The Big "O"

News of Oracle Corp's share drop echoed around the software market today as Oracle shares fell 7 percent Thursday March 27. Questions again arise around whether or not the shopping spree the company has been on in the past few years is paying off, Oracle has spent over $35 billion over the past three years on acquisitions. It’s been unique to watch Oracle’s aggressive moves particularly in the BI space with the acquisition of Hyperion, there have always been rumors around whether they will actually be able to successfully pull off their acquisition strategy. Oracle points to some of this downturn to be reflected by the US economic situation and overall market dynamics as many companies are being forced to pull back on their IT spend and investment in new technologies. It will be interesting to monitor this term as Oracle fourth quarter guidance for the is being set cautiously. The macro economic environment will hurt companies like Oracle more than smaller software vendors, giving a fighting chance to smaller players to come up with that next big thing and does open up the door for rival ERP software vendor SAP to gain some momentum particularly in the BI space.

Is Your Team #1?

Walking through San Francisco International and I happened to glance up and see the newest (at least to me) "We're #1" pronouncement from Oracle. They claim to be #1 in Enterprise Performance Management, which the sub-head in the ad defines as Business Intelligence, Financial Applications and analytics.

While Oracle gets full credit for leadership as of the latest Gartner MQ, it is not immediately clear that Oracle is #1. This may be a function of overall market share, or it just might be more chest pounding from Oracle. Of interest is the fact that Gartner calls out that Oracle's BI offer needs work and the fact that current customers, especially the Hyperion customers, are taking a wait and see approach to Oracle offerings.

Oracle has a strong global market share in financial analytics, but it is by no means clear that Oracle is #1 in EPM. Especially if SAP has anything to say about it. And they do, based on a recent announcement of Oracle replacements based on their offering not inclusive of Business Objects.

Let the games begin.

The Many Mutations of Performance Management

As you know, we here at the Performance Guys are always on the look-out for new thinking and new solutions that focus on the performance management arena. And while the big players are slugging it out at the macro level, hiring top industry analysts, having one last sales kick-off, and getting ready to take over the world, other specialist vendors are quietly going about their business and solving problems for companies across the vertical spectrum.

One such example comes to us today from Red Prairie from the NRF show (you may have seen other cool NRF unveilings earlier in the week--pretty soon the damn shopping carts will be driving themselves--and the futuristic vision of Webvan will yet be achieved--VICTORY!--but I digress).

Companies like Red Prairie, focused on vertical solutions, are unveiling their own performance management solutions--this one branded in the imaginative "R"PM, or "Red Prairie" Performance Management (bets on if this name catches on? Anyone?) for retail companies. Now Red Prairie isn't necessarily a household name like some of the links above, but sports an impressive client list that uses--and depends on the RP software to help them optimize their operations and performance.

OK, there "is" the matter of the product being built on top of a certain software giant's own performance management application, but that aside, it's important to remember that many vertically focused organizations--retailers in this instance--are wary of using the big guys as their vendor of choice for BI and performance management--they're worried about cost, customization, and if the vendor truly knows and understands their key issues. Vendors like Red Prairie show us that in this rapidly accelerating era of consolidation (It's true, Oracle will one day rule us all), that innovation and laser focus on solving key business pains for a customer still has a place in the market.

BI and Performance Management Invade OOW!

Anyone looking for some insights or clues as to how seriously Oracle is taking the BI and performance management market need look only as far as this post from Rittman Mead Consulting, an Oracle centric partner in the area of business intelligence and data warehousing.

Now admittedly a more technically focused review on BI platform and data warehousing functionality than we tend to deal with here at Performance Guys, but in seeing statements like :

..."There were hundreds of business intelligence presentations, with a separate Hyperion stream, dozens of Oracle BI EE talks, BI keynotes and presentations on the new data warehousing and analytic features in the 11g release of the Oracle database. What’s more, all of the main conference keynotes had business intelligence as a major component..."

It doesn't take a genius to see that this is a space that Oracle is just a bit serious about, and with all of its main competitors now fully vested in their own BI strategy, it's a more than impressive opening move to show its customers, developers, CIO's, CFO's, and even CEO's that this is just another part of the IT budget that Oracle wants you to spend with them.

Is SAP Too Preoccupied?

We've wondered here before that in this Performance Guy's opinion/hypothesis, was Oracle always intending to go after BEA and not Business Objects, forcing SAP's hand and tying them up in a costly and lenthy acquisition and integration process while continuing to encircle them with more competitive technology?

Now news comes that Oracle has added to its performance management portfolio with the announcement of their intent to acquire Interlace Systems, a maker of integrated planning systems, which in large part acts as an extension of sales and operational planning--kind of a "planning for planners" type of approach. This move will further differentiate Oracle's performance management portfolio, and adds a solid extension of planning capabilities that you would expect to be used in sales cycles as soon as the acquisition is closed.

Interestingly, the "SAP may be distracted" angle was just picked up by another blogger we're now linking to on the right hand side here, Tony Baer at www.SandHill.com/opinion. Tony's insights are interesting in that as he looks on the Interlace site, while they have IBM, Oracle, and SAP as partners, the SAP partnership does have prominence over the others, particulalry on the support and certification side vs. what they are doing with Oracle, and he surmises that this may be another acquisition that Oracle has snatched away.

Time will tell, but first BEA, now Interlace, stay tuned for more developments...

Did Oracle Just Trump SAP?

An interesting theory I was discussing with Performance Guy Nic this morning regarding the news that Oracle has made an unsolicited bid (now rebuffed) for BEA Systems of about $6.7B. This is not the first time Oracle has gone after its competitor in the middleware market, but with the internal turmoil at BEA right now, and the performance of the stock (not to mention the 13.2% stake held by Carl Icahn), the timing couldn't be better.

Now SAP is really on the defensive here, with so much cash and focus now tied up with a long integration with Business Objects, are they in a position to counter the Oracle bid? Not withstanding other competing bids that are likely to come in for BEA now that there's an offer out there (IBM and HP come to mind), SAP may be left on the outside of this market if they let Oracle win.

Interestingly, what if this was Oracle's plan all along? Everyone knows of Oracle's interest in Business Objects throughout the year; what if they were making noises of varying degrees about being interested again with the intent of baiting SAP to make its move, all the while having no real intention to buy Business Objects, but having BEA as their main goal all along?

They saddle their nemesis with a lengthy and arduous integration and cash commitment, they scoop up a hugely competitive vendor and take over more of the infrastructure play, and SAP is again on the sidelines playing catch-up.

I'm just saying is all...

“The Five Possible Suitors”

So by now everyone has heard about the now infamous “Le Figaro Leak” from over the weekend, where some enterprising young reporter/disgruntled employee/cash poor intern, whoever—got hold of news that Business Objects has retained Goldman Sachs to help them find a buyer.

Couple of important markers to tell you this has some legs to it—first, multiple emails going out to employees to not discuss the matter externally, or even with each other. The old “loose lips sink ships” mantra is in full force in the halls of San Jose and Paris. Second, however, no statements of outrage, denial, or any sort of righteous indignation came out yesterday, and with the crack PR staff of Hill and Knowlton on speed dial over there, one would think that something would have been said to squash the rumors before they gained legs. So lets assume that there’s some smoke here.

Importantly, this smoke is really not new. For months before Oracle acquired Hyperion, there were rumors that an announcement was imminent—the “safe” room had been set up, documents were being exchanged—it just came down to a price issue. Now whether or not that’s the truth, I have absolutely no idea, but the point is that amongst the employees, they’ve been down this road once already this year.

Marketwatch mentions five possible suitors for the company, and since none of the Performance Guys work at Business Objects at this point in time, and all my options have cleared, let’s look into our EPM Magic 8-ball and see who might be contacted to see if there’s an “expression of interest” on their part…

SAP: “Outlook seems clear.” This is the one “name” that’s out there in terms of who would likely be most interested. Becoming more acquisition-friendly with recent purchases of Pilot and OutlookSoft, but far less of a partner and far more of a competitor to Business Objects in recent years. Also, OutlookSoft acquisition is a direct overlap to BOBJ Cartesis/SRC/ALG acquisitions—so do they take it for the BI side? Two European companies—might be easier to bring together culturally—wait what am I saying—SAP and culture? Sorry about that…

HP: “Intriguing—hadn’t thought of them, wait to shake again.” They have been making noise for some time about getting into the BI space, and with the business humming along all fronts, this would be a bold move in an area in which they have little experience or mind share. However, they have the deep pockets, and as the server and printer businesses continue to mature, the higher-growth apps business may beckon, and this may be an easy, less threatening way to get into the game. Local as well with the San Jose/American side of Business Objects, would afford good integration at the corporate level.

IBM: “Maybe, but not sure this works for them, hold still a minute. Yep, makes sense.” They keep making inroads into the BI space with EIM and ETL acquisitions, but also have deep partnerships with Cognos and others that would be sacrificed to bet everything on Business Objects. Great services opportunity for Big Blue (are we still allowed to call them that?) here, and if they want to make a play against the big apps vendors, this would certainly be that stake in the ground. Culturally, way different than Business Objects, but it would be an easy integration for most of the product line. The key is the services arm—do they want an exclusive with one vendor?

Adobe: “Just how hard are you shaking me?” Just announced stellar earnings, doing more with Business Objects, have a contrary technology to Microsoft around documents and reports, have the #1 product in Acrobat around document sharing—what’s not to like here? The companies are reportedly working on an announcement around business process management, might this be a precursor to something bigger? This is an intriguing combination, one that will require further watching...

Oracle: “Are you insane?—shake again.” As mentioned above, this was the assumption earlier in the year before the Hyperion announcement, and in the words of O.J., “if they did it,” they’d likely be doing it for the BI and EIM business, not the EPM business which is now well served by Hyperion. Boy talk about technology overlaps—but—to keep it out of SAP’s hands, might that be enough of a carrot for the Oracle folks to grab onto?

Hyperion is Back at Oracle

New Flair: Hyperion site update. The brand new red and white Oracle signage was applied yesterday on the former Hyperion (and Palm before that) buildings yesterday. It turns out news of Hyperion's removal was premature, and the new PLM addition to the family, Agile, is about to join with some of the Hyperion team in their former office space at Santa Clara. Either way, people are moving around and things are happening. While it is still not clear which version of BI the field sales teams are selling at Oracle, they are clearly selling the Hyperion financial applications and all the ERP reps have the opportunity to sell PLM. This may or may not be Office Space recut as a horror movie, but certainly a lot of new people making the "Oh" face.

Oracle still on the move...

No, we don't have a juicy rumor to pass along today, but there are always tremors in the greater Bay area, aren't there? And our friends at Oracle seem not to be quite finished with their buying spree in the technology space just yet.

As posted in the very topical ZDNet blog, Oracle may be on the move once again.

We posted about this here and here, evaluating some of the pro's and con's of the remaining performance vendors out there in the marketplace today, but our Spidey Senses tell us that in this case, we need to think beyond the perhaps strict definition of performance management vendors and think about more broad-based technology and applications vendors in this case.

Perhaps something in the business process management space? What say you Performance Guy Pat?

The CIO Blog has Questions on Hyperion and Oracle as Well...

I'm sure many vendors out there would love to know the answers...

Hold on a Minute...

Interestingly, the market doesn't seem to agree with Mr. Morrissey's analysis of the situation. Although Business Objects certainly has quite a good stable of consolidations customers in the marketplace, it's been no secret that the global GAAP heavy duty reporting and consolidations functionality has been lacking in its product arsenal, and Cartesis, with it's almost exclusive stable of enterprise customers, clearly fills this aspect of the product portfolio.

If you look at the move by Oracle, they made no bones about the fact that the rationale for the acquisition was clearly to move into the CFO office and stake a claim to turf previously held by SAP. I'd strongly argue that the move by Business Objects provides it with a clear path to the same audience that was previously lacking before on a consistent basis. Planning overlap aside (which although not insigificant, was clearly not the rationale behind the deal and the Cartesis planning product is by no means a market leader), you can make a strong case that the end to end functionality of the BusinessObject EPM stack is now much stronger and more complete as a result of this acquisition. I just don't know if you can make the same case for SAP, which was my point. It's a lot to pay for something that isn't readily apparent to the marketplace.

By their own admission, they were caught flat footed by the Oracle announcement, and by all accounts things are more than a little unsettled in Palo Alto in terms of the GTM strategy. Now will it turn out to be a good thing for SAP? Who knows. It could be. But it's a lot to pay to bring in functionality that you already have in full.

Anyone for tea? I'm thirsty and there appears to be a kettle brewing on our blog...

SAP Buys Outlooksoft

Consolidation in financial analytics and performance management is happening at light speed with the announcement yesterday that SAP plans to acquire Outlooksoft. In their announcement, SAP clearly positions this as extending its solutions for the CFO's office and expanding its portfolio to include performance management. In SAP speak, they provide everything from governance, risk and compliance to performance management, while doing a little ERP as well.

Interestingly, SAP usually does not usually spend much time talking about performance management as a stand alone offering, yet with Hyperion buying Oracle and Business Objects buying Cartesis, SAP could not afford to be left on the sidelines. Paul Hammerman at Forrester indicates that this closes a gap around Planning in the SAP product line in his interview with SearchSAP and notes that SAP's Strategic Enterprise Management (SEM) was not great. Hammerman suggests that SAP is losing CPM deals to best of breed vendors like Hyperion and Cognos.

OutlookSoft had been all Microsoft, all the time, until recently when they expanded support for Oracle. Outlooksoft offers a nice Excel front-end tool and makes it easy to do custom planning, budgeting and forecasting. The capability is user friendly for finance teams who have grown up with Excel. The capabilities and ease of use are both things SAP customers will benefit from, but there is clearly some overlap with existing functionality, and OutlookSoft products are not going to be used like Hyperion or Cartesis for complex consolidations. John Haggerty from AMR research points this out specifically in his view of the SAP acquisition.

"When thinking of Outlooksoft, we picture an image of a solid, highly usable, prediction-focused planning, budgeting and forecasting system. Customers, many of which are divisions of larger organizations, have built very responsive and flexible planning systems with the product. The consolidation tool is decent, but used more for budgeting and forecasting roll ups and less for complex enterprise consolidations, which is what SAP customers will need and expect. "

I would suggest this is true for legacy SAP customers, but maybe less so for the next generation of SAP customers, who are smaller organizations. SAP has spent a lot of energy and money talking and marketing to the mid-market with NetWeaver, even spending on ads suggesting start ups use SAP. While there is little evidence to suggest this is true, SAP has been touting mid-market wins and spent many cycles at Saffire 2007 talking about the mid-market and their strategy.

SAP's Chairman Hasso Plattner unveiled SAP's focus on SaaS as part of their mid-market strategy at Software 2007 yesterday. His chalkboard slide set was interesting to those of us in the audience, but the strategy was not as warmly received by the media. (Thanks Darren). Regardless of whether you believe SAP will be successful with on-demand, the Outlooksoft acquisition will sell very well in the mid-market, be very applicable for existing SAP enterprise customers, especially at division and business line levels, and the concept of extending Outlooksoft into a SaaS option is not a big jump. The OutlookSoft offering with Oracle also gives them something else to sell into Oracle and Hyperion customers, many of them still running on OFA and Essbase that is way past its prime.

Very clearly the consolidation wave has crested. Will the last pure play financial analytics and performance management vendor please hit the lights on the way out.

Reading the Tea Leaves in EPM

Well one of the performance guys has been in the UK this week, and came across this interesting article on-line at the Financial Director website about the game of musical chairs currently being played amongst all the vendors in the performance management space in the wake of the Oracle/Hyperion news.

Looks like lots of implications and potential combinations all around, and it will be interesting to see how this all shakes out--read on!