When the voracious Oracle Corp. acquisition machine consumed Hyperion Solutions Corp. in March for $3.3 billion, Wall Street cheered. So did Oracle CEO Larry Ellison, who described the combination as creating “an end-to-end performance-management system” serving customers from planning and budgeting to compliance reporting. Oracle also openly delighted in the impact of the deal on archrival SAP AG, going so far as to note in its press release that “Hyperion is the latest move in our strategy to expand Oracle’s offerings to SAP customers.”

Some customers of business-performance management (BPM) software, on the other hand, are less thrilled. Jan-Willem Beldman, information-technology finance manager with Wilsonville, Oregon-based Mentor Graphics Corp., worries about whether the Hyperion Financial Management (HFM) product, which Mentor has considered installing, can still be the “neutral middleman” that Mentor wanted. The company, which uses Hyperion applications for financial consolidation and planning, had considered using HFM to replace its current product for generating intercompany adjustments. But since Mentor uses SAP applications for fulfillment and financial reporting, Beldman is concerned. With Hyperion under the Oracle umbrella, he says, “it will make it harder for us to consider Hyperion as an independent vendor with a strong tool.”

Based on experiences at a previous employer, Dan Brunet, administrator of the HFM application for automotive supplier Visteon Corp., also thinks Hyperion customers might feel pressure to use Oracle’s database products, even though HFM currently can work with either Oracle or other SQL (Structured Query Language) databases. “Would the push be to use only Oracle?” he asks.

Hyperion’s competitors are happy to add fuel to any fire over the acquisition. “CFOs will wonder if Oracle will move them to another platform for analytics,” says Richard Stark, director of performance-management solutions with Hyperion rival Actuate Corp., a provider of enterprise reporting applications. And Piet Loubser, director of market intelligence for Business Objects SA, points to Oracle’s own statement that the Hyperion acquisition aims to win over SAP customers. Loubser points out that “there is no mention of the customer value the deal brings.”

While rivals may be expected to point out such issues, their caution resonates with the companies that use both Oracle and Hyperion products. Oracle’s budgeting-and-planning tool is good, but not best of breed, and is used mainly by “dedicated Oracle customers,” says Mark Smith, CEO and executive vice president of research with Ventana Research. Customers may wonder what migration options they’ll be offered, a big issue given the many areas of overlap between Hyperion and Oracle products.

A Two-front Battle

Still, many customers and industry analysts view the combination favorably, as a fusion of strong companies in largely different software areas that will provide strong competition to SAP.

Oracle’s acquisition of Hyperion plays up the strengths of both companies, says Mike Fauscette, program vice president, applications, with research firm IDC. He points out that Oracle’s applications have a powerful ability to analyze operating data, while Hyperion’s longest suit is in financial-analysis applications.

Further, Hyperion’s BPM products have “a very loyal following among CFOs,” says Kathleen Wilhide, IDC’s research director, adding that there is a subculture across finance departments of Hyperion advocates who depend on these solutions. “Hyperion is many times the default ‘go-to’ vendor for finance users,” she says.

A year ago, Oracle’s management shifted its focus from products that work only in Oracle environments to those that offer best-of-breed solutions that work with heterogeneous information sources. But that new spirit of cooperation did not diminish its intentions to compete fiercely with SAP.

John Hagerty, vice president and research fellow with AMR Research, says that only 10 percent of SAP’s customers (about 4,000 firms) use Hyperion. Many of these are SAP’s blue-chip clients, though, so Oracle’s purchase of Hyperion puts “a little chink in SAP’s armor.”

Oracle has opened a second battlefront with SAP in court. Weeks after the Hyperion deal was announced, Oracle sued its archrival, alleging that the German company had illegally and systematically entered Oracle’s computerized customer-support systems, downloading more than 10,000 software and support materials. SAP denies the allegations, which date back to its purchase of a software-support company founded by former PeopleSoft Inc. executives. SAP’s acquisition occurred at about the same time Oracle bought PeopleSoft. As the bad blood between the two companies increases, expect competitors to suggest that customers will suffer. “You’re CFO and you have two strategic suppliers locked in a dogfight,” says Cartesis chief marketing officer Crispin Read. That can’t be good, he argues, because you want your suppliers to work together to make you successful.

“Art, Science, and Luck”

The Hyperion deal is the latest in a 27-company shopping spree that started with Oracle’s PeopleSoft acquisition in January 2005 (see the chart at the end of this article). Targets ranged from search products to call-center applications to database technologies. Oracle’s drive to thrive in a mature industry through external growth has boosted its annual revenue in two years from $11.8 billion to an estimated $16 billion for the year ending May 30, 2007.

For its part, SAP has chosen mostly organic growth, and prefers strategic partnering, a spokesman says. “We don’t believe this [Oracle] strategy of trying to buy customers and market share is working,” he adds. SAP maintains a substantial market-share lead in enterprise applications and claims to be the true “end-to-end” provider. “Our competition’s approach — to move into the applications market by acquisition — leaves it to customers to cobble together and integrate software solutions that operate on different code bases,” he says. “Hyperion customers will face this same challenge.”

The bid for Hyperion was hardly a surprise. “Consolidation in the business-intelligence (BI) market has been anticipated for at least 18 months,” says Hagerty, and acquiring customers was the only way to grow. Given how much time and money companies invest in implementing BI products, few switch vendors without a compelling reason.

Some see no reason to switch. “We see the acquisition as a major benefit for us in the long run,” says Keith Hall, CFO of Lending Tree LLC, which uses Hyperion financial-reporting applications and is installing PeopleSoft accounting applications. “Presently, it requires a bit of art, science, and luck to coordinate our Hyperion and PeopleSoft systems. I would expect Oracle to merge the best of both lines together for a ‘killer app’ combination of accounting and financial-reporting software.”

Indeed, while more upheaval in the market is likely as the acquisition binge continues, there’s no need for finance customers to panic or act impulsively, says AMR Research’s Hagerty. He recommends that any shift in IT strategy or providers reflect a change in the user’s business, not in who owns the vendor. “Unless there’s a compelling reason to change your strategy,” he advises, “sit tight.”

Karen M. Kroll is a freelance writer based in Minnetonka, Minnesota.