Oracle Hops on Hyperion

Database giant Oracle continued on its M&A tear today, spending $3.3 billion on business intelligence specialist Hyperion in an attempt to boost its data analysis story. (See Oracle Buys Hyperion.)

The cash tender offer for Hyperion follows the $5.85 billion acquisition of CRM vendor Siebel and the $10.3 billion acquisition of PeopleSoft. (See Oracle Swallows Siebel, Oracle Takes Control of PeopleSoft, Oracle & PeopleSoft: The Final Round, and PeopleSoft Plot Thickens.)

The idea behind business intelligence (BI) is that the software extracts data from various back-end systems and databases containing info on HR, financials, customers, and the like, which can then be sifted and searched. (See Vendors Fire Up Data Forensics, Kane County Consolidates, and IBM Extends Biz Intelligence.)

Hyperion's flagship product is its System 9 software, which lets users run queries on data warehouses and also compile financial data in accordance with regulatory rules. (See Hyperion Reports Q4.)

Speaking on a conference call this morning, Oracle president Charles Phillips admitted that Oracle has gaps in its existing BI portfolio. "We needed something really strong there," he said, explaining that Oracle was on the lookout for software to really drill down into database data.The vendor currently offers Oracle Business Intelligence Enterprise Edition software, although Phillips wants to improve its ability to analyze database data. "What we did not have are the analytic applications," he explained, adding that Hyperion's OLAP software engine will let users analyze "multi-dimensional data" held in different formats across databases.

Hyperion's CEO Godfrey Sullivan used this morning's call to reassure Hyperion's 12,000 customers, which include big names such as Wells Fargo and aluminum manufacturer Alcoa. "We're confident that customers will see their investments protected," he said.

Compliance pressures, not to mention the recent hi-jinks at HP, have helped raise the profile of BI amongst users to new levels, although a recent report from Heavy Reading Enterprise warned that, up until now, the market has largely been characterized by vendor hype. (See Report: Separate BI Hype From Reality and Enterprises Want More Intel.)

The end result is that many BI deployments have failed to meet end-user expectations, although the report found that organizations are nonetheless diving into the technology. Half of the respondents to a survey conducted by Heavy Reading Enterprise, for example, plan to increase their budget for the technology over the next two years, while only a small fraction thought that it would decrease.

Some CIOs and IT managers have already voiced their concerns about getting their BI efforts off the ground. Specifically, users cited data availability challenges, getting other parts of the organization on board with BI, and security issues. (See Users Describe the Battle for BI.)At least one analyst warns that BI should be approached with caution. "This stuff is complex, it's not plug and play, like turning a PC on," says Yankee Group analyst Laura DiDio, adding that many CIOs have not addressed the realities of the technology. "A lot of the BI deployments are not meeting requirements because the folks that are mandating it are doing so without adequate training, time, and internal communication," she explained.

Today's deal is also part of Oracle's ongoing push to pressurize its arch rival SAP. (See Oracle Increases Retek Offer and SAP Sidles Up to PeopleSoft Users.) "This acquisition has helped us extend our 'surround SAP' strategy," explained Phillips, adding that more SAP customers are now using Oracle's Fusion middleware than SAP's own Netweaver product.

Initial indications are that Hyperion's workforce, which is said to number around 2,500 employees will be moving over to Oracle. "I don't think there will be any problem, they will want to stay," said Phillips, although he did not reveal what incentives are likely to be offered.

Oracle's acquisition of Hyperion is expected to close next month.

The market, despite the slump that hit Wall Street this week, responded positively to Oracle's latest foray into the M&A arena. In trading today, Oracle shares rose 39 cents (2.37 percent) to $16.82.James Rogers, Senior Editor Byte and Switch