Business enterprise vendor Oracle Corp. renewed its strategy of growth through large acquisitions on Thursday, with a $3.3 billion cash deal to buy Hyperion Solutions Corp., a leader in the fast-growth market for business performance management (BPM) and business intelligence (BI) systems.

Unlike Oracle's earlier hostile takeover of rival PeopleSoft, the Hyperion acquisition–priced at $52 per share–was agreed to on friendly terms. The move signals the wide technical gap best-of-breed BPM vendors like Hyperion and Cognos have established through specialized financial systems for planning, budgeting and forecasting purposes over larger enterprise resource planning (ERP) vendors like Oracle and SAP AG, which have attempted to duplicate their technology with their own modules. “This is a good fit for Oracle,” says Paul Hamerman, vice president of enterprise applications at Forrester Research. “They have not been successful in the financial business performance product category. They have a good transactional platform but not for planning and consolidation applications, and Hyperion is the market leader.” Hamerman estimates the BPM sector is growing at about 15% a year, compared with 6% for the ERP segment dominated by Oracle and SAP.

But the deal also highlights the threat that even large independent vendors are under as large ERP vendors add more functionality through acquisition or, in the case of SAP, partnerships. “It's getting more and more difficult to operate as a standalone, niche vendor,” says Jim Shepherd, senior vice president at AMR Research. “Buyers want to buy single suites and standardize around large vendors.”

In a letter to customers this morning, Hyperion president and CEO Godfrey R. Sullivan stressed that the Oracle purchase will provide important benefits to both sets of customers. “Coupled with Oracle's BI tools and pre-packaged analytic applications, the combination redefines business intelligence and performance management by providing the first integrated, end-to-end Enterprise Performance Management System that spans planning, consolidation, operational analytic applications, BI tools, reporting, and data integration, all on a unified BI platform.” He added that Hyperion has more than 12,000 customers worldwide, including 91 of the Fortune 100.

Oracle executives pointed to the fact that today's deal will broaden the company's reach into the customer base of its core rival, SAP. “Thousands of SAP customers rely on Hyperion as their financial consolidation, analysis and reporting system of record,” said Charles Phillips, president of Oracle, in a morning press released. “Oracle's Hyperion software will be the lens through which SAP's most important customers view and analyze their underlying SAP ERP data.”

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Breaking News: Oracle scoops up Hyperion

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