While Oracle's impending buy of Hyperion will not have significant impact on customers, there are still questions that should be raised in the board rooms of enterprise customers throughout Asia-Pacific, an analyst says.
Oracle on Thursday said it is buying Hyperion Solutions for US$3.3 billion, in a bid to expand into the enterprise performance management market, which includes business intelligence (BI) and analytic applications.
In an interview with ZDNet Asia, John Brand, research director at analyst company Hydrasight, said the short-term impact will be "negligible" for Oracle customers and "minimal" for the majority of Hyperion customers.
However, Brand noted some potential customer concerns among Asia-Pacific enterprises.
For example, because Hyperion has enjoyed some good relationships with Oracle rivals Microsoft and IBM, he explained that customers of these vendors will now have to do some "serious thinking" about their choice of vendor for various layers in the software infrastructure stack.
"There are definitely some Hyperion customers who need to be concerned," Brand said, adding that it would take some time before any effects from product-related issues are felt in the market.
He said the full impact of the Oracle-Hyperion acquisition is "probably still two to three years away yet". "Nonetheless, we believe there will be customers who will be negatively affected by this deal," he said.
"Those that will benefit most are likely to be Oracle-only shops, which now have a more solid outlook for financial business performance management and analytics," he added.
For now, Brand said, most of the initial impact will likely be internal, within the two companies, in areas such as administrative and organizational changes, followed by a period of licensing adjustments and optimization, as well as product integration.
In a statement Thursday, Oracle president Charles Phillips said Hyperion is part of the company's strategy to expand Oracle's offerings to SAP customers. "Thousands of SAP customers rely on Hyperion as their financial consolidation, analysis and reporting system of record," Phillips said. "Oracle's Hyperion software will be the lens through which SAP's most important customers view and analyze their underlying SAP ERP data."
Hydrasight research director
Brand said Oracle has progressively been squeezed out of many enterprise accounts by the likes of Microsoft, IBM, and increasingly, SAP. "This move is certainly one which is designed to stem the losses within Oracle accounts, but it is really [also] just an early defensive play rather than a particularly aggressive one against SAP," he said.
"Having said that, SAP has also been picking up some market share in data warehousing, analytics and business performance management over the last few years, especially with its business information warehouse product line," he noted.
According to Brand, SAP has had a much broader focus for reporting, analytics and business performance management. This required the German software maker to partner a range of niche software vendors in different areas, he added.
"Hyperion was one such vendor, so we believe SAP and their customers will now be 'encouraged' by Oracle to use more of its infrastructure products, in conjunction with SAP rather than replace it," he said. "SAP is a major sunk cost for the majority of organizations, so replacement is not an option."
"Therefore, Oracle's challenge is to contain it and subsume it over time," Brand said.
An SAP Asia Pacific spokesperson told ZDNet Asia that the software vendor has been in the business intelligence and analytics market for seven years, and there are now more than 13,000 installations of SAP NetWeaver Business Intelligence worldwide.
"In Asia-Pacific, SAP has been consistently growing its analytic applications market share, especially with rapid adoption of SAP NetWeaver BI Accelerator launched last year," he said.
To further expand its footprint in the analytic applications market segment, SAP also recently announced the general availability of more than 100 analytic composites in the SAP xApp Analytics composite application and the acquisition of Pilot Software, a privately-held company specializing in strategy management software.
Motivated by lucrative sales
Brand noted that Hyperion's experience and focus in improving business performance management through the direct financial-oriented aspects of customers businesses, is an element that Oracle finds very appealing as a general sales approach.
"Sales motivated by the finance department within organizations are typically easier to win and much more lucrative for vendors. This is typically how SAP was sold into larger organizations," he explained.
Asked why Oracle did not acquire Business Objects instead, though market speculation was rife about the possibility, Brand said: "Business Objects hasn't managed to strike the same chords with senior executive teams [of corporate customers] about the impact better information management tools and practices can have financially.
"Add to this the entry of Microsoft into the market and Business Objects started to look far less attractive," he said. "Business Objects would have competed much more directly with Microsoft than Hyperion did, so Oracle's preference would definitely have been to stay as much out of that game as it could."
Keith Budge, senior vice president and general manager at Business Objects in Asia-Pacific and Japan, noted: "To Oracle, BI is an accessory to a database or to applications. Customers demand mission-critical BI that gives them insight into all of their databases and a wide variety of applications from any vendor, because the world they work in is naturally heterogeneous."
"Business Objects provides the only enterprise-class solution that is at the same time open--with respect to databases, middleware and applications--broad, covering BI needs from data quality to performance management, and integrated around one single platform," he added.
Oracle Asia-Pacific declined comment for this story, and Hyperion did not respond by press time.
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