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Oracle’s $3.3 billion acquisition of Hyperion Solutions, a specialist in the field of corporate performance management, has set the fox among the chickens in the broader business intelligence market.

This has long been a relatively quiet and sometimes prosperous sector of the enterprise software market, where the corporate acquisitions have been far less costly and involved larger BI players making strategic purchases of their smaller brethren.

But with Oracle in the market, the larger surviving BI players—Cognos, Business Objects and Informatica—have to start thinking about whether it’s time for them start making more of their own strategic acquisitions … or even start devouring each other.

Click here to read more about Oracle’s $3.3 billion buyout of Hyperion Solutions.

Another company that certainly should be reviewing its options is SAP, because once again Oracle has demonstrated that it will keep massively outspending SAP to try to build an all-encompassing ERP (enterprise resource planning) suite that can’t be assailed in the market.

John Van Decker, Gartner’s research vice president, says the March 5 buyout of Hyperion for $52 per share is part of Oracle’s “surround SAP” strategy.

This acquisition, Van Decker said, allows Oracle to get both feet inside the offices of chief financial officers around the globe. Performance management is the branch of BI that helps CFOs determine whether their companies are achieving financial goals and operating according to business plans and budgets.

CFOs frequently use supporting data generated by performance management applications when they decide whether to approve major new corporate investments.

Hyperion had been the biggest player in the market, Van Decker said. Until recently, neither Oracle nor SAP had a performance management application within their business intelligence portfolios, he noted.

Oracle’s acquisition of Hyperion comes barely a week after SAP acquired Pilot Software, a privately held developer of business analytics and online analytical processing applications, on Feb. 20.

Now that Hyperion is off the market, the surviving big players in the BI market have to be thinking about how they will react, Van Decker said. “I can tell you right now that we are fielding many calls from competitors that are now wondering how will this change the market,” he said.

To read more about why SAP acquired Pilot Software, click here.

SAP officials have said many times that they don’t intend to spend the billions of dollars Oracle has over the past four years to build up its application portfolio. Instead SAP has pursued small but “strategic” acquisitions that have allowed it to add innovative technology to its product line.

However, Van Decker said, this latest acquisition may force SAP to reconsider that strategy. Oracle’s latest move has to be “raising an eyebrow, I would imagine at SAP, and I think that ultimately they will need to make some kind of a response.”

Next Page: Collecting companies means an integration challenge.

This is likely only one of a series of acquisitions and what will be an overall consolidation trend in the BI market, said Judy Sweeney, research vice president with AMR Research, in Boston.

Previously, the BI sector had been “very incestuous” with the larger players buying smaller companies, Sweeney said. Recent examples would be the Cognos acquisition of Celequest, Hyperion buying Brio Software, or Business Objects acquiring Crystal Decisions, she noted.

But with the Hyperion buyout, there are fewer “best of breed” BI software companies left in the market and the survivors have all become attractive acquisition targets, Sweeney said. “We have had rumors about Cognos, Business Objects and Hyperion playing out for a while. And the buyers have ranged from Oracle to SAP to Microsoft to IBM,” she said.

The Hyperion buyout is likely to trigger other acquisition activity inside and outside of the BI market, she said.

The next question is how Oracle will integrate Hyperion into its product line. Oracle has to decide how to sort out the various BI technologies it has accumulated in its portfolio. Oracle had its own basic BI capabilities and then it acquired more BI applications with the acquisition of Siebel Systems in 2005. While there isn’t much overlap between the Siebel BI apps and Hyperion’s, Sweeney said integrating them into the Fusion architecture won’t be a matter of plug and play.

Oracle could be faced with an identity crisis when it tries to tell customers about its BI product strategy, Sweeney suggested. “What’s the BI story for Fusion? Is it Siebel analytics? Is it Hyperion? There will be a pretty dramatic change of architecture if they try to take the Hyperion product and just plug it in,” she said.

Sweeney added, “With every acquisition you have to look and say, Is Oracle just an acquirer? Are they just assembling a collection of software or are they really moving” toward a coherent product story that everyone will understand and buy?

Oracle’s Fusion strategy is still in flux; it’s unclear what the architecture will look like or how effectively it will all run together, because Oracle keeps buying piece parts while it is still building the earlier components into Fusion.

Customers have to wonder whether Oracle will ever eventually produce a usable, integrated Fusion product line or whether it will end up with a jumble of disparate applications that will strain to work under an improvised architecture.

Only time will tell whether Oracle will ever reap in profits even a fraction of the billions it has plowed into corporate acquisitions.

John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at

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