Ho hum…Earlier this month, Oracle spent another $3.3 billion buying a major software vendor. This time it was Hyperion, the leading provider of software for financial consolidation, budgeting, and planning. Those of us who thought Oracle’ acquisition appetite might be satisfied for now were wrong again. A pattern seems to have formed – Oracle makes a major acquisition each winter and fills in with smaller ones in the warmer seasons.
While the Hyperion deal is obviously a big deal for Oracle, the near term relevance to JD Edwards customers appears to be limited. As another clue to the puzzle that is Oracle’s applications and business intelligence (BI) strategy, however, this plot twist is worth examining.
The early consensus among industry and financial analysts is one of optimism tempered with mild confusion about exactly how Hyperion’s product line will be merged into the dog’s breakfast of pieces that Oracle has assembled through the 30 or so acquisitions made in recent years. Our early reactions to this acquisition, subject to revision when we know more of the details, are:
- Hyperion is the market leader for financial consolidation, budgeting, and planning software. Oracle’s existing products offer far less functionality in these areas, which makes this a great fit. Hyperion’s typical customers are corporate finance departments in large, complex multinational corporations. This opens the door for Oracle to call on senior financial executives within many organizations that do not currently use any of its enterprise applications.
- Many of Hyperion’s customers use SAP applications. That is not a surprise since SAP’s sweet spot in the market is the largest companies in the world. As such, buying Hyperion and gaining greater access to CFOs lets Oracle fill out its product line and attack its top rival at the same time.
- Conversely, a much smaller percentage of Hyperion’s customer base uses JD Edwards software because, on average, they tend to be more modest in size and complexity.
- Besides selling financial applications, Hyperion also offers BI software. However, its role in the BI market is somewhat tangential. Therefore, this acquisition does not seriously disrupt the path Oracle was already on to expand its presence in BI. Oracle will most likely fold Hyperion’s BI software and technologies into its existing products since these offerings mainly compliment rather than compete with Oracle’s products. That said, we do not expect that Oracle will force Hyperion’s BI customers into a rapid migration. In typical form, it will support the current products for many years while offering “upgrades” to Oracle products.
- Within a few years, a Fusion version of the Hyperion financial applications will almost certainly become available. At that time, it will become a highly attractive option for those JD Edwards customers who need the sophisticated capability Hyperion offers to obtain them as add-on applications.
As is always the case, the acquisition announcement left more questions open than it answered. Hyperion’s technologically advanced Essbase product clearly overlaps heavily with existing Oracle offerings and its own BI tool set performs many of the same functions as the product, now called Oracle Business Intelligence Enterprise Edition (OBIEE), that Oracle obtained in the Siebel acquisition. Over time, something has to give.
As more of the picture becomes clear, we will post additional information. In the meantime, reader observations and comments are most welcome, especially from those JD Edwards customers that do have Hyperion products installed.