Oracle's $3.3 billion deal to buy Hyperion didn't surprise the business intelligence vendor's channel partners, who said an acquisition was inevitable.
"We wondered when it was going to happen and whether it would be Oracle, IBM or SAP," said John Nilsen, vice president of sales at 1Answer Solutions, an Englewood, Colo., specialist in Hyperion solutions.
Though Nilsen's bet was on IBM, which has a large internal Hyperion deployment, he's optimistic about working with Oracle. The software giant's deep customer base will open up new opportunities, he predicted. "We look at it as a strong positive for us personally," he said. "We can go wider with the accounts we have relationships with and get more involved at the database level."
Also bullish on Oracle is Dan Gudal, president of Vertical Pitch, a Golden, Colo.-based solution provider that works exclusively with Hyperion. He said he likes Oracle's strength in applications and databases and sees more opportunity in that end-to-end stack than what IBM or SAP would offer.
"Over SAP or IBM, this is the best fit," Gudal said. "For me, it's a huge positive. The Hyperion executive management felt that sales were constrained at Hyperion. There was way more demand than what they could engage in the sales cycles. Now we can double the number of feet on the street."
Hyperion wasn't the first BI vendor that Oracle sized up. During Oracle's legal wrangling with PeopleSoft, materials became public from an April 2003 Oracle board meeting about potential acquisitions. Among the 10 targets on Oracle's shopping list -- which included PeopleSoft, Siebel Systems and J.D. Edwards -- was Business Objects, the largest BI company.
But Business Objects, with $1.3 billion in revenue last year, would have been a pricier buy than Hyperion, which had sales of $765.2 million in its latest fiscal year. Oracle ended last quarter with $4.7 billion in cash, plus an additional $3.1 billion in liquid holdings.
Trailing Business Objects and Cognos, Hyperion was long considered prime acquisition bait. "While Hyperion's revenue performance the past two quarters has been strong, the fact remains that Hyperion holds the undesirable third-place slot in an increasingly competitive sector," JMP Securities analyst Patrick Walravens wrote several months ago.
The rumor mill around a Business Objects/Oracle tie-up had picked up steam in recent weeks, but Business Objects is staying mum about any discussions. The company would rather talk about its plans for BI domination.
"This opens up a massive opportunity for Business Objects to further consolidate our leadership," said Piet Loubser, senior director of market intelligence at Business Objects. "When it comes to performance management, customers want to talk to a specialist."
Oracle partner Scott Jenkins, CEO of The EBS Group in Lenexa, Kan., would have preferred a Business Objects buy because Hyperion fills a smaller niche. Still, he thinks the deal will be a good fit, giving Oracle a stronger performance management portfolio.
"I think it's good news for partner community. It gives us more space to fill," Jenkins said. "Oracle has done a good job integrating the companies it has already acquired -- a surprisingly good job, considering the number and size of acquisitions."
And Jenkins doesn't expect Oracle's acquisition pace to slow. "Oracle is now in the third year of Larry [Ellison]'s 'Kill SAP' policy," he quipped.
Industry analysts backed the view that the Hyperion deal spells trouble for SAP, since Oracle gains another tunnel into SAP's customer accounts.
"Oracle is making a play at SAP's customer base, many of which also use Hyperion software," UBS analyst Heather Bellini wrote in a research note. In Oracle's press release announcing the deal, Oracle President Charles Phillips bragged that Oracle's Hyperion software will be "the lens through which SAP's most important customers view and analyze their underlying SAP ERP data."
SAP offered a chipper spin on the news. "This latest acquisition continues the efforts by Oracle -- limited by the inability to grow on its own -- to buy customers and market share, and only adds to Oracle's already cluttered applications landscape," an SAP spokesman said in a prepared statement. "The customers chose to invest in Hyperion -- you'd have to ask them whether they see Oracle's strategy as one that helps them or just shoves them into the quagmire of $20 billion of acquisition strategies."
Oracle's long string of acquisitions has made it tricky for analysts to judge the company's growth and sales prospects. The timing of the Hyperion deal will extend the fog: It comes just as Oracle was completing its first full year of operations including Siebel. Oracle's accounting habits make granular examinations of its sales difficult. For example, it lumps its flagship database sales together with middleware. First Albany analyst Mark Murphy called that "analogous to Boeing not disclosing actual airplane sales."