BI Squeeze

Just about the only thing surprising about Oracle’s acquisition of BI (business intelligence) and performance management vendor Hyperion last week was, what took them so long, and why didn’t IBM buy them first?

First, we’ll deal with Oracle. You know they’re not terribly shy about buying companies. Do the math. With Hyperion being number 30 over the past three years, on average, Oracle has been swallowing up companies on the average of one every five weeks or so. Maybe you might even recall that Hyperion wasn’t Oracle’s first BI acquisition. Way back when (1996 to be exact), it snapped up the IRI Express OLAP database around the same time that Business Objects and Cognos were making their splash.

You’d think that a $3.3 billion deal for a product set that largely complements what Oracle already offers would have been child’s play compared to forking out $11 billion for a hostile run at PeopleSoft.

OK there’s some overlap, in that PeopleSoft and Siebel have their own analytics. In a company that’s agglomerated so many product lines as Oracle, any acquisition is bound to have some overlap someplace.

We thought this was inevitable because BI has little reason to remain a standalone market.

BI emerged about a decade ago, largely as a database and reporting tools market. In fact it was first called “data warehousing.” Today, OLAP is just another face of the database. Besides Oracle, Microsoft has bundled an OLAP option with SQL Server.

Consequently, with the OLAP side of BI having become an extension of the database market, the BI market shifted towards reporting and analytic tools. That was fine when BI was emerging, but the sweet spot of the market wants applications, not tools. Increasingly, the BI folks have been emphasizing performance management applications, which have placed them between a rock and a hard place: the ERP folks on one side, and the data integration middleware platforms on the other.

If your organization is heavily invested in ERP, BI/performance management becomes a natural extension of the core enterprise system. Conversely, if no single application predominates your environment, or if your business is predominately run with homegrown apps, your reliance is on your data integration vendor. Either way, there’s little value add from having another vendor providing the analytics, and therefore, less and less reason for BI to remain a standalone market.

We haven’t forgotten about IBM. For the better part of the past decade, they’ve been bundling Hyperion’s own Essbase as DB2 OLAP Server. So you’re probably asking why didn’t IBM just buy them a decade ago?

OK, you can say that IBM is not in the applications business, except that they already have products like Master Data Management that, not only border on applications, but are very synergistic with BI. And you could say that IBM probably had a pretty cheap, low risk deal reselling Hyperion Essbase. Obviously with Oracle in the picture, that won’t be the case anymore.

Consequently, the one thing that would surprise us is if IBM doesn’t buy Business Objects or Cognos.

2 thoughts on “BI Squeeze”

  1. Business Objects and Cognos have become increasingly difficult to buy as they add a data integration stack to the BI tools. For example if IBM were to buy Business Objects they would find themselves with an entirely overlapping suite of ETL, data quality and metadata management. IBM seems to have pretty strong relationships with most BI and seems to want to keep it that way. The other problem is that Microsoft is selling BI cheap and trying to climb into the enterprise market. Does that make a +5 billion dollar gamble on Cognos or BOBJ worthwhile?

    Vincent from ITToolbox

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