Oracle Buyout of Hyperion to Hasten BI Sector Consolidation

Opinion: Oracle's $3.3 billion buyout of Hyperion Solutions will likely trigger a general consolidation of the business intelligence sector as the survivors devour each other or get snapped up by the industry giants.

Oracles $3.3 billion acquisition of Hyperion Solutions, a specialist in the field of corporate performance management, has set the fox among the chickens in the broader business intelligence market.

This has long been a relatively quiet and sometimes prosperous sector of the enterprise software market, where the corporate acquisitions have been far less costly and involved larger BI players making strategic purchases of their smaller brethren.

But with Oracle in the market, the larger surviving BI players—Cognos, Business Objects and Informatica—have to start thinking about whether its time for them start making more of their own strategic acquisitions … or even start devouring each other.

/zimages/2/28571.gifClick here to read more about Oracles $3.3 billion buyout of Hyperion Solutions.

Another company that certainly should be reviewing its options is SAP, because once again Oracle has demonstrated that it will keep massively outspending SAP to try to build an all-encompassing ERP (enterprise resource planning) suite that cant be assailed in the market.

John Van Decker, Gartners research vice president, says the March 5 buyout of Hyperion for $52 per share is part of Oracles "surround SAP" strategy.

This acquisition, Van Decker said, allows Oracle to get both feet inside the offices of chief financial officers around the globe. Performance management is the branch of BI that helps CFOs determine whether their companies are achieving financial goals and operating according to business plans and budgets.

CFOs frequently use supporting data generated by performance management applications when they decide whether to approve major new corporate investments.

Hyperion had been the biggest player in the market, Van Decker said. Until recently, neither Oracle nor SAP had a performance management application within their business intelligence portfolios, he noted.

Oracles acquisition of Hyperion comes barely a week after SAP acquired Pilot Software, a privately held developer of business analytics and online analytical processing applications, on Feb. 20.

Now that Hyperion is off the market, the surviving big players in the BI market have to be thinking about how they will react, Van Decker said. "I can tell you right now that we are fielding many calls from competitors that are now wondering how will this change the market," he said.

/zimages/2/28571.gifTo read more about why SAP acquired Pilot Software, click here.

SAP officials have said many times that they dont intend to spend the billions of dollars Oracle has over the past four years to build up its application portfolio. Instead SAP has pursued small but "strategic" acquisitions that have allowed it to add innovative technology to its product line.

However, Van Decker said, this latest acquisition may force SAP to reconsider that strategy. Oracles latest move has to be "raising an eyebrow, I would imagine at SAP, and I think that ultimately they will need to make some kind of a response."

Next Page: Collecting companies means an integration challenge.

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...