Product Strategizing Key to Hyperion

 
 
By Dennis Callaghan  |  Posted 2001-05-28 Email Print this article Print
 
 
 
 
 
 
 

Company plans business strategy review, focus on profitable offerings.

Hyperion Solutions Corp. announced earlier this month that it will slash 15 percent of its work force, or about 400 jobs. Now customers and analysts are wondering if the other shoe will drop on the companys product lines.

The job cuts, along with a hiring freeze, restrictions on corporate travel, and cuts in discretionary spending and capital expenditures, will be made to improve the companys financial performance as the economy slows, Hyperion officials said.

Hyperion also announced plans to review its business strategy and realign personnel around profitable products, leading some to speculate that either some of its business applications or its Essbase OLAP (online analytic processing) multidimensional database server could be on the chopping block.

"It would be nice to see a clear direction of their product strategy," said Jay Nish, a consultant at Clarity Systems Ltd., in Toronto, and an Essbase user. "I wish theyd focus more on building the database product [Essbase] than the [analytical] applications. I can build the applications."

Jeff Rodek, Hyperions chairman and CEO, said last week that Hyperion remains committed to Essbase, one of its most profitable products.

Hyperion, of Sunnyvale, Calif., acquired the Essbase application when it purchased Arbor Software Inc. in 1998 and discontinued its own OLAP server in the process.

Hyperion will add new features to Essbase later this year, including a multitiered architecture to allow Essbase to work better with Web-based applications, improved integration with relational data warehouses and a new administrative console.

Company officials said Essbase has more than 4,000 customers and 1 million users.

But if Essbase is one of its most profitable products, the companys applications business is most likely not faring as well.

For its fiscal 2001 third quarter, Hyperion posted a net loss of $1.2 million on $130 million in revenue. (The company does not break out revenue by product lines.) Its licensing revenue fell by more than $7 million from the same quarter a year ago.

Officials will not speculate on whether the review of its business strategy could result in the elimination of some unprofitable product lines. But, Rodek said, much of the evaluation will center on improving the way Hyperion goes to market with its channel partners.

"Our goal is to go through a strategic planning process to better identify our power alleys and how best to attack them," Rodek said. "We need to find the most cost-effective ways of taking our products to the customers where the purchasing decision is made."

Nigel Pendse, a consultant who follows Hyperion closely for OLAPReport.com, said the strategic review would likely lead to the elimination of some analytic applications the company has been building.

"Hyperion really, really needs to focus on the apps that are likely to be big sellers, cutting out the ones that are failing," said Pendse in London. "They have a lot of costs tied up in these unpromising projects, and its been obvious for ages that they needed to pull the plug on this cash drain."

Pendse said that Hyperion would be better off splitting into two companies—one for applications, one for database products—though he thought that was unlikely.

Over the past year, Hyperion has focused increasingly on the analytical applications at the expense of Essbase, Claritys Nish said.

Pendse said Hyperion has focused more on Essbase this year than last year, and he expects it to continue to be a viable product for the company.

"Even though Microsoft [Corp.] has taken leadership of the OLAP server market from Hyperion [with Microsoft Analysis Services], theres likely to remain a solid niche for an OLAP server thats both cross-platform and database-independent," Pendse said. "[Essbase] is still a widely used, successful product with a fantastic customer list."

Rodek said Hyperion has no plans to split into separate companies; however, he said, it cant continue to try to sell its packaged applications and database server products the same way.

"It doesnt mean we have to split the company, but it does mean we have to use our channel better," he said.

One consultant who uses Hyperion software and other business intelligence applications for his clients said the company needed to cut "dead weight" and still suffered from the merger with Arbor.

"I think their problems are internal. They have two sales forces that need to cross-train on the different products; they have clients who are confused by all the products theyve been releasing," said the consultant, who asked to remain anonymous. "I think you have to wait for the dust to settle and the products to mature."

Rodek rejected the notion that his companys current troubles are related to the merger, but he did concede that Hyperion has helped sow confusion in the market with all the applications that it has released. He didnt agree with the assertion by OLAPReport.coms Pendse that Hyperion needs to eliminate some of those applications.

"The good news is, weve delivered a lot of applications. The bad news is, weve made things a bit too confusing for our customers and partners. We do need to simplify things a bit," Rodek said. Look for a new product and a go-to-market strategy laid out by the end of July, he said.

 
 
 
 
 
 
 
 
 
 
 

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