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What’s Driving the Latest Wave of Business Performance Management Mergers and Acquisitions?

Originally published March 14, 2007

Business performance management (BPM) as we now know it probably got its start with the 1998 merger of Hyperion Software (financial applications) and Arbor Software (multidimensional database and tools). Hyperion had earlier acquired Pillar to add budgeting capabilities to its existing financial consolidation and management reporting product set.

The company resulting from the Hyperion/Arbor merger, Hyperion Solutions, was able to provide a full range of financial performance management solutions coupled with the underlying business intelligence (BI) tools to allow for enhancement and expansion. Hyperion later added Brio to the mix to further flesh out the BI side of the house.

This first wave of BPM mergers and acquisitions (M&A) continued with Cognos picking up Adaytum to add a budgeting and planning application to its strong BI foundation.  Soon after, they acquired Frango to provide the missing financial consolidation component.

Business Objects joined this wave in 2005 with the acquisition of SRC Software to add both budgeting and consolidation capabilities to their business intelligence toolset.

SAS started with a strong BI base and strengthened its application focus with its acquisition of ABC Technologies in 2002 and further enhanced its applications through close relations with existing clients. 

Thanks to all of this activity, these four vendors stand out today as having some of the most complete core BPM+BI solutions in the market. Some also have, to varying degrees, the integration challenges that come along with this method of growth.

While “first-wave” type activity continues (Geac combining its financial applications with Systems Union’s business intelligence tools as they became part of Infor in 2006, and Cartesis’ acquisition of INEA and Advanced Info Systems in 2005 to strengthen their budgeting platform and reporting/analysis capabilities), there has been a distinct shift in the nature of the majority of deals being done in the space.

This second-wave of BPM M&A closely follows the BPM 2.0 model developed by BPM Partners. In essence, the primary focus areas of BPM 2.0 and the mergers and acquisitions that have followed are around reaching more users (ease of use and distribution), taking a deeper financial dive (profitability analysis/activity-based costing), forming a more comprehensive/holistic view of the business (operational analytics), and enhancing BPM’s forward-looking abilities (predictive analytics).

If we look back at 2006, we see the beginnings of this trend. Microsoft’s acquisition of ProClarity clearly falls under the heading of reaching more users. This front-end tool makes it easier for business end users to access information stored in Microsoft SQL databases. Similarly, Applix’s purchase of Temtec and the Executive Viewer product addresses the same needs for Applix TM1 and Hyperion Essbase. However, this BPM 2.0 round of M&A really kicked into high gear when Business Objects added ALG Software to its lineup. This vendor of activity-based costing and profitability optimization solutions thrust Business Objects into the forefront of BPM 2.0 activity and proved they were really serious about performance management.

Although the year is still young, 2007 has been a hotbed of BPM 2.0-driven M&A activity. Cognos kicked off the year with the acquisition of Celequest. This vendor focused on operational analytics and alternative distribution mechanisms (hosted solutions, hardware appliances), all of which address key elements of the next generation of BPM. Not to be outdone, Hyperion announced the purchase of Decisioneering and its Crystal Ball product, which focuses on the predictive analytics aspects of BPM 2.0. It should be noted that OutlookSoft may be the most prescient of all the vendors. They purchased a company called Tian Software several years ago, and it became the basis for their initial delivery of predictive analytics capabilities. All of that happened long before the definition of BPM 2.0 was even developed. The most recent activity, SAP’s purchase of Pilot Software and the PilotWorks product set (operational analytics), continues to follow the pattern for this generation of deals.

It appears as if the pace of this round of M&A in the BPM space is surpassing that of the first wave. Why is that? With the BPM market red hot and the definition of BPM evolving, some vendors see this as an opportunity to challenge the established leaders. The leaders, anxious to maintain their position, are working overtime to stay ahead of the BPM 2.0 curve.

All of this is great for purchasers of BPM software. Those who are new to the market will be able to choose from a greater array of full-suite vendors. For those that have completed the BPM basics, the likelihood is increasing that the vendor they used initially will have the software needed for their next phase. Of course, application and data integration will continue to be an area that needs to be carefully evaluated.

With these deals, the vendors are responding faster than ever to the changing needs of the BPM user community. Or are they? In an upcoming article, we will look at what users and prospective users had to say in the BPM Pulse survey regarding their BPM priorities. At press time, the Oracle acquisition of Hyperion has been announced, which could be the start of yet another wave of mergers and acquisitions. This wave may be bigger than any that have preceded it (in terms of size and scope). John Colbert's article this month takes a look at the implications of the Oracle/Hyperion transaction.

  • Craig SchiffCraig Schiff

    Craig, President and CEO of BPM Partners, is a pioneer in business performance management (BPM). Craig helped create and define the field as it evolved from business intelligence and analytic applications into BPM. He has worked with BPM and related technologies for more than 20 years, first as a founding member at IMRS/Hyperion Software (now Hyperion Solutions) and later cofounded OutlookSoft where he was President and CEO.

    Craig is a frequent author on BPM topics and monthly columnist for the BeyeNETWORK. He has led several jointly produced webcasts with Business Finance Magazine including "Beyond the Hype: The Truth about BPM Vendors," the three-part vendor review entitled "BPM Xpo" and "BPM 101: Navigating the Treacherous Waters of Business Performance Management." He is a recipient of the prestigious Ernst & Young Entrepreneur of the Year award. BPM Partners is a vendor-independent professional services firm focused exclusively on BPM, providing expertise that helps companies successfully evaluate and deploy BPM systems. Craig can be reached at cschiff@bpmpartners.com.

    Editor's Note: More articles and resources are available in Craig's BeyeNETWORK Expert Channel. Be sure to visit today!

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