Oracle buys itself leadership in BI

For months, the business intelligence (BI) market has been buzzing with acquisition talks. IBM, some said, has been eyeing up Cognos; Hewlett-Packard, whose CEO has an analytics background, will make its move soon, others said. Oracle, with its recent history of big acquisitions, was as usual linked with just about everyone.

“If an acquisition happens – if one of the big boys is bought – it could change the face of the whole BI market,” Gartner analysts told a press briefing at its European BI Summit in London in February. At the same event, Hyperion chief strategy officer Howard Dresner, perhaps as a diversionary tactic, questioned whether some of his rivals could maintain their independent stance.

In the event, the long-expected acquisition came unexpectedly quickly: Oracle announced that it is paying $3.3 billion for Hyperion, one of a group of four publicly-listed ‘pure plays’ in BI that the market had considered might be in play. Of the other three, Cognos and Business Objects are also believed to have talked with Oracle, leaving only MicroStrategy out of the dance.

Although Oracle’s exact revenues from BI are difficult to break out, the agreed acquisition immediately makes the combined company the clear leader in business intelligence (excluding the privately held SAS Institute, which mainly competes in the high-end analytics market). Before the acquisition, Business Objects was the clear market leader, with sales of about $1.25 billion over the previous twelve months, followed by Cognos ($948 m) and Hyperion ($831m).

Oracle, which has made clear its intention to buy market leadership in the sectors where it can’t achieve that aim organically, said it was attracted to Hyperion because there was less product overlap than with Business Objects and Cognos. It may also have been attracted by Hyperion’s strategic stance: although the products from all the BI vendors have become increasingly comprehensive and alike, Hyperion emphasises

corporate performance management, which involves more planning, modelling and feedback than simple BI.

“The requirements for performance management and business intelligence solutions are increasingly converging,” said Hyperion CEO Gordon Sullivan in the acquisition announcement.

Helped by the strong demand for BI tools and aided by its own acquisitions, Hyperion has been growing strongly in recent years. In its most recent quarter, revenues grew 20% to $223 million, with net profits of $21.5 million.

But it is not clear whether the Hyperion acquisition will speed up Oracle’s organic growth: BI sales from Oracle, SAP and Microsoft together grew at over 50% in 2005, according to Gartner, far faster than the ‘pure play’ BI vendors. This may indicate Oracle’s real interest in this deal: fighting off the challenge from Microsoft and SAP (see M&A section for more on SAP’s BI plans).

No details of product consolidation have been released. Oracle already has an extensive, loosely integrated list of products, but Hyperion’s popular Online analytic processing (OLAP) is likely to be preferred to Oracle’s products; Oracle’s relational database analysis tools may fill gaps in Hyperion’s products.

Oracle has already said it wants to keep all of Hyperion’s sales staff. Many of these have deep relationships with financial staff, who are the biggest group of users of Hyperion’s products, and are good targets for several Oracle products.

In the meantime, the CEOs of both Cognos and Business Objects released statements revelling in their independence. “Now that’s out of the way, we can get down and do business,” said Business Objects CEO John Schwarz.

Henry Catchpole

Henry Catchpole runs Inform Direct, a company records management software company which simplifies the process of dealing with Companies House. The business was set up in 2013.

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