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Hyperion is to buy Brio, a fellow business intelligence software vendor, for $142m in cash and shares, in the second major acquisition in the sector in a week.

Last Friday (June 18) Business Objects announced the proposed all-stock purchase of Crystal Decisions for $820m to create a company with combined revenues of $736 million and 3,800 employees.

The Hyperion-Brio combo will be a tad smaller, pooling $613m in sales, 2,700 employees, and 16,000 customers. But the combo will get a little bigger, while Business Objects/Crystal Decision will get a little smaller, as Hyperion has signed an OEM agreement with immediate effect which will see it drop selling Crystal Decisions reporting software and start selling Brio instead.

Hyperion and Brio both specialise in reporting and data analytics software but they say their products are entirely complementary. Meta Group, the analyst firm agrees: "This is almost like pieces of a puzzle that were made to go together," analyst David Folger told Reuters.

So why so much consolidation? Here is the rationale supplied by Business Objects CEO Bernard Liautaud: "
"Only 10-15% of the market has been reached...it's still a fragmented market, with no clear leader...it's not unusual for ten or more BI technologies to be used within a single organization."

Business Objects has spotted a trend welling up for customers to move from best-of-breed to single sourcing. However, no BI vendor has all the answers right now, although Cognos, perhaps has, or had, more answers than most. So Business Objects/Crystal Decisions and Hyperion/Brio are making sure that they won't be dogmeat if the customer-led shakeout gathers pace.

Cognos, meanwhile, market leader in many BI segments, will now have two much bigger competitors, both outstripping it in revenues, to contend with. But what about the future of other, smaller BI vendors? Cognos earlier this year beefed up its enterprise performance management with the $60m cash purchase of Adaytum. It has a strong balance sheet, so it could easily make some more infill purchases, if it so wished.

Most analysts, in their Marxian determinist way, will draw the conclusion that consolidation to maybe three players - it's always three - is inevitable. If so, there are plenty of consolidation rounds to go.

Waiting in the wings are the likes of SAP, Peoplesoft, Oracle, and Microsoft which supply much of the software which gets data-mined, analysed and chopped up into reports.

And standing above the fray - so far - is SAS Institute, the privately-held company, which commands annual revenues of more than a billion dollars, making it comfortably the real market leader in business intelligence. ®

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