#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.

#8. Delayed release of EPM/Hyperion 11x for Unix

On July 12 of 2008, Oracle released the most significant release of the Hyperion products (particularly the updating of Essbase) in years. And while the policy of Hyperion always was to release the Windows and Unix versions at the same time, Oracle EPM System, Fusion Edition (AKA Hyperion 11x) was available only for Windows... and only in English. Linux, HP/UX, Sun Solaris, and AIX users were left as frustrated as Sisyphus (of "stone pushing up hill only to have it roll back again" fame).

And Hyperion 11x stayed Windows-only until the middle of November: four months of daily scorning of the desires of Unix admins everywhere to install EPM 11x. While Hyperion (and Arbor before that) was often really slow with 64-bit and Linux releases of its products, never have months gone by before any Unix editions of a major version were made available. Yes, I know that some products have always been Windows-only (Hyperion Financial Reporting Print Server, for instance), but for the products supported on multiple platforms (like Essbase), Windows and Unix were always in lockstep.

One of the bright spots about the English-only Windows 11x release was that almost all of the applications were also available on 64-bit. 64-bit Windows is the way of the future (and many would argue, the way of the present) and running Hyperion on Windows 64-bit is important for Oracle to keep their dominance in the EPM space. Many of the products that compete with Oracle EPM are either not fully 64-bit or they may run on 64-bit but are not optimized for it.

As of this writing, Hyperion 11x is still English-only. Since the release was around 6 months ago, this is just weird. I'm told that the release of the localized languages versions (numbered 11.1.1.2, most likely) is imminent, but originally it was due before the end of 2008. Let's hope so, because we want the whole world to share in the Hyperion 11x love.

I'm told that the delayed Unix release was a one-time occurrence.  With another major updating of Oracle EPM slated for summer/fall of 2009, we'll see.

#9. Recession Misses Oracle EPM

While Oracle doesn't officially break out its EPM/Hyperion revenue, everyone in the industry agrees: EPM is booming.  Ask analysts, vendors, and customers, and you'll get the same answer.  Let me give you a personal example.  My EPM/Hyperion consulting company, interRel, made the Inc. Magazine as being one of the fastest growing companies in America, and we're in our 12th year of business.  We've seen ebbs and flows before.  2002-2003, for example, was particularly miserable for EPM/BI.  In all those 12 years of business, though, 2008 was the biggest growth year in our company's history.

Why?  Quite simply, it's because EPM software sales are through the roof. Everyone and their brother (and their dog and their grandmother) either wants to start EPM projects at their company (or quit their jobs to go into EPM consulting).  While many of our clients are slowing down in other tech areas (tons of data warehousing and ERP implementations are being delayed in our client base), EPM seems to be maybe the only area (beyond iPhone integration) that is expanding.

While this is great for the Oracle EPM sales people, there is an interesting problem occurring in the Oracle EPM consulting space.  There are some companies that now have a 3-4 month backlog of work, because they're at 100% utilization for that long.  This is leading to some frightful run-ups in hourly consulting rates as the supply and demand curves equalize (as we all remember from Economics 101).  The billable rates we're seeing in the HFM world are particularly high right now.

Is this double-digit EPM software growth going to continue into 2009?  God only knows (and just maybe, Obama), but let me hesitate a guess.  I expect it will, because the reason that led to EPM's spectacular growth in 2008 still holds true in 2009: companies have spent billions of dollars collecting data in databases, data stores, data warehouses, ERPS, and the rest... and they're finally trying to get their data back out again.  Relational databases have hit their stride, making EPM the new "killer app."

One job security tip for those who are worried about layoffs at their companies: get a job in the EPM area of your company as soon as is humanly possible.  Even if your company lays you off (and yes, some silly companies are trying to cut staff even in their EPM departments), you can get a new job in a matter of hours.  EPM is the only job port in the middle of the perfect economic storm.

Oh, and maybe writing iPhone applications.

#10. Shrinking of Oracle OpenWorld Hyperion Content

As many of you know from my past blog entries, I wasn't a huge fan of Oracle OpenWorld in 2007, and shockingly, I was even less of a fan in 2008.  The simple reason is that in 2007, there seemed to be at least an attempt to have some decent Hyperion content.  There were even designated Hyperion rooms over at the Marriott to separate the Hyperion attendees from the teeming masses.  While the 2007 content wasn't as good as Hyperion Solutions (more to come on that one in one of the following "Top 10" stories), it definitely was more than in 2008.

This doesn't make a lot of sense, really.  You'd think that they'd take 2007 and try to build on it.  While the Hyperion content from Oracle certainly decreased in quantity (and in some cases, quality), there were a few bright spots for Hyperion customers.  ODTUG and OAUG both sponsored significant Hyperion user group symposiums on the opening day of OpenWorld.  OAUG and Oracle co-hosted a great reception for Hyperion customers.  (The next sentence is not a shameless book plug.)  Look Smarter Than You Are with Essbase System 9 was the 4th best selling book at the conference (out of over 500 titles on all Oracle products).  The last one, more than anything, tells me that people are dying for more Hyperion content (at least about Essbase), not less.

While Oracle didn't announce official numbers for Hyperion attendees for 2008 - since Hyperion officially is now an Oracle brand and not a company, how could they? -  my personal experience was that attendance was down from the estimated 1,000 Hyperion-driven attendees of OpenWorld 2007.  My advice to Oracle: realize that EPM is one of the few growing areas of technology right now.  The more you talk about it, the more people will listen (and the more they'll come to your conference).  The worst thing that can happen to your product is that people forget about it, like, say, Express.  Now whatever happened to that product once Oracle bought them?  I can't seem to recall...

Top 10 Oracle EPM (Hyperion) Stories of 2008

Everyone else has been doing their "Top 10 XYZ Lists" for the past year, so I thought that a Hyperion-centric list is definitely in order.  Over the next ten days, I'll be counting down my "Top 10 Oracle EPM Stories of 2008."  (Yes, I'm trying to train myself to say "Oracle EPM" and not Hyperion, but the problem is that few people recognize the "Oracle EPM" name yet.)  A nice side benefit of me posting 10 stories in the next 10 days is that it will force me to post every day for the next 10 days.

Some of you might also consider that a downside.