hyperion's performance management is finance only, nothing for the enterprise. Their BI tools were really lightweight and a lot of the analytical capabilities were predicated on using their OLAP cube Essbase. The same with Oracle -- everything was predicated around your using Oracle's database and applications. The problem is that the world is not heterogeneous.

Cohen, Information Builders: I think they ought to go to the independent vendors, because they are the only ones [that] can play with all the data. Remember, in the BI space, we're talking about reading every piece of information the company has and making it available usefully. That can only come from the independent vendors. I don't expect Oracle to do a great job reading SAP information or even hooking up to SAP.

Deighton, QlikTech: Clearly, organizations should think twice before buying from the traditional OLAP BI players, as they never know who might buy them and what that buyer might do with them, their solutions or their customers. The BI solutions offered by these giants will become a patchwork of many different products, and this certainly won't make deployments and usability any easier for the customers.

What are your top three questions or concerns about the proposed deal?
Loubser, Business Objects: What is the roadmap going to look like for these technologies to come together? Whatever the roadmap, customers are asking: "How will Oracle get me from where I am today to that new base? I can't just throw away hundreds or thousands of reports and investments in training." Hyperion customers have gone through hell with maintenance -- where Hyperion has upped and increased maintenance fees. In past experience, that's the first thing that Oracle has done to PeopleSoft customers and Siebel customers, changing maintenance from an average of 20% to 22% and 25%. And, lastly, how much of Oracle's Fusion platform will they forcibly attach to whatever product I'm buying -- such as a Hyperion planning or BI product?

Cohen, Information Builders: Will Oracle tolerate another database in its company? It has never done that so far. [Cited IRI's Express database as an example.] So I think the Essbase users are probably a little bit worried about their long-term prospects. And how are they going to deal with SAP information? What's going to happen to Brio? [Brio is a Hyperion product, acquired through acquisition.]

Mollot, Cognos: Which products from which portfolio will be the go-forward product and which won't? What happens to System 9? Discoverer? Oracle EP&B? PeopleSoft EPM?

Cobb, SAS: What does this mean for Hyperion customers? We were a little bit surprised that the announcement really positioned this as an acquisition to get at SAP, as opposed to saying that it was best for the mutual customer base.

LaRow, MicroStrategy: What happens to customers of the former Brio products? Those are directly overlapping with Oracle's Siebel Analytics. What happens to the R&D budget for Essbase and the formerly Brio products? What happens to Hyperion tech support, product management, and field sales/consulting force after the acquisition?

Read, Cartesis: Which of Hyperion's products are going to survive? And there are other concerns around the relationship and about the stated purpose of surrounding SAP. Customers are looking at this and saying there's obviously a war between Oracle and SAP -- but it's not my war. I'm not involved, and I have better things to do.

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