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Oracle's Hyperion may lead to more BI acquisitions

Oracle's Hyperion may lead to more BI acquisitions

Business Objects, Cognos could be next

Analysts expect Oracle's purchase of business intelligence software vendor Hyperion Solutions will lead to more takeovers in this space, with Business Objects and Cognos the most likely targets of companies looking to expand through acquisition.

"Needless to say, IBM needs to do something. Both IBM and SAP will have to make some kind of move to counter Oracle," says Analyst Boris Evelson, who covers business intelligence at Forrester Research. "Today, IBM's [business intelligence] story is very disjointed."

Oracle on Thursday said it agreed to acquire Hyperion for $3.3 billion. The sale price represents a 21% premium over Hyperion's actual stock price, but it appears that Oracle believes the deal will help it take customers away from applications rival SAP.

Oracle President Charles Phillips said in a statement that the acquisition is the "latest move in our strategy to expand Oracle's offerings to SAP customers," because thousands of SAP customers rely on Hyperion for financial consolidation, analysis and reporting systems.

SAP is more likely to make the next move than IBM, Evelson believes. "SAP is less resistant to the not-invented-here syndrome," he says. "They're much more open to acquiring and integrating whereas IBM is a little more prejudiced, thinking 'we're IBM, we know everything about software.'"

SAP's Business Information Warehouse does a great job supplying analytics, but falls short in the user interface, Evelson says. "An acquisition of Cognos by either IBM or SAP is a very logical next event," he says.

Business Objects and Cognos are the most likely companies to be acquired next, although business-intelligence vendor SAS is in play too, says James Kobielus, principal analyst for data management at Current Analysis.

Vendors with a service-oriented architecture (SOA) agenda such as IBM, Microsoft, BEA Systems and webMethods may all be looking to acquire business-intelligence software vendors, he says.

"The SOA suite vendors, the main ones, are already looking for some strategic acquisitions in [business intelligence] and the corporate management space. This has been going on for a while," Kobielus says. "BEA hardly has any business intelligence at all, much less performance management. They've shown recently they will do strategic acquisitions to round out the suite."

Just like the Hyperion deal, future acquisitions involving business-intelligence vendors will likely involve payments above stock price, though maybe not as high as the price paid by Oracle, according to analysis by the Goldman Sachs Group.

The Oracle-Hyperion transaction "could fuel takeover speculation for other business-intelligence vendors including Business Objects, Cognos and Informatica. However, we believe there is already some takeover premium in these stocks. Without Oracle, there are fewer potential acquirers which could dampen future premiums in BI consolidation," the Goldman Sachs Group wrote.

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