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Competitors Comment on Oracle’s Hyperion Gambit

Holy Paradox, Batman: why prominent BI and PM players say Oracle’s move is actually a good thing.

By most reasonable standards, Oracle Corp.’s announced intention to purchase Hyperion Solutions Corp. earlier this month has the makings of a highly disruptive—indeed, of a hugely transformative—industry event.

That isn’t the impression one gets after chatting with Hyperion’s (and now more than ever) Oracle’s competitors, however. In fact, as far as some prominent business intelligence (BI) and performance management (PM) vendors seem to be concerned, Oracle’s move is actually a good thing. The upshot, these BI and PM players argue, is that Oracle’s acquisition of Hyperion plays right into their strategies, creates a can’t-miss opportunity for them to gain share (and to contrast their own value propositions with that of Oracle), or—in the most optimistic scenario—does a little bit of all three.

On the market share tip, BI and PM vendors—like more than a few industry analysts—emphasize the likelihood of substantial overlap between Oracle’s and Hyperion’s respective BI offerings. "It’s very clear … that Oracle is focused mostly on Hyperion’s financial applications. BI was not mentioned—or at least it wasn’t emphasized—during the [announcement] call," says Mychelle Mollot, vice-president of market strategy with Hyperion rival Cognos Inc.

FUD-Mongering or Fair Play?

FUD-mongering is a dependable marketing tactic, and—in this case, perhaps more than most—there’s a legitimate basis for feelings of fear, uncertainty, and doubt among Hyperion BI customers. "Oracle certainly restated their previous position that Oracle BI Suite Enterprise Edition was their main platform," Mollot says. "So it looks like Hyperion BI will be put on maintenance, which introduces the question about innovation for that platform."

Oracle last week said it would continue to offer Hyperion’s Essbase OLAP engine—although the database and applications giant was more reticent about its commitment to enhance Essbase in future iterations. Oracle also demurred, for the most part, on the question of Hyperion’s other BI tools, such as Intelligence (the former Brio reporting technology) and SQR (which it inherited from Brio). 

For this reason, Hyperion’s competitors seem anxious to write—proactively, at that—obituaries for the company’s BI offerings.

"Three years ago the customers on the Hyperion side were Brio, watching Brio lose market share, when they got swooped up by Hyperion," says Piet Loubser, senior vice-president and director of market intelligence with Hyperion competitor Business Objects SA. Hyperion "saved" Brio at the time, Loubser concedes, but—this time around—former Brio users probably won’t be so lucky. "Oracle isn’t interested in Hyperion BI. They’re really just going to put those [Hyperion BI] customers on maintenance, which means they’ll up the 18 percent maintenance that Hyperion currently charges to the 22 to 25 percent that Oracle charges."

Nor is such talk entirely the stuff of fear, uncertainty, and doubt. Industry analysts say that once Oracle gets down to integration brass tacks, there will almost certainly be a blood-letting of some kind.

"Oracle keeps saying ‘there is almost no product overlap.’ On the BI front, I strongly disagree with this statement. I think customers of both Hyperion and Oracle need to recognize that there is a likelihood of some products being discontinued—whether that’s this year or a more distant future is what may be more debatable," comments Cindi Howson, founder of Howson says she plans to publish a report that outlines which modules are stronger and weaker from both Oracle and Hyperion, and stresses that she "would caution customers against investments in the weaker BI modules."

BI and PM players aren’t simply FUD-mongering for the sake of FUD-mongering, of course. They smell opportunity. Cognos, Business Objects, and others see a chance to lure—or, as they might put it, to "rescue"—fretful or despondent Hyperion BI customers. At the same time, they seem anxious to avoid the vendor-sharks-at-a-feeding-frenzy atmosphere that so often attends post-acquisition tumult.

"Our strategy is not at this point in time to throw a press release at this thing and sort of have a free-for-all on this," Loubser says. Business Objects, for example, already has a program in place to help customers migrate from Hyperion BI to its own Business Objects XI stack, he points out. "When customers do approach us, we have the ability to support them from both a product point of view, but we also have a very strong methodology for migration and conversion: we utilize our partners, we utilize our own capabilities, we have software utilities, we have kind of a full suite of offerings that we can give customers."

Cognos, too, has an existing Hyperion outreach program of its own.

"We’ve talked to some of our customers already that have Hyperion BI, and even Hyperion PM, and a lot of them are already concerned, asking ‘What is this going to mean for us in the long term; should we consider moving right now?’" Mollot says. "We’re in the process of strategizing how we’ll respond to [these inquiries], but obviously we already have migration [programs] we designed for customers that have already done this."

Greed Purifies. Greed Simplifies. Greed Clarifies.

Oracle’s competitors say they aren’t sweating its latest acquisition power play for another important reason: they just aren’t all that concerned about competing against Oracle. Mollot, for example, argues that Oracle’s BI and PM vision is too freighted—i.e., too dependent on a homogeneous application stack that includes not only the Oracle database, but the Oracle BI Suite and Fusion middleware deliverables, as well—for many prospective customers.

"I don’t think it complicates things as much as makes them clearer. There’s a huge percentage of customers that are looking for independence: independence from the data, independence from the applications, independence from the financial structures. In that sense, [Oracle’s acquisition of Hyperion] clarifies what’s at stake," Mollot indicates. "For us, it opens up a bigger opportunity. There was a Goldman Sachs survey a couple of quarters ago that showed customers preferred to buy their BI from an independent player to the tune of 60 percent. They’re not wall-to-wall Oracle or SAP stacks. They want independence."

Loubser, for his part, says Oracle’s move also helps simplify things for Business Objects, Cognos, and for other pure-play vendors.

"With Hyperion gone, there’s one pure-play vendor taken off the market. Where previously you could say the top three is Business Objects, Cognos, and Hyperion, now you can say, the top two are Business Objects and Cognos, and the rest are further down," he indicates.

But isn’t Business Objects concerned about wrangling with an even bigger, brawnier competitor in Oracle? Not according to Loubser. "The problem with Oracle is that in two years time, after they sort through the business of cutting through the overlap and integrating what they’ve decided to keep from Hyperion, they’ll give you planning. They’ll give you really good planning. But where previously [with Hyperion] it was a pretty small implementation, now it involves implementing Fusion and implementing the rest of that huge application [stack]. For a lot of customers, it becomes just like implementing SAP all over again," he argues.

If It Looks Like Growth-by-Acquisition…

And speaking of SAP-- which has a respectable BI and analytics practice of its own—the German ERP giant likewise downplays the significance of Oracle’s move. SAP officials link Oracle’s Hyperion acquisition to what they claim is a growth-by-acquisition strategy. It might strike some as an inapposite riposte—it doesn’t explicitly address the competitive threat posed by an analytics and PM-rich Oracle, after all—but it’s a retort that’s reprised by representatives from Cognos, Business Objects, and other vendors, too. "Oracle's strategy, limited by its inability to grow on its own, has resorted to attempting to acquire customers," claims SAP vice-president of communications Bill Wohl. "This latest acquisition only further muddies Oracle's already cluttered application landscape."

SAP’s growth strategy, on the other hand, "focuses on organic growth, while we ‘tuck-in’ smart, well-placed acquisitions to round out our product capabilities on behalf of customers," Wohl concludes.

Business Objects’ Loubser, for his part, says Oracle’s Hyperion gambit fits a familiar pattern. "The timing of it was a little bit of a surprise, although from history, we know that Oracle always tries to do something big in the early year, because that’s one way they prop up their financial numbers. Their strategy at this point is to grow their revenues by acquiring other companies," he indicates.

And Gerry Cohen, CEO of BI pure-play Information Builders Inc. (IBI), says that for Oracle, such acquisitions are "a way to expand their market share. You might question why they chose to acquire a company [like Hyperion] where there’s so much overlap, but at this point, there aren’t many companies Oracle could acquire where there wouldn’t be at least some overlap."

If it looks like growth-by-acquisition and (figuratively, at least) smells like growth-by-acquisition, it just might be growth-by-acquisition, says Philip Russom, senior manager at TDWI research: "Oracle’s greater goal is growth for revenue and customer count, and it currently achieves growth primarily through acquisition, despite an impressive track record of building top-drawer tools in the past." Russom says this is an acceptable strategy—although he concedes it can be nerve-wracking for customers. "Unfortunately, [acquisitions] put customers through a lot of fear, uncertainty, and doubt," he says.

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