Home / Under all the hype

Under all the hype

Oracle’s announcement that it is to buy Hyperion, and its admission that its motivation is mainly to attack rival SAP, has caused uproar in the industry. IT Weekly assesses the impact Oracle’s actions could have on the enterprise software market.

Oracle’s announcement that it is to buy Hyperion, and its admission that its motivation is mainly to attack rival SAP, has caused uproar in the industry. IT Weekly assesses the impact Oracle’s actions could have on the enterprise software market.

Usually when one company buys another in the IT sector, industry watchers will pore closely over the deal to try to determine how it fits into the buying company’s strategy.

Oracle’s motivation for its US$3.3 billion bid to buy business intelligence (BI) and corporate performance management (CPM) firm Hyperion seems pretty easy to read however, with the software giant spelling it out early on.

“Hyperion is the latest move in our strategy to expand Oracle’s offerings to SAP customers,” Oracle president Charles Phillips said in the statement announcing the deal. “Thousands of SAP customers rely on Hyperion as their financial consolidation, analysis and reporting system of record,” he added, pointing out that SAP’s largest customers already use many of Oracle’s products — ones it originated itself or acquired through acquisition.

“Now Oracle’s Hyperion software will be the lens through which SAP’s most important customers view and analyse their underlying SAP ERP data,” he concluded.

While the rationale behind the deal may be clear for Oracle, merging two large software firms is never straightforward, and analysts and rival firms have been queuing up to highlight problems with the deal.

Unsurprisingly, SAP itself was quick off the mark, with the German software giant issuing a statement claiming that the Hyperion buy “further muddies Oracle’s already cluttered application landscape” following on from its earlier acquisitions. While Oracle executives have been claiming that there is little product overlap between the two firms, this view has been questioned.

“Existing customers will want to know what Oracle’s strategy is going to be,” said Derek Morrison, regional general manager for Cognos Middle East. “This deal is going to create confusion for the market given that a number of Oracle products overlap with Hyperion products and vice versa.”

In the BI space, Oracle CEO Larry Ellison has repeatedly gone on record as saying that the firm has already got a strong presence through its US$5.85 billion acquisition of Siebel Systems last year.

“We think we now have the leading technology, we don’t have that many customers because it’s a new product, but we now have the leading technology in business intelligence,” he told IT Weekly in an exclusive interview last year.

In the statement announcing the deal, Ellison focused on Hyperion’s CPM capabilities, claiming the deal would make Oracle the category leader in enterprise performance management (EPM).

Analyst firms such as Gartner believe that it will be the former Siebel offerings that will make up Oracle’s BI strategy going forward, although Oracle could provide data-access level integration between the product lines.

For both Hyperion and Oracle customers, such uncertainty over the product lines raises the thorny issue of support. With other acquisitions, Oracle has made a virtue of offering indefinite product support to its customer base.

Godfrey Sullivan, Hyperion’s CEO, is understood to have written a letter to the firm’s customers, assuring them Oracle is focused on protecting its customers’ investments through its lifetime support policy.

That has not stopped analysts from urging customers to call for clarification on pricing and support issues, with Forrester recommending that firms renegotiate more favourable long-term deals.

Analysts now expect to see more consolidation in the BI and performance management sectors.

Cognos and Business Objects, the other leading firm in the sector, are both now being seen as potential acquisition targets. SAP, for instance, might want to counter Oracle’s move with its own capture of a BI firm. HP and IBM are also both seen as candidates to venture into the business intelligence market.

Oracle’s move may well prove to have stirred up a hornet’s nest for customers and competitors alike.

Follow us to get the most comprehensive technology news in UAE delivered fresh from our social media accounts on Facebook, Twitter, Youtube, and listen to our Weekly Podcast. Click here to sign up for our weekly newsletter on curated technology news in the Middle East and Worldwide.

REGISTER NOW | Webinar Event | Security you can bank on – Safeguarding the Middle East’s financial sector

Presented in partnership with security and network specialist Cybereason, the second in the three part webinar series will bring together a panel of experts to discuss how banks and financial institutions are evolving their service offering while simultaneously staying one step ahead of the cyber criminals who seek to bring their operations crashing to the ground.