Oracle’s Hyperion Acquisition: First of Many Consolidations?

On March 1, Oracle acquired Hyperion Solutions in a deal valued at approximately $3.3 billion. The deal is expected to close in April 2007, assuming all the regulatory hurdles are surmounted. In response, we might expect other large vendors to pursue an aggressive acquisitions strategy, leading to even more consolidation in the business intelligence (BI) and applications market. Interestingly, this BI-market consolidation was predicted in the recent Gartner Group “Magic Quadrant for Business Intelligence Platforms” report that I discussed a few weeks ago in “Gartner’s BI Report is Magically Interesting.”

I know that Douglas McDowell, my friend and colleague who covers BI topics in the monthly SQL Server Magazine UPDATE Special Edition newsletter, plans to delve into the BI implications of the Oracle acquisition of Hyperion. So I’d like to focus on the bigger picture. What effect might this move have on the applications market in general, and particularly on the ERP and performance-management spaces?

I admit that I’m a bit of a database geek and tend to be centered on that market. The Oracle/Hyperion deal is, at face value, all about data because one of the leading database players has bought one of the leading BI companies. But is the move really about data, or really about applications? I spent some time with my good friend the Google toolbar and came away with some interesting observations. I’m going to quote liberally from two articles that do a great job of exploring the topic, and I wouldn’t want to pretend that the ideas in my article this week were invented solely by me. Please read both articles for complete context and I hope you enjoy my accompanying comments and observations. Neither article is long. Please read them now. Yes, now.

Oracle’s real target with Hyperion: CFOs

Oracle-Hyperion deal could prompt similar move from SAP

One of the most interesting questions raised by both these articles is what will SAP do? And by logical extension, what will Microsoft do to protect its space in the ERP market if Oracle uses its extensive sales force to convince CFOs to dump SAP in favor or an Oracle stack—if that’s Oracle’s intention. Numerous possible scenarios could play out. It’s hard to imagine that SAP will continue to think super kindly of Oracle if they make inroads into the SAP customer base, but SAP does need strategic relationships with key database players. Does that push SAP to strengthen its relationships with Microsoft and IBM?

At the same time, let’s consider Microsoft’s position in the ERP space. Hum? You didn’t know that Microsoft was a serious player in the ERP space? Have you checked out the Microsoft Dynamics product line lately ( )? Microsoft’s ERP offerings might seem a bit disjointed right now because over the past few years, the company has swallowed quite a few small, medium, and large vendors and now owns several solutions that aren’t fully integrated. But Microsoft does have a roadmap for converging these products in the 2012-2013 timeframe. Don’t think Microsoft has the ability to take their current midrange offerings and turn them into enterprise offerings? I’ve been working with Microsoft since the early days of Windows and SQL Server, when SQL Server for OS/2 boxes still had almost the same code basis as Sybase. Don’t doubt Microsoft’s ability to move products up the food chain through hard work, perseverance, the investment of tons of cash, and the occasional monopolistic act.

If I had to, I could probably write half a dozen interesting and defendable story lines for how I think all of this will play out. Honestly, I really have no concrete idea, but I’m convinced that the Oracle/Hyperion deal is simply the opening round of a series of aggressive consolidations that I expect to see in the applications market space. The outcome will be a bit like an ERP version of “Survivor,” except the stakes are much more than a measly million bucks. Who will be the last vendor voted off the island?

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