Feeds

Oracle and Hyperion: is it really a strategic fit?

Fusion, migration and competition

Intelligent flash storage arrays

This is a blastingly good deal for Hyperion shareholders. Hyperion's share price went up from $43 to $52 overnight, so shareholders gained 20 per cent. Since Godfrey Sullivan became CEO in 2004 he has done an excellent job of putting in place a first class management team and this is the opportunity to cash in. But what about Oracle shareholders?

Oracle's share price was $16 on the announcement, and is still at $16. Flat. The market appears to believe it is an "OK" deal for Oracle and a very good deal for Hyperion. I agree with this assessment.

First of all take the product fit. If you overlay Gartner's BI Platform Quadrant on its CPM Quadrant, Oracle and Hyperion take up five positions. Oracle and Hyperion have virtually identical positions on the BI Quadrant. No real customer value here. Fuse the two product sets together is the logical conclusion, as Oracle has done with other acquired product sets from the likes of Siebel and PeopleSoft.

The CPM Quadrant is more interesting. Oracle PeopleSoft EPM is a Challenger, Oracle CPM is a Visionary, and Hyperion is the market leader. The obvious strategy is to migrate Oracle PeopleSoft EPM and Oracle CPM into the superior Hyperion System 9. But hang on, hasn't Oracle already spent an enormous amount of product development time and money getting Oracle PeopleSoft EPM and Oracle CPM integrated and ready for market? Yes it has. Accountants would generously describe this as "sunk costs". Not great for shareholder value though.

On the plus side, Hyperion says "Hyperion System 9 Business Performance Management software is Powered by Oracle and connects seamlessly with Oracle 10g Application Server, a component of Oracle Fusion Middleware, (and) is certified for Oracle Real Application Clusters. In addition, Hyperion is an Oracle customer employing Oracle Database, eBusiness Suite, Projects, and Siebel across the Hyperion enterprise". Hopefully this means that product integration might not be so painful after all.

Second, take cultural fit. The real value of Hyperion is that it understands how to talk in a language that the CFO understands. It sells into finance departments. Oracle does the opposite. Oracle sells IT for enterprise use to the IT department. Mixing an IT salesman with a finance salesman could be a highly potent combination. On the other hand it could be oil and water, and Hyperion could lose a chunk of their salesforce to the likes of Microsoft, Business Objects, and Cognos, who cannot wait to get their hands on their finance-savvy Hyperion salespeople.

Third, take customer acquisition. Hyperion has 12,000 customers. Hyperion focuses in the large enterprise space - as does Oracle. One third (4,000) of Hyperion's customers use Oracle software, including Hyatt Hotels, Toyota, and Symantec. I suspect this is a conservative estimate given Oracle's acquisitive nature over the past two years. The acquisition should help to cement Oracle's position in large enterprises, so long as they can stop the salesforces fighting with each other over the best customer accounts. However, it is unlikely to increase their penetration of the mid-market, which is a key Oracle strategic intent.

Finally, take the competitive play, or SAP killing to be more exact. "Hyperion is the latest move 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… Now Oracle's Hyperion software will be the lens through which SAP's most important customers view and analyze their underlying SAP ERP data."

Hyperion reports there are 4,000 joint Hyperion/SAP customers that represent just over 10 per cent of SAP's customer base. Not that significant. Both SAP and Hyperion can report instances where they have replaced the other, and Hyperion is vulnerable to replacement in wall-to-wall SAP deployments. There is not that much friendly co-existence although Hyperion has developed Hyperion System 9 for use on SAP R/3, SAP BW, the mySAP™ and the SAP NetWeaver platform, and it supports the SAP strategic roadmap including SOA and Business Process Platform. Will the acquisition of Hyperion oust SAP from the enterprise? I think not. There will be some co-existence, as is normal.

Overall, a great acquisition from Hyperion's point of view, but many management challenges from Oracle's point of view. Will it release a flurry of knee-jerk large acquisition responses from competitors? I doubt it, but I have a sneaking suspicion that HP has a greater role to play in market development. More likely is a flurry of competitive attack campaigns on the Hyperion installed base, as SAP did after the PeopleSoft acquisition, to try and make the most of the fear, uncertainty and doubt that pervades during the transition period.

Copyright © 2007, IT-Analysis.com

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.