Hype-rion?

Rather than simply diss Oracle for buying Hyperion, and face the accusation of being a SAP PR stooge –  I figured I’d read what others Jeff , Jason, James, Dennis, Larry, Larry again, Louella,  Dana, John ,Mark, Tony, Tom  Andy, SystematicHR, and even Wikipedia expert Nicholas have to had say, and then ponder a bit. I’ve pondered, now I’ll ramble.

Most  commentators see this as smart move for Oracle. Essbase gets lots of praise, as does the “CFO Access”, and Hyperion ease of use. The financial types say that Oracle didn’t overpay . It certainly gives Oracle a much stronger corporate performance management story, a solid boost up the Gartner quadrants and some not insignificant bragging rights. It also puts more salesfolks and consultants on the ground. It definitely strengthens Oracle’s CFO story. It takes everyone’s eye off fusion. It further muddies Oracle’s earnings picture. Smart move.

I’m still going to diss it, well just a bit. This deal is a net positive for Oracle, but I don’t think it is quite as rosy and game changing as many of the commentators reckon it is.

1. Hyperion is not a high growth play. Its software revenue grew at roughly  9%  last year  when the BI market is supposedly going great guns. With an existing  salesforce of 1900 it isn’t a question of taking a neat product and giving it a channel and a salesforce to scale. I’m not sure that adding Hyperion to the Oracle kit bag will create a spike in Hyperion sales. Contrast this with the SAP Pilot buy.(James has a good write up on this.)

2. Hyperion is not a single application that will simply and quickly “bolt on or drop into” to the Oracle offering/s. Over the last couple of years Hyperion itself has done a mini-Oracle and acquired Brio, Razza and other companies. Oracle will need to figure out what to do with these bits and pieces too. Hyperion was/is a very successful consolidation tool vendor that tried to branch out into the broader BI space, with less success.  Jeff from infoworld picks up on this. This means that Oracle probably only really want at most 60-70% of what they have bought. This makes the deal more expensive than it seems, and creates uncertainties for the customers of those less loved products in the Hyperion offering. Andy notes.

What is less clear is what happens to Brio. Brio never quite made it up into the same league as Business Objects and Cognos, and given that Oracle already has various reporting software of varying quality it is unclear whether Oracle will really exploit Brio or just let it quietly shuffle off to that crowded house in the sky for acquired BI software. Certainly Brio customers need to carefully think about their options.

Mark Rittman, an independent Oracle BI consultant comments on the politics and technical challenges this take over brings. It isn’t as simple as it seems, and there is alot more overlap than Charles Phillips makes out. I’ll be adding Mark’s blog to my feed.

Integrating Essbase, and its salespeople and technologists, into Oracle will be a very bitter pill to swallow for many Express and IRI veterans, a bit like George Graham becoming manager of Tottenham Hotspur to use an analogy close to my heart. Whilst the architecture of Oracle OLAP is, in my opinion, superior to Essbase (and there are as many advocates on the Essbase side who would beg to differ), what’s happened to the product over the past five years has been nothing short of a tragedy, and one that is largely made up of Oracle shooting itself in the foot, repeatedly.

Similarly Systematic HR comments

If Fusion applications (yes – please make the distinction between product and infrastructure) is supposed to be out in a few years, why would they add a component this late in the game? Now they will need to determine the new product strategy and integrate all the components into a nice package that plays well together. Yes, I understand that SOA is a nice theory, but let’s face it, retooling Hyperion to make its code fully interoperable with other Oracle components is not a small task. Already Oracle has the eBusiness Suite, PeopleSoft, and Siebel to grapple with. Isn’t that enough?

3. But what really surprises me is this talk of “access to the CFO” many commentators picked up on. Does the Hyperion salesforce have a magic CFO access finder?  I wasn’t aware that CFO’s were a hidden tribe.

If an SAP account executive isn’t able to develop CFO “access” when needed, and have something relevant to say, he-she doesn’t normally last very long here at starship enterprisey.  It isn’t about access, it is about conversation. And to converse you need something worthwhile to say.  Hyperion has a great story that CFOs like, but then buying a bunch of Hyperion sales folks will not suddenly mean that CFOs will want to hear about the other 21 code bases in Oracle’s kit bag.  

Many of SAP’s customer are already Oracle customers, via Database and if Charles is to believed, Fusion Middleware, (whatever that may be), so far this hasn’t  generated any significant inroads into SAP revenue streams. InAccording to the SAP analysis, we are taking market share.  I’m not sure that the Hyperion sales person will succeed where Oracle’s have failed.

4. Captain Contrarian, Josh Greenbaum nailed an interesting point. M&A is something that Wallstreet thrives on and understands. Buying listed companies is easy news  and the analyst and journo community lap it up. Organic growth seems kind of boring  in comparision. Josh comments. 

Unfortunately, when it comes to the news that matters in our industry, the Anne Nicole Effect is in full force. Neither the New York Times (nor its competitors) has managed to write an in-depth look at the issues behind the strategies of Oracle, SAP, and the rest of the enterprise software market. What gets played is stuff like M&A — big and brash and titillating — while the the issues that matter, I believe, more to customers — product strategy, technology strategy, innovation, total cost of ownership — are hardly ever addressed. 

I blame a fair amount of this on the Wall Street analysts and their priorities, which are too much about quarterly earnings and market cap and not enough about long term value to customers. Wall Street understands M&A very well, and is able to analyze it and pontificate on it and report on it and generally make a big splash about it. But complex product strategies and long-term vision is a little too complex and long-term for them.

Charles Phillips is doing a brilliant job in talking to the Street and the City. For him talking about M&A is a lot easier than getting into the technical details of Fusion, but he is a master at talking numbers. He understands the banker and analyst world but Vinnie may have a point, Oracle is a private equity fund. 

5. This purchase will encourage SAP to invest more into financial performance management. The Pilot purchase a couple of weeks ago seems rather prescient and links well with the growing success of BI. But the Oracle move places a premium on delivering stronger user-centric applications, as Hyperion is known for its accountant-friendly (oxymoron?)  UI.

6.The SAP salesforce will be more focused, as “losing” or perhaps not even competing for a performance management deal to a standalone vendor that is a part of the Netweaver ecosystem is very different to losing one to Oracle.  Over the last few years we have had a focus on the platform; what I’d classify as the CIO centric-sell. This accquistion may herald a return into fashion of stronger CFO centric presales. Personally I think this is long overdue, but then as an ex-application presaler I’m reflexively biased. Folks that understand the challenges of the CFO and speak the language of finance will be in demand.

I’d guess that IBM and Microsoft will also be less inclined to open the door for Hyperion when it is part of Oracle than when it was a standalone vendor.

Tony from Freeform Dynamics explains this challenge well. 

The major test for many current customers of Hyperion will lie in how well Oracle maintains Hyperion’s ability to operate across a broad portfolio of offerings. Hyperion has gained much benefit from its ability to extract valuable business performance information in many environments and Oracle will face a major challenge to keep these relationships functioning, especially as it is also a direct competitor with many of these vendors

7.As with the PeopleSoft  and Siebel takeovers, this creates opportunities for SAP to pick up great talent who don’t want to work for Oracle, both in development and the field.

8. Oracle is paying 7.8x Hyperion’s maintenance stream. This is higher  than prior acquisitions of PSFT at 7.2x and Siebel at 7.3x. I’m also not convinced that reporting tools have the same level of stickiness that core transactional systems do. It is a lot easier to replace a consolidation and reporting tool that it is an ERP.

9.Oracle is talking up an anti-SAP pitch on this one, but rather than just attacking and surrounding SAP, this may be more of defensive play. Buttressing the database business against IBM and Microsoft may be the real reason for this spending. An  IBM-Cognos wedding would make things really interesting. Microsoft’s BI ambitions are well known.

(my views, not SAP’s)

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Incidently, Hyperion was a relatively minor figure in Greek Mythology  He started well, being the father of light but then things went rather down hill and he was banished to a really dark pit with his brothers. He was made a little more famous by John Keats, a poet who wrote stuff about urns. The poems Hyperion and the Fall of Hyperion go on almost as long as the Oracle-Peoplesoft take over did, but herewith an excerpt.

In sad demeanour, solemn, undisturb’d,

Unruffled, like high Gods, ye liv’d and ruled:

Now I behold in you fear, hope, and wrath;

Working for Oracle.

Okay the last line wasn’t Keats.

 

 

Technorati tags: Hyperion, Oracle, SAP, IBM, Microsoft