Divining Oracle’s Latest Gambit

By snapping up Hyperion, Oracle intensifies its war with SAP, even as it pledges to play nice with others.

When the voracious Oracle Corp. acquisition machine consumed Hyperion Solutions Corp. in March for $3.3 billion, Wall Street cheered. So did Oracle CEO Larry Ellison, who described the combination as creating “an end-to-end performance-management system” serving customers from planning and budgeting to compliance reporting. Oracle also openly delighted in the impact of the deal on archrival SAP AG, going so far as to note in its press release that “Hyperion is the latest move in our strategy to expand Oracle’s offerings to SAP customers.”

Some customers of business-performance management (BPM) software, on the other hand, are less thrilled. Jan-Willem Beldman, information-technology finance manager with Wilsonville, Oregon-based Mentor Graphics Corp., worries about whether the Hyperion Financial Management (HFM) product, which Mentor has considered installing, can still be the “neutral middleman” that Mentor wanted. The company, which uses Hyperion applications for financial consolidation and planning, had considered using HFM to replace its current product for generating intercompany adjustments. But since Mentor uses SAP applications for fulfillment and financial reporting, Beldman is concerned. With Hyperion under the Oracle umbrella, he says, “it will make it harder for us to consider Hyperion as an independent vendor with a strong tool.”

Based on experiences at a previous employer, Dan Brunet, administrator of the HFM application for automotive supplier Visteon Corp., also thinks Hyperion customers might feel pressure to use Oracle’s database products, even though HFM currently can work with either Oracle or other SQL (Structured Query Language) databases. “Would the push be to use only Oracle?” he asks.

Hyperion’s competitors are happy to add fuel to any fire over the acquisition. “CFOs will wonder if Oracle will move them to another platform for analytics,” says Richard Stark, director of performance-management solutions with Hyperion rival Actuate Corp., a provider of enterprise reporting applications. And Piet Loubser, director of market intelligence for Business Objects SA, points to Oracle’s own statement that the Hyperion acquisition aims to win over SAP customers. Loubser points out that “there is no mention of the customer value the deal brings.”

While rivals may be expected to point out such issues, their caution resonates with the companies that use both Oracle and Hyperion products. Oracle’s budgeting-and-planning tool is good, but not best of breed, and is used mainly by “dedicated Oracle customers,” says Mark Smith, CEO and executive vice president of research with Ventana Research. Customers may wonder what migration options they’ll be offered, a big issue given the many areas of overlap between Hyperion and Oracle products.

A Two-front Battle

Still, many customers and industry analysts view the combination favorably, as a fusion of strong companies in largely different software areas that will provide strong competition to SAP.

Oracle’s acquisition of Hyperion plays up the strengths of both companies, says Mike Fauscette, program vice president, applications, with research firm IDC. He points out that Oracle’s applications have a powerful ability to analyze operating data, while Hyperion’s longest suit is in financial-analysis applications.


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