IDC's thoughts on the Hyperion Oracle Merger in their report titled "A Focus on Intel ligence: Oracle ' s Renewed BI Strategy"

Dear Hyperion Customer - Protect, Extend, Evolve
In a letter to Hyperion customers, Hyperion president and CEO, Godfrey R. Sullivan, described the agreement by stressing that "the combination redefines business intelligence and performance management by providing the first integrated, end-to end enterprise performance management system that spans planning, consolidation, operational analytic applications, BI tools, reporting, and data integration, all on a unified BI platform." The tone of both the letter as well as today's communications stress the complementary nature of the combination, communicating a message of investment protection coupled with longer-term benefits of extended capabilities to Hyperion customers.

Given the loyal Hyperion customer base, this is the right message, although in reality there is more overlap in the product offerings of the two companies than implied.Oracle has multiple offerings in the FPSM market, inheriting the EPM suite of PeopleSoft, and similar Oracle offerings including a new budgeting and planning application delivered in the last couple of years. Oracle has continued to develop these products while developing a Fusion strategy for performance management that includes offerings such as the consolidation hub, which supports a heterogeneous environment. The Fusion strategy for performance management is focused on bringing the best of the current performance management offerings forward into an integrated solution.

However, traction of these solutions for Oracle has been lower than expected, partly due to a lack of understanding of what applications may survive Fusion, but also due to many organizations' willingness to look at best-of-breed performance management solutions. For example, Hyperion as a specialty FPSM vendor is in many of the current customers of Oracle and SAP, and performance management initiatives leverage far more than core ERP data. Hyperion has functioned as the management system for the enterprise at a level higher than the ERP transactional layer.

This is what makes the Hyperion acquisition a real gem for Oracle, if handled correctly. Oracle must ensure that the relationship with the CFO remains intact and plans to do so by retaining the financial expertise and focused sales force of Hyperion. Oracle must keep Essbase fans happy and ensure that any move to integrate additional OLAP features into the database is non-disruptive. And as always, Oracle must strive not to confuse the offering with the Fusion strategy,
keeping communications simple and road maps clear.

In terms of competitive advantage, Oracle makes no secret of the fact that this deal is a key aspect of its "surround SAP" strategy. Hyperion is ingrained in many customers in the SAP installed base, as is the Oracle database. With the potential strength of the Oracle BI platform within the database and integrated capabilities that span Hyperion's financial management solutions and Oracle's operational analytics, Oracle can coexist with SAP ERP as the performance management layer in a manner that does not disrupt core SAP ERP investments. The implications here are significant, as the mind and market share battle intensifies for extensions to core ERP.

Certainly the ability for Oracle to appeal to the SAP installed base as well as its own customers in a BI/performance management platform capacity will cause major BI players such as Cognos and Business Objects to take notice. And will possibly spearhead a few more strategic round-two BI/performance management
consolidations. What remains to be seen is whether end users that value the agnostic nature of BI and performance management vendors will view this Oracle acquisition as independence lost.

Source: 1, 2, 3

Prashanth Rai