Should Oracle seal the deal, the enterprise software giant will be poised to grab an excellent market position and compete more aggressively with BI providers Business Objects and Cognos. Plus, Oracle could be in position to steal customers away from rival SAP, observers and analysts say.
Hyperion makes planning, budgeting and consolidation applications that help CFOs gain better insight into corporate finances.
"This is definitely a leg up on SAP for Oracle," said Ventana Research CEO Mark Smith said. "SAP has not competed in the BI or financial management apps market. Oracle has a large number of customers and an applications suite that SAP just hasn't got yet."
Forrest Research analyst Boris Evelson agreed that Oracle's new position as a financial performance management leader will put additional pressure on SAP.
If SAP is concerned, it's not showing it. "This latest acquisition continues the efforts by Oracle -- limited by the inability to grow on its own -- to buy customers and market share, and only adds to Oracle's already cluttered application landscape," said SAP spokesperson Jim Dever.
"SAP has more than 2.5 times the market share in applications [compared to the competition] and despite all the billions of dollars Oracle has spent on over 20 acquisitions, SAP still gained 3 percentage points of market share in 2006 alone," Dever asserted. "The question that needs to be asked is: Has Oracle's acquisition strategy actually benefited the user?"
Oracle already makes BI tools and has some market share. Purchasing Hyperion will add acclaimed software and 12,000 customers to the Oracle line-up.
Hyperion has been a good earner. The company tallied a second-quarter sales increase of 20 percent to $222.9 million, compared to $185.5 million for the same period a year ago.
Phillips dismissed products from Cognos (Quote) and Business Objects (Quote) as point solutions, claiming those vendors focus on BI tools and have poor BI foundations with few analytic applications, or no database or transactional systems.
Bi market leader Business Objects saw revenue rise 22 percent to $371 million in the recent fourth quarter; Cognos' Q3 revenue rose to $247.8 million from $212.3 million, trumping analysts' estimates of $241.1 million.
Even with Hyperion in the corporate fold, Oracle's road to success in the sector is not quite Easy Street.