frantic first week of June that marked an outright internecine war in the ERP
space, seems to have been somewhat repeated in the second half of July, but
this time in the business intelligence (BI) market. The following acquisitions
Business Objects will acquire Crystal Decisions
Hyperion will acquire Brio Software
Actuate Corporation has completed the acquisition of Nimble Technology
Geac and SSA GT have acquired Comshare and Elevon
Lawson Software has acquired Numbercraft
a comparison of the consolidations taking part in the BI market versus those
among ERP vendors see "BI
Market Consolidation Compared to ERP Market Consolidation".
is Part Two of a three-part note.
One detailed current acquisitions in the BI Market.
Three will discuss Competition and make User Recommendations.
one could find some elements of similarity (e.g., market share bolstering and
cross-selling opportunities) with the ongoing raging consolidation in the overall
enterprise applications market (particularly in the mature ERP segment), the
onset of consolidations in the BI market still has much more to it than meets
the eye. One group of reasons would lie in different current evolutionary states
between ERP and BI markets (i.e., the mature and highly penetrated first vs.
the still fragmented and far from being saturated latter), while the others
would come from peculiar factors, such as Microsoft's intended
foray into the reporting sector of the broader BI market with its recent unveiling
of SQL Server Reporting Services, slated for a foreseeable
future and forcing those directly affected (particularly its still quite involved
partner Crystal Decisions) to make defensive moves. Hence, Crystal, with already
interesting genesis (see Seagate
Software 'Crystallizes' Its New Name: Crystal Decisions) and particularly
successful recent past, had recently announced its IPO intentions for ~$172
million, and it was also logical to expect acquisition suitors to start knocking
on the door.
Consequently, the above Business Objects and Hyperion acquisitions have a few common traits such as 1) the bigger vendor availing itself of complementary products, 2) the bigger vendor with a more complex product acquiring a smaller competitor with simpler/cheaper products, and 3) both acquisitions have reshuffled the BI/analytics market ranking pushing once leading Cognos beneath, at least revenue wise. Also, the sales and marketing programs of the merged companies largely complement each other Crystal and Brio have been more successful at selling to the CIOs as opposed to reaching the finance department or boardroom, whereas Hyperion and Business Objects, conversely, have sold mainly to the CFOs and CEOs. Increasingly, their imminently more rounded CPM suites will become a joint sale to finance and to other business areas like sales and marketing, product development, operations (inventory management, quality control, production planning), customer service, and to the IT organization as well.
Still, the two mergers have at least the following two major differences:
The functional rationale - Hyperion has
seemingly had more reasons to extend its OLAP infrastructure and expanding
CPM product line to include Brio's query and reporting capabilities, whereas
Business Objects' focus remains mainly within reporting and interactive analytics,
but the acquisition gives it a well-oiled organizational infrastructure, thereby
exceeding Cognos and Hyperion in revenue, licenses, customers and OEM partnerships.
Both Business Objects and Crystal have established channel partnerships built
on the capability to embed within the context of the partner application.
Indeed, the merger should place the merged Business Objects in the leading
BI/reporting market position and, in this slowly but surely maturing market,
product footprint and financial stability will soon mean more opportunities
and the clout to compete.
The level of despair - Brio Software, while
nonetheless the top BI player, which brings lots of innovative technology
as a dowry (see Brio
Technology Expands Support for WML and XML and Brio
Technology Enters the ETL Market), has long been financially troubled
following up on a poorly executed acquisition of Sqribe Technologies
in 1999, and has since been in need of a white knight to ever compete against
Cognos and Business Objects, whereas Crystal and his future parent have been
two of the best performing software providers lately.
OEM Partnerships Affected
the recent spate of intra-market mergers complicates many soon-to-be former
and/or still ongoing OEM partnerships, such as between Hyperion and Crystal,
Business Objects' use of Hyperion's Essbase XTD analytic platform,
while it is worth noting Business Object's use of Adaytum prior to its acquisition
by Cognos and of TopTier prior to SAP's acquisition (see Business
Objects Teams With TopTier For Analytics). The market segment has also been
riddled by a number of patent infringement lawsuits in the past (see Business
Objects Objects Again and Business
Objects Outguns Brio Technology in Patent Dispute).
both acquisitions again have similarities would be the challenge of the products'
overlap, and the fact that the precise products' roadmaps are yet to be produced.
The Brio acquisition has some potential for Hyperion given a reasonably little
product overlap, the physical closeness of the vendors' headquarters, former
partnering in the past (with a result that Brio can query Essbase XTD cubes)
and the clarity of who will be the boss in the common household. It is likely
that Hyperion will integrate Brio's products into its suite to deliver more
reporting and richer ad hoc capabilities within its Hyperion Financial
Management and Hyperion Planning applications and
to extend custom applications built with its OLAP platform, rather than pursuing
a standalone BI initiative and alienating a number of partners and customers
that are currently using other BI products. Still, at this stage, it is not
clear what happens between Brio Intelligence and Hyperion
Analyzer, Hyperion Reports and Brio SQR,
or Brio Metric Builder and Hyperion Performance Scorecard
equivalent products (i.e., convergence, one product's discontinuation, or dual
strategy). Whichever direction Hyperion plans to take, it will have to quickly
articulate its strategy to the market.
Business Objects will claim that there is more overlap in marketing message
than in the products per se, and it will focus on stressing the differences
(i.e., Business Objects is largely deployed to power users for on the fly'
query and reporting due to its semantic layer's ability to abstract the data
structures, and to management users through dashboards and scorecards, while
Crystal is primarily used by IT professionals as a tool to design and disseminate
reports out to very large user communities), it has been a very rare occurrence
to see that in a merger of companies making similar products at least one product
has not been affected. However, in addition to two scorecards products (i.e.,
Crystal Performance Scorecard vs. Business Objects
Performance Manager) the vendors will have similar tools involved in
creating reporting products such as semantic layers, query engines, design environments,
formatting and rendering engines, distribution engines, and so on, and will
likely have to decide on a single set of components, which will be a grueling
and emotional task down the track.
addition to products' rationalization, the integration at sales and cultural
levels will be challenging. While Business Objects have had a solid acquisition
track in the past, Business Objects should not discontinue the Crystal brand
in the same way the Acta or Blue Edge brand
names were easily discontinued after recent acquisitions, since Crystal means
both revenue and renowned products (and even a bigger brand name in North America
than Business Objects), while Acta and Blue Edge meant a mere functionality.
Cultural dissimilarity and power clashes between two strong matrimony partners
have often flawed the software mergers, and unraveling Crystal's strong channel
and OEM partnerships may likely result in conflicts, when Business Objects'
staff start targeting these. Further, Business Objects used to have alliance
with Adaytum for financial reporting, and it continues to prefer
alliances for extending its reach into modeling, planning, and budgeting. While
the focus on enterprise reporting is notable, sooner or later, Business Objects
will have to acquire its own planning solution or be relegated to a weaker competitive
position in the broader CPM marketplace.
the other hand, since CPM typically enters most corporations in the area of
financial planning, Hyperion, having a core competence there, has achieved a
significant penetration like its financial analytics peers (e.g., Cartesis,
Comshare, Cognos, Longview Solutions,
Informatica, etc.). However, CPM has begun to spread into other
business areas, and it might realize its true success in any organization when
it pervades, e.g., quality improvement, supply chain management (SCM), customer
relationship management (CRM) or product lifecycle management (PLM). Therefore,
the BI vendors with strong financial management products including Hyperion
and Cognos may be well positioned to extend BPM into the enterprise, but for
the time being they are still perceived as pure-financial players.
concludes Part Two of a three-part note.
One detailed recent events.
Three will discuss Competition and make User Recommendations.