Oracle Corp. fed its ongoing appetite for software vendors again Thursday, agreeing to buy business analytics company Hyperion Solutions Corp. for $52 per share, or $3.3 billion. The acquisition will give the vendor a strategic foothold within the accounts of German rival SAP and expand its business intelligence capabilities.
Take That, SAP
The immediate effect of the acquisition will be to add fuel to Oracle’s ongoing feud with SAP. About 12,000 companies use Hyperion’s enterprise performance management solutions, including 91 of the Fortune 100. Many of those tap Hyperion to analyze data from SAP’s enterprise resource planning suite.
Once upon a time, the top names in the enterprise software game were SAP, IBM, Hewlett-Packard Co., Oracle, Siebel Systems and PeopleSoft. Now, SAP is one of the last remaining software rivals that Oracle has, thanks to Oracle’s headline-grabbing $10 billion hostile takeover of PeopleSoft about two years ago, and its merger with Siebel Systems last year. In the meantime, the software maker has been on a buying spree with the apparent aim of knocking SAP and others off their pedestals via further acquisition, which has had the side effect of making it the world’s largest enterprise software vendor.
"Hyperion is the latest move in our strategy to expand Oracle's offerings to SAP customers," said Oracle President Charles Phillips in a statement. "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 analyze their underlying SAP ERP data."
Strategic Direction
While the benefit of insinuating itself into SAP customer accounts is clear, Oracle’s latest merger will also strategically position it to take advantage of the boom in operational analytics and business intelligence, a market expected to reach $3 billion or more by 2009.
"Companies around the world have purchased more than $40 billion worth of enterprise applications, including ERP, CRM and HR, during the past few years," said Colleen Graham, principal research analyst at Gartner Inc. "This has generated significant volumes of data in support of the operational processes they automate. By investing in BI, companies can further leverage their enterprise application investments and turn the torrent of data into meaningful insight to better measure performance, respond more quickly to market changes and opportunities and comply with an increasingly complex regulatory environment."
Increasingly enterprises are requiring the ability to not only slice and dice the data, but apply it to information from other parts of the business, for a full view of the financial impact of software strategies. To that end, Oracle recently has embarked on a best-of-breed strategy, allowing easier integration with multivendor environments and launching a few BI tools to manage it all. Now, Hyperion will add complementary products to Oracle's existing business intelligence offerings, including an open enterprise planning system, financial consolidation products and a powerful multisource OLAP server. Coupled with Oracle's BI tools and pre-packaged analytic applications, the combination provides an integrated enterprise performance management system that spans planning, consolidation, operational analytic applications, BI tools, reporting and data integration, all on a unified platform.
The move also counters HP’s recent move to beef up its own BI tools. In December that company agreed to buy Knightsbridge, a BI vendor.
In the past two years, Oracle has assimilated, among others, an OSS service fulfillment suite for provisioning, network inventory and activation from MetaSolv Software Inc.; a real-time database from TimesTen; a SIP competency from HotSip; a Parlay expertise from the Net4Call acquisition; billing and revenue management from Portal Software Inc.; multichannel customer management, order and service fulfillment, and analytics from the acquisition of main U.S. rival Siebel Systems Inc.; CRM and other enterprise applications from PeopleSoft; Oblix’s identity management competency; and Retek’s retail solutions.
The Hyperion transaction is subject to customary conditions and is expected to close in April.
Oracle Corp. www.oracle.com/hyperion
