ISA Consulting Bought by E&Y

And so the consulting company acquisitions continue.  I haven't written about this in over a year mostly because these acquisition entries take so many hours to research (cry me a river, Edward), so let's bury the lead by first covering all the major acquisitions that have occurred since my last entry:


November 24, 2009: PWC acquires Paragon
Those in the Oracle EPM areas in Europe & Asia knew of Paragon.  With close to 100 employees, they were a significant player in the UK, Turkey, and Singapore markets.  It's not known how many of Paragon's employees made the transition to PWC, but press releases seem to reflect around 40.


March 29, 2010: Perficient acquires Kerdock
Kerdock was a major, long-standing Oracle BI/EPM vendor dating back to roughly 2002.  Based out of Houston, they had close to 65 employees at their peak.  When they were bought last year by Perficient (a public-traded company - NASDAQ: PRFT - with about 1,400 employees), they had roughly 45 employees and about $8MM in annual revenue.  They were bought for $6MM (of which $3.4MM was in cash and $2.6MM in PRFT stock).


May 4, 2010: Idhasoft acquires TLC Technologies
TLC is a long-time Oracle EPM partner based out of Pennsylvania.  Though they dated back to the late 90's, they were never that large.  Last year, a controlling interest in TLC was acquired by Idhasoft (through their Prism Informatica subsidiary) for an undisclosed sum.

May 18, 2010: Edgewater acquires Meridian

If you hadn't heard of Meridian when Edgewater acquired them, you weren't alone.  They were only a few years old (and they were pretty small) but they had begun developing a reputation as a Hyperion Strategic Finance implementer that was able to compete with the focused expertise of BlueStone.  We'll never know if they would have fulfilled that promise of HSF experience, though, because they were acquired too early on by Edgewater.  They did have several former Alcar executives (the company that became HSF) on their leadership team (including Alcar's former head of services, Ricardo Rasche), so their acquisition was significant.

August 31, 2010: E&Y acquires Global Analytics
Global Analytics, as you may recall, bought Narratus (the former "Data into Action") a couple of years ago and in 2010, they were gobbled up themselves.  Largely through the strengths of Hyperion installation expert, Bill Beach, Global Analytics had developed a reputation in the Hyperion infrastructure world.  For a time, they were one of only 5 companies (interRel was one of the others) with a significant infrastructure practice around Hyperion which included them subcontracting to other larger global systems integrators.  They had several areas outside of Hyperion, and my guess is that's why  E&Y bought them in 2010.  The small size of their Hyperion practice doesn't seem like it would have warranted E&Y's attention.  Though maybe this should have been a predictor of the acquisition of ISA?


October 21, 2010: IBM acquires Clarity
In my opinion, this was the most significant acquisition in the Oracle EPM, Hyperion, and Essbase world in 2010.  Clarity Systems out of Canada (same place my high school girlfriend lived, by the way) was the first substantial partner to build a pre-packaged budgeting solution on top of Essbase that way pre-dated Hyperion Planning.  Originally a consulting partner at Arbor, Clarity turned their spreadsheet-based front-end to Essbase eventually into a full-featured financial planning, consolidation and reporting product.  What was once a fairly pleasant working relationship got contentious for a number of reasons including alleged licensing violations and what later turned into a compete between Clarity and Hyperion's own Planning and Financial Management products.  As Clarity began to score some competitive wins over Hyperion at companies like Southwest Airlines and Alcon Labs, the relationship took a turn for the downright hostile.


Eventually, Clarity started integrating with non-Hyperion products as they continued their expansion.  Interestingly, when IBM bought them last year, IBM made no secrets about their intentions to kill off most of the Clarity suite (including the planning and financial consolidation functionality).  This actually makes complete sense since they already have the Cognos and TM/1 products doing virtually the same functions.  So why did they acquire them?  Consultant bodies to implement BI/EPM at IBM's consulting clients? Clarity's client list? Just to eliminate a competitor.  None of the above.  Apparently, IBM noticed a weakness in their XBRL reporting and one component of Clarity handled this functionality.  Seems like overkill to me, but then I'm not a company the size of IBM.


Throughout 2010: Palladium founders leave to form other firms
As disastrous as the Hyperion/Arbor merger was back in 1998, there are many who feel that the merger of Balanced Scorecard Collaborative, Painted Word, and ThinkFast into Palladium was even worse.  While I'm not one to judge, it has definitely been true that  Palladium has been bleeding talent (in the Hyperion/EPM world, at least) since their founding.  The last 15 months have been particularly harsh with three major group personnel departures:

• Painted Word executives including Scot MacGillivray, Jim Leavitt, Chris Boulanger, and Peter Graham all left to found Cervello.  All of these people were founders and/or executives at Painted Word when it became part of Palladium.  They stuck it out for a few years and then left as a group to create Cervello which seems to be doing Oracle BI and EPM consulting.  I can't vouch for that personally, because I haven't run into them at all, but their departure from Palladium was definitely a blow.
• Tom Phelps left Palladium to start up ClearLine Group.  Tom Phelps was the original founder of the company that later became ThinkFast (one of the three components of Palladium).  Tom and his brother, Marty, founded a company that appears to be doing Oracle EPM consulting (but again, like Cervello, I haven't run into them yet).  With Tom Phelps departing and the Painted Words executives departing, the only founders of the component companies that are still part of Palladium are the Balanced Scorecard guys.
• Palladium Pace team members including Dean Tarpley, Michael Wright, Carolyn Sieben, and a few others left to join Alvarez and Marsal in August, 2010.  The Pace product hadn't been selling anywhere near what its creators expected and this was the final nail in the coffin of the product.  While Pace is still mentioned on Palladium's website, it doesn't seem that there's anyone left at Palladium still working on the product.  Palladium had been shopping around for a buyer of their Pace business unit for a while, so it's unclear as to if Palladium sold the developers to Alvarez or if they simply were hired en masse.  Since there wasn't any sort of "predatory workpractices" lawsuit, I'm concluding that it was a purchase of the talent and Alvarez didn't want Pace at all.

March 15+ 2011: Ernst & Young acquires ISA
Well, I'd love to point to a press release on this, but there isn't one simply because it's not been announced yet. [Editor's Note: it is now public.  Scroll to the end of the story for more.]  Normally, I wouldn't do a blog entry on this until it was official, but this is the least stealthy acquisition in history.  I have heard about it from no fewer than three sources at three different companies, and since offers have already been extended to the employees that are going to get them at ISA Consulting, the affected people already know.  Keep watching Ernst & Young and ISA's news pages and I'm sure something will be up in the next week or two.


ISA is based out of Pennsylvania and is a very large player in the Oracle BI and EPM space.  Though they do other products, ISA is still considered by many to be a primarily Hyperion partner.  Based on what I've been told, E&Y is acquiring ISA primarily for their consulting expertise.  While they're letting almost all the sales and back office staff go (Mitch Rubin and Cliff Matthews being notable exceptions), most all of the consultants seem to be getting offers to join E&Y.  The partners at ISA do seem to be coming on as either partners or close to it at E&Y.


Even though E&Y is one of the 10 largest privately held companies in the USA, this is a significant acquisition because ISA does appear to have well over 100 people focused around BI, EPM, and data warehousing.  Whether they end up putting ISA in the BI & Data Warehousing group or into financial transformation (or split them between them), this acquisition will significantly increase the number of individuals in those areas. If E&Y does manage to hold on to the talent from ISA, they will now be able to much more directly compete with Deloitte on the BI & EPM front.


I haven't heard terms of the acquisition, but since E&Y doesn't need ISA's client list or sales expertise but rather just wants the consulting bodies, the dollars are presumably based on a multiple of EBITDA. Based on other similar deals in the last year, I expect the multiple is 6.5 times 12-month EBITDA (give or take a factor of 1.5).  If anyone knows any different, by all means, either shoot me an e-mail (I'll keep you anonymous) or post it in the comments to this entry.


Who's Next?
If you go way back to my posting from January 5, 2009, I offered up this list of potential targets for acquisition: 

One could speculate that it might be interRel, PII, Kerdock, Global Analytics, US-Analytics, Analytic Vision, HCG, TopDown, or even the Hyperion arm of Palladium, but it could just as likely be some other tiny Hyperion vendor that's not on anyone's radar screen right now. Heck, it might even expand beyond the consulting world to one of the Hyperion software partners like Applied OLAP or Star Analytics.

I then went on to say that interRel could be removed from the list.  Well, I was right on Kerdock, Global Analytics, and the Hyperion arm of Palladium, so that leaves PII, US-Analytics, Analytic Vision, HCG, TopDown, Applied OLAP, and Star Analytics.  I guess I would add MarketSphere to that list too even though they're obviously in areas beyond Oracle EPM.  While many of these companies are too small to attract the attention of Deloitte, IBM, E&Y, and Oracle, don't be shocked if one or more of them is gobbled up in the next year by an off-shore consulting firm looking to fill in the EPM/BI gaps in their offerings.


It's now almost 2AM and I have to present to the HUG group in Minneapolis in a few hours, so I'm going to post and then sleep.  If I've stated anything incorrectly above, feel free to comment and please assume I wasn't trying to be malicious.  It's just been a long day and this entry (essay?) was almost 1,800 words.


UPDATE April 5, 2011: E&Y Officially Buys ISA Consulting
It took a week into April, but E&Y finalized the ISA deal and announced the deal publicly.  The press release states that ISA had 130 employees (I'd speculated 100+) and financial terms were not disclosed.  Read more about it here.

#7. Consulting Company Consolidation

When the decade started, the Hyperion consulting world was dominated by niche companies that only did Hyperion (and sometimes, its competitors like Cognos and Business Objects). Some of the big names included Application Partners, Beacon, Ranzal, ThinkFast, Painted Word, Navigator, Vertical Pitch, and WhittmanHart Consulting. By the end of the decade, not one of those firms was still standing.

Starting in about 2003, the value of BI/EPM really started taking off, and the merger/acquisition of the independent firms began. The first to go was Beacon (acquired by what’s now called Hackett in 2003). The next year, Edgewater gobbled up Ranzal and then in 2007, it also ate Vertical Pitch. ThinkFast and Painted Word merged with Balanced Scorecard Collaborative in 2005 to form Palladium (raise your hand if you think that was a good idea in retrospect). Hitachi acquired Navigator Systems in 2006, WhittmanHart was acquired by Rolta (an Indian conglomerate) in 2008, and the list goes on. Oh, and Application Partners? They just disappeared.

While the landscape was once dominated by focused BI/EPM firms, by 2010, only a handful remain. Yes, as of this writing, interRel is still independent, and you'll get this company out of my (and my co-founder, Eduardo's) cold dead hands. I think I sounded a little like Charlton Heston right there (when he was alive enough to say things like that).

#7. Acquisition of Major Hyperion Consulting Firms

While consulting firms getting acquired is nothing new (AnswerThink buying Beacon, Hitachi buying Navigator, etc.), the rash of consolidations affecting the Hyperion consulting world in 2008 was unprecedented. Let's review 5+ major EPM consulting company transactions that occurred in roughly the last 12 months alone.

December 10, 2007. Edgewater Acquires Vertical Pitch.

Yes, I know this technically happened at the every end of 2007, but this event is really what signaled the onslaught of coming consolidation. Edgewater first got into the Hyperion consulting game with the acquisition a few years ago of Ranzal. They later swallowed Lynx and now they're continuing their march towards global assimilation with the purchase of Vertical Pitch out of Denver, Colorado. They were bought for $20MM and their run rate (trailing twelve months revenue) was about $10MM. The $20MM was $14MM in cash and $6MM in Edgewater stock (which is now is more valuable as kindling than stock, to be honest).

On one hand, this purchase was predictable. Edgewater had a great deal of cash on hand and they were itching to buy up another Hyperion partner; a predominantly West Coast firm just made good geographic sense. On the other hand, most people were surprised because Dan Gudal (founder of Vertical Pitch) never seemed like the type to sell out. I guess everyone has his price? It's also possible that Dan read the tea leaves of the soon to be plummeting USA economy and realized that this was probably the peak time to get out.

May 15, 2008. Titan acquires Sinmax Global.

I know: Sinmax Global sounds like a multinational porn conglomerate, but they were actually a major EPM player in India and Southeast Asia. While their founder was a former Hyperion groupie, Sinmax had since expanded beyond Hyperion to include competing products like Cognos and Business Objects.

While this didn't make many headlines over in the USA, it was the first of a two-pronged attack from Titan Technology Partners into the EPM space.

July 29, 2008. Rolta (TUSC) acquires WhittmanHart Consulting.

This one is mildly confusing. Rolta is an Indian conglomerate with 5,000 employees. In January of 2008, Rolta bought TUSC, a Chicago-based Oracle (and other IT services) consulting firm with around 160 consultants. Rolta (or TUSC, if you prefer) bought the consulting division of WhittmanHart. Based out of Chicago, WHC (WhittmanHart Consulting) primarily focused on Hyperion although their 80 consultants also implemented some other products.

The purchase of WHC made perfect sense for Rolta. TUSC (their USA-based IT arm) was already based in Chicago so it was easy enough to acquire another Chicago-based firm and while ERP and Data Warehousing certainly slowed down in 2008, BI/EPM did not. Simply, companies are adding BI/EPM initiatives while cutting others, so to keep growing, Rolta needed to get into the EPM space.

August 18, 2008. Titan acquires Pinnacle.

While I wasn't surprised that Titan bought a domestic Hyperion consulting firm (based on their initial salvo into EPM back in May when they bought Sinmax), I will admit that the purchase of Pinnacle threw me. The founders of Pinnacle, Andrew Jorgensen and Michael Fuori, always seemed very content working for themselves. Andy, in particular, has been known as a bit of a rebel, "go his own way" sort of person in the industry for years.

While there has been some gossip as to why this deal was executed, I won't go into it here. The important thing is that it did happen and within one month, two of the ten largest Hyperion partners disappeared (the other, of course, being WHC mentioned just above).

October 1, 2008. Global Analytics acquires Data Into Action (Narratus).

Most of you probably haven't heard of Narratus, but those old-timers in the crowd may have heard of Data Into Action. DIA (Data Into Action) was a major California Hyperion partner back in the 1990s until it was bought (sort of) by Hyperion to fill a gap in their own consulting services organization. When they left the Hyperion corporate fold (after 5 years, if I recall correctly), they relaunched as a division of Narratus... and that division is now part of Global Analytics.

Global Analytics is a fairly small Hyperion partner (~$4.5MM in revenue, at last check) but this acquisition signals their intention to grow. Of course, buying a little division of Narratus (DIA was fairly tiny once they went back out on their own) isn't the fastest way to do it. Frankly, it's a lot more likely that Global Analytics will be acquired themselves than that they will be able to grow through any sizable acquisitions. This purchase does get Global Analytics out of the area they've been pigeonholed in by their competitors: a company that only does Hyperion infrastructure. They can now claim to have a project implementation arm as well.

December 30, 2008. TUSC (Rolta) acquires Piocon.

Most of the Hyperion people reading have no idea who Piocon is, but they're well known in the OBIEE space. As past readers of this column know, interRel won Oracle's partner of the year award at OpenWorld 2008 for our EPM solutions. What you may not know is that there was also an award given (out of 17 awards in all) to the "BI Solution" of the year, and the winner was... wait for it... Piocon. This was for a very successful Oracle Business Intelligence project they did, and from what I've heard they deserve it.

Chicago-based Piocon (notice that apparently Rolta only knows how to buy firms based in Chicago) predominantly focuses on the Oil & Gas sector, so TUSC (or Rolta, I can't tell anymore) will most likely need to buy another more well-rounded firm if they're serious about the OBIEE arena. Either way, this gives Rolta (TUSC? Ack!) another building block in their EPM stack.

Why all the consolidation?

I have two theories. It's possible that the economy is tanking and the Hyperion/EPM consulting firms are getting scared. That would explain why the consolidations have been accelerating in the latter half of the year as the economy continues its downward spiral.

The other possibility (and the one that I find more likely) is that IT consulting firms (like Titan and Rolta) realize that their companies aren't expanding in traditional IT areas. Larger firms can use EPM to get in the door and then expand into their other IT areas. Even if the EPM deals aren't huge, once your in a company, the deals can be expanded to technology projects across the enterprise. After all, isn't this why Oracle bought Hyperion in the first place?

Who's Next?

That's probably a subject for a blog posting in and of itself. The rumor at OpenWorld was that interRel was being bought (which couldn't be further from the truth, by the way). It was most likely due to all the awards we were winning at the conference and when you're on people's lips, rumors like this tend to fly. People kept coming up to me congratulating us on getting acquired, and I amused myself by asking who exactly was purchasing us. The answers I got most often were Rolta, Deloitte, and Edgewater.

So we're perfectly clear, let me just say that no one from any of those companies has called me, but I would look to those three companies (Deloitte, Edgewater, or Rolta) to be one of the next companies to buy a Hyperion partner. As for who they will buy, there aren't a ton of pure-EPM partners left. One could speculate that it might be interRel, PII, Kerdock, Global Analytics, US-Analytics, Analytic Vision, HCG, TopDown, or even the Hyperion arm of Palladium, but it could just as likely be some other tiny Hyperion vendor that's not on anyone's radar screen right now. Heck, it might even expand beyond the consulting world to one of the Hyperion software partners like Applied OLAP or Star Analytics.

No matter who it is, look for the EPM/Hyperion consolidation wave to continue.