By SDA Asia
After spending nearly USD 20 billion over the past three years to acquire more than 25 software companies, Oracle's Chief Executive Larry Ellison is still hungry for more. After a quarter's gap of silence on acquisitions, the Redwood Shores company added performance management software solutions company Hyperion to its shopping bag 2007, through a cash tender offer for USD 52.00 per share, or approximately USD 3.3 billion. According to sources, Oracle will continue to invest in the Hyperion products while also trying to more tightly integrate them with Oracle's existing applications.
Over the past few years, shopaholic Oracle had gobbled PeopleSoft for USD 10.3 billion in 2004 and Siebel Systems for USD 5.9 billion in 2006. Oracle also bought I-flex Solutions of India for USD 909 million in 2005, and in November 2006 added a pair of software companies, Stellant and SPL WorldGroup.
The Hyperion acquisition is a sign of the consolidation wave in the Business Intelligence (BI) software market.
With Hyperion under its belt, Oracle is turning the heat on SAP. "Hyperion is the latest move in our strategy to expand Oracle's offerings to SAP customers," said Oracle President Charles Phillips. "Thousands of SAP customers rely on Hyperion as their financial consolidation, analysis and reporting system of record. Oracle already has PeopleSoft HR, Siebel CRM, G-Log, Demantra, i-flex, Oracle Retail, and Oracle Fusion Middleware installed at SAP's largest ERP customers. Now Oracle's Hyperion software will be the lens through which SAP's most important customers view and analyse their underlying SAP ERP data."
In February this year, SAP had acquired Pilot Software, a privately held company specializing in strategy management software. SAP's focus on the entire business application suite as opposed to just the BI piece of the puzzle will mean that it continues to pursue shopping for smaller component players unlike Oracle’s large purchases strategy. The effect of this acquisition, however, is expected to affect SAP in terms of additional revenue that Oracle can realise from this deal.
This acquisition is also expected to impact Microsoft. The Redmond software major added BI vendor ProClarity to its bag in 2006 and is preparing to release a product called PerformancePoint Server this year that could make analysis of financial and operational data accessible to more users of its ubiquitous Office suite. "I think one of the big losers in this is Microsoft given they had built a substantial relationship with Hyperion and spent quite a bit of money connecting with the product. I can't see how they will continue this level of effort now that Hyperion is owned by Oracle," opined Ed Mullin, a solution architect at SM Consulting.
This acquisition also puts the "ripe for acquisition" tag on BI software players such as Business Objects, Cognos, Terradata, and other manufacturers of data warehousing and performance management solutions. "With Oracle's market base and revenue for R&D, other BI players will have a tough time keeping pace. Oracle will be in all sales opportunities just due to Oracle customer base (database or applications)," said Brian Galicia, a program manager at Microsoft.
"Business Objects is the number one leader in Business Intelligence (BI), the distant number seven (Oracle) acquiring number four in the market (Hyperion) does not change that," said Keith Budge, Senior Vice President and General Manager, Asia Pacific and Japan, Business Objects. “To Oracle, BI is an accessory to a database or to applications. Customers demand mission critical BI that gives them insight into all of their databases and a wide variety of applications from any vendor, because the world they work in is naturally heterogeneous," Keith asserts.
On the other hand, Oracle CEO Larry Ellison is confident that this acquisition makes Oracle the category leader in the high growth enterprise performance management market. "Hyperion's EPM software coupled with Oracle's Business Intelligence (BI) tools and analytic applications form an end-to-end performance management system that includes planning, budgeting, consolidation, operational analytics and compliance reporting," said Ellison.
According to industry sources, the next few years will see the emergence of a three to four player space within BI and analytics. It could be a four-player space that is dominated by SAP, Oracle, IBM, and Microsoft, or a four-player space where Oracle, IBM, and Microsoft, work to catch up with SAP. Speaking to BusinessWeek, Robert Ketterson, a managing partner at Fidelity Ventures says, "And the pond may not be completely fished out. While the core market for analytics software is saturated, there are opportunities for small companies that can supply niche applications, such as those helping companies understand the return on their marketing and advertising spending, "I don't think business intelligence is dead," he says. "There's always an opportunity for venture [capital] in a space where consolidation wipes the bigger players from the map."
With many of the analytical capabilities rapidly approaching commodity status, only players that are able to automate and put something useful behind the One Big Button will be able to survive. |
