Score One for Oracle: Can SAP Stay in the Game?Score One for Oracle: Can SAP Stay in the Game?

It has been clear for a while that Oracle needed to make a strategic acquisition to elevate its standing with corporate finance organizations, so few were surprised when the Redwood Shores database giant announced today it plans to acquire Hyperion Solutions Corp. When it comes to finance, Hyperion is, after all, the biggest kid on the block from customer, revenue and product-line perspectives.

The intention to acquire Hyperion is further proof that market consolidation is still the name of the game. It also is validation of the increasing importance of the CFO and the finance organization. The ownership and leverage of ERP has been waning for many years now and is just an IT maintenance function mostly and not a strategic finance conversation. This is a critical point that is now much more obvious to Oracle and SAP. The CFO relationship for influencing the management of budgets and many key strategic elements of decisions on technology is not to be under estimated.

How Hyperion will get along within Oracle remains to be seen. The finance components of Hyperion's offerings will be a good, complementary fit to Oracle Financials, but integrating its BI line may not be quite as simple. After all, Oracle has made its strategic bet clear with the release of Oracle BI Enterprise Edition, a product that came courtesy of the earlier acquisition of Siebel. Hyperion BI will provide a starting point from which to build a future migration path. But what happens to Hyperion's BI customers in the meanwhile?The ball now is in Oracle's court, and we know that in previous acquisitions it has been somewhat slow to move it down the court. I believe that if - if - Oracle can deploy dedicated sales and service organizations with skill sets and competencies in the area of performance management for Finance, then it can successfully retain and build loyalty among those customers and be a BI force to be reckoned with.

The most interesting question out of today's announcement, though, concerns not Oracle but its rival SAP. If Oracle successfully moves forward with Hyperion, SAP has a problem. It doesn't have as much depth in BI or performance management as Oracle will. That will make it difficult for it to have a strategic dialogue with CFOs or CIOs of large and midsized organizations - at least until it fills the gaps in its product- and customer-facing organizations.

SAP's February purchase of Pilot Software helps in that it addresses the strategic needs of Operations and Finance for strategy and initiatives management and the use of scorecards, but that deal doesn't address financial applications or BI needs. And we shouldn't underestimate the depth and prowess of recently assembled Infor, which has significant depth in performance management and financial applications.

But that's nowhere near enough. Can SAP acquire a more dedicated financial performance management application provider, like Cartesis or OutlookSoft? Can it put together a counterbid, or acquire a Hyperion competitor - say, a company like Cognos that has both finance and BI products and customers?

These are, as they say, interesting times. For SAP to be taken seriously as a strategic player in BI and performance management, it will have to make something happen. Let's see if the other enterprise application provider can score one next.

Mark Smith is CEO And Senior Vice President of Research at Ventana Research. Write to him at [email protected].It has been clear for a while that Oracle needed to make a strategic acquisition to elevate its standing with corporate finance organizations, so few were surprised when Oracle announced today its intention to acquire Hyperion. When it comes to Finance, Hyperion is, after all, the biggest kid on the block from customer, revenue and product-line perspectives... The most interesting question out of today's announcement, though, concerns not Oracle but its rival SAP.