Business enterprise vendor Oracle Corp. renewed its strategy ofgrowth through large acquisitions on Thursday, with a $3.3 billioncash deal to buy Hyperion Solutions Corp., a leader in thefast-growth market for business performance management (BPM) andbusiness intelligence (BI) systems.

Unlike Oracle's earlier hostile takeover of rival PeopleSoft,the Hyperion acquisition–priced at $52 per share–was agreed to onfriendly terms. The move signals the wide technical gapbest-of-breed BPM vendors like Hyperion and Cognos have establishedthrough specialized financial systems for planning, budgeting andforecasting purposes over larger enterprise resource planning (ERP)vendors like Oracle and SAP AG, which have attempted to duplicatetheir technology with their own modules. “This is a good fit forOracle,” says Paul Hamerman, vice president of enterpriseapplications at Forrester Research. “They have not been successfulin the financial business performance product category. They have agood transactional platform but not for planning and consolidationapplications, and Hyperion is the market leader.” Hamermanestimates the BPM sector is growing at about 15% a year, comparedwith 6% for the ERP segment dominated by Oracle and SAP.

But the deal also highlights the threat that even largeindependent vendors are under as large ERP vendors add morefunctionality through acquisition or, in the case of SAP,partnerships. “It's getting more and more difficult to operate as astandalone, niche vendor,” says Jim Shepherd, senior vice presidentat AMR Research. “Buyers want to buy single suites and standardizearound large vendors.”

In a letter to customers this morning, Hyperion president andCEO Godfrey R. Sullivan stressed that the Oracle purchase willprovide important benefits to both sets of customers. “Coupled withOracle's BI tools and pre-packaged analytic applications, thecombination redefines business intelligence and performancemanagement by providing the first integrated, end-to-end EnterprisePerformance Management System that spans planning, consolidation,operational analytic applications, BI tools, reporting, and dataintegration, all on a unified BI platform.” He added that Hyperionhas more than 12,000 customers worldwide, including 91 of theFortune 100.

Oracle executives pointed to the fact that today's deal willbroaden the company's reach into the customer base of its corerival, SAP. “Thousands of SAP customers rely on Hyperion as theirfinancial consolidation, analysis and reporting system of record,”said Charles Phillips, president of Oracle, in a morning pressreleased. “Oracle's Hyperion software will be the lens throughwhich SAP's most important customers view and analyze theirunderlying SAP ERP data.”