Call it coincidence, but within the past week, two strangely similar deals reshaped the fragmented BI sector: Business Objects + Crystal Decisions, and Hyperion + Brio. Some background: While SAS and Teradata are the 16-ton gorillas dominating the high-end Terabyte market, the rest of the field is dominated by midsize players dying to break out.
Business Objects and Cognos battle over the ad hoc query and reporting space which targets power users. By contrast, Crystal has blown away virtually all competition (including Brio) for the high-volume, standard reports that are created once and distributed across enterprises and business units. Crystal also boasts a huge OEM business whose contribution is more mindshare than revenue, with Hyperion having been one of its licensees.
At first glance, the combination of Business Objects and Crystal appears a marriage of strength, while Hyperion’s Brio acquisition appears reactive. In reality, both deals are defensive, primarily aimed at putting together critical mass, and secondarily intended to provide more complete soup-to-nuts suites in a sector that until now resisted them.
Of course, amassing size in a consolidating software market is not a bad thing, unless the assembled parts have little or no synergy. Virtually every BI player has traveled the M&A route before to mixed results. In this case, Business Objects and Crystal have more apparent synergies, but both players admit that it will be impractical to merge both product sets into a single line. Ironically, Hyperion may find it easier to unite products since conceptually, it’s not a huge leap to replace the embedded Crystal Reports with Brio. And it may find some benefit adding Brio’s Metrics Builder to its existing corporate performance dashboard products. But the deal won’t garner Hyperion much additional market share, given Brio’s also-ran history.
The real question is what BI companies want to be when they grow up. Business Objects aims to be the “pure play” query and reporting player. Although it (and everybody else) has ventured into analytic apps, it realizes the need to avoid traipsing on SAP’s turf. Hyperion intends to continue emphasizing financial consolidation and planning, while Cognos is trying to serve all of the above. To its credit, Cognos has just come out with a pretty cool next-generation web services reporting capability that has yet to be proven.
Yet, as all this consolidation is taking place, new demand for “real-time” business intelligence is emerging that may — or may not — utilize the capabilities that these vendors have spent years developing. In that context, this week’s M&A is more about shoring up the past rather than looking into the future.