Consolidations in the BI industry You can contact Barney Finucane, who maintains this list, if you have any comments, observations or user experiences to add. Last updated on May 17th, 2011. Introduction The BI industry has seen a wave of acquisitions since the mid- 1990s, with takeovers occurring on a regular basis. The first wave was mainly created by companies who were attracted by the higher growth rates in the BI industry and preferred to buy an existing vendor rather than to develop their own product. These changes of ownership did not produce any ‘consolidation’ because there was no net reduction in the number of BI vendors or products. There was also no reduction in competition as market shares often simply passed from the hands of an existing BI vendor to a new player. Examples of such non-consolidating acquisitions include the entry of the various database vendors into the BI market, such as Oracle’s purchase of the Express business from IRI Software, Informix buying STG MetaCube and Microsoft’s purchase of the Panorama technology. But there have also been a number of cases where existing BI vendors acquired each other and these have led to genuine consolidation. This is particularly true of SAP’s acquisition of BusinessObjects. Although these acquisitions reduce the number of BI vendors, they do not necessarily reduce the number of BI products, as often both product lines live on separately in the merged company. The perils of acquisition Another big question is whether these consolidations are good for the products, the existing users or shareholders in the acquiring companies. Clearly, in some cases, the products have done much better under new ownership, because the new owner has far more financial strength than the former owner. A recent example is the acquisition of TM1 by IBM (via Cognos) which is leading to higher sales of TM1 that were possible with the old owner, Applix.
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Consolidations in the BI industry
You can contact Barney Finucane, who maintains this list, if you have any comments, observations or user experiences to add. Last updated on May 17th, 2011.Introduction
The BI industry has seen a wave of acquisitions since the mid-1990s, with takeovers occurring on a regular basis. The first wave was mainly created by companies who were attracted by the higher growth rates in the BI industry and preferred to buy an existing vendor rather than to develop their own product. These changes of ownership did not produce any ‘consolidation’ because there was no net reduction in the number of BI vendors or products. There was also no reduction in competition as market shares often simply passed from the hands of an existing BI vendor to a new player.
Examples of such non-consolidating acquisitions include the entry of the various database vendors into the BI market, such as Oracle’s purchase of the Express business from IRI Software, Informix buying STG MetaCube and Microsoft’s purchase of the Panorama technology.
But there have also been a number of cases where existing BI vendors acquired each other and these have led to genuine consolidation. This is particularly true of SAP’s acquisition of BusinessObjects. Although these acquisitions reduce the number of BI vendors, they do not necessarily reduce the number of BI products, as often both product lines live on separately in the merged company. The perils of acquisition
Another big question is whether these consolidations are good for the products, the existing users or shareholders in the acquiring companies. Clearly, in some cases, the products have done much better under new ownership, because the new owner has far more financial strength than the former owner. A recent example is the acquisition of TM1 by IBM (via Cognos) which is leading to higher sales of TM1 that were possible with the old owner, Applix.
But in many cases, the product was less important to its new owner who accidentally or otherwise neglected it. ProClarity has disappeared from the market since its acquisition by Microsoft Datamax has had no further development after its first re-release under Microsoft in 2001, whereas Maximal Max would presumably have continued to develop had Maximal survived or been acquired by a different company. It is also likely that Express development would have continued more smoothly without the badly mishandled transition to a new generation product that has occurred under Oracle’s ownership. Holos would almost certainly have done better had Seagate not acquired it. MetaCube, too, would probably have survived longer without Informix’s ham fisted intervention. The two ROLAPs accidentally acquired by Computer Associates would almost certainly have not been snuffed out so ignominiously had they remained independent.
More often than not, the shareholders of a company that acquires an OLAP vendor or product have not received a good return. Some of the worst examples of squandered shareholders’ assets include: Informix’s acquisition of STG, Arbor’s acquisition of Hyperion Software, Seagate’s acquisition of Holistic Systems SPSS’s acquisition of ShowCase. BusinessObjects acquisition of SRC Cognos’s acquisition of Adaytum and Business Objects’ acquisition of Crystal Decisions
None of these are likely not to have generated a good return for their respective shareholders.
The tables below list some of the many acquisitions since 1994. Note that some products have changed hands more than once. Pilot has had five owners since 1994. Temtec was bought by Applix, which was bought by Cognos, which was bought in turn by IBM – all within two years. Comshare was bought by GEAC. MIS was bought by Systems Union Two years later GEAC was acquired by Extensity, and several months later Systems Union was bought by Extensity, which was bought only three days later by Infor. Year by year list of consolidations
Where known, the purchase price is shown, though of course in some cases, this price is for a whole company with both BI and other products.
For brevity, we have used acronyms in the tables which may not be familiar to all readers. This is particularly true of the alphabet soup of functions in the area of data management and operative BI. The following table provides a key to the abbreviations used here.AbbreviationMeaning
BAMBusiness activity monitoring
CEPComplex event processing
DIData integration
DBMSDatabase management system (or simply database)
DQMData quality management
DWData warehouse
EAIEnterprise application integration
EIIEnterprise information integration
GRCGovernance, risk and controlling
ILMInformation lifecycle management
MDMMaster data management
PMPerformance management
2011
The consolidation of the fast growing market for analytical databases continues in 2011.DateAcquired companyProduct typeAcquiring companyProduct typePrice
February 2011VerticaDBMSHPMiddleware>$200m
March 2011Aster Data Data Analysis TeradataDM$263m
April 2011DatanomicDQMOracle N/A
April 2011: Oracle acquires Datanomic
Oracle can hardly have digested the data quality vendor Silver Creek Systems, purchased just over a year ago before swallowing this specialist in data profiling for compliance and auditing purposes.March 2011: Teradata acquires Aster Data
There had been some talk of HP acquiring Aster Data before this takeover. The Vertica acquisition may have made it easier for Teradata to bid on Aster Data. The takeover came just six months after Aster Data appointed Quentin Gallivan CEO.
Obviously, the immediate question is how to differentiate between the two products. The answer is probably that Aster is for analysis of large data sets by small groups of users, but Teradata is more strongly oriented towards operational projects. The future will show whether it makes sense to have one sales force to sell these similar technologies to disparate customer groups, and how much time and energy the company spends integrating the similar but unrelated technologies.
This may be seen as a continuation of Teradata’s move towards applications and marketing, as seen in its recent acquisition of the SaaS marketing specialist Aprimo. February 2011: HP acquires Vertica
This acquisition comes hard on the heels of HP’s announcement that it is killing off Neoview, unveiled less than four years earlier as “a next-generation data warehouse platform and new business intelligence (BI) services” [sic]. Mark Hurd, an important sponsor of Neoview, has moved on to Oracle. Vertica should give HP a new opportunity to move into this fast growing market.2010
The biggest news in 2010 was the takeovers in the area of analytical databases, with Sybase, Kickfire and Greenplum being acquired. DateAcquired companyProduct typeAcquiring companyProduct typePrice
January 2010Silver Creeks Systems DQM/MDMOracle N/A
May 2010SybaseMobile, DBMSSAPERP, BI, DI, DQ$5.2bn
May 2010Cast Iron DIIBM N/A
June 2010CoremetricsWeb AnalyticsIBM N/A
July 2010Greenplum DBMSEMCStorageN/A
August 2010KickfireDBMSTeradataDMN/A
September 2010OpenPagesGRCIBM N/A
September 2010NetezzaDW Appliance
IBM $1.7 bn
October 2010Clarity Planning, ConsolidationIBM N/A
November 2010Quantrix Planning AnalysisIDBSR&D Data ManagementN/A
December 2011Aprimo Marketing AutomationTeradataDM$525m
September 2010: IBM takes over Netezza
Netezza is a low cost appliance often used as a data warehouse running on IBM hardware. Its products are mature enough that IBM is sure to continue marketing them. However, it is not quite clear how the technologies of the two companies will be combined. IBM is likely to emphasize Netezza’s analytic features. This may well be a reaction to SAP’s acquisition of Sybase. Perhaps Oracle will follow with a similar move.May 2010: SAP acquires Sybase
SAP is taking over Sybase for a whopping $5.8 billion dollars. There are two things about Sybase that SAP may find attractive: mobile BI and the database business. SAP is probably more interested in the mobile solutions from Sybase, which offer SAP some opportunities in this growing area of content distribution. Sybase’s database business includes SQL Anywhere for mobile platforms, ASE (a transactional relational database) and IQ, an analytic, column-oriented relational database. SAP hopes to strengthen its portfolio in two areas where it is currently not strong. It is also moving towards being a infrastructure provider instead of just an application provider.2009DateAcquired companyProduct typeAcquiring companyProduct typePrice
February 2009
Applimation ILMInformaticaDI, DQ $40m
April 2009Hologram Pty BIFirst DerivativesRisk, ERP$2.5m
May 2009Lumensoft Planning arcplan BIN/A
June 2009AddressDoctor Address Cleansing Informatica DI, DQ N/A
June 2009Inforsense Data MiningIDBSR&D Data ManagementN/A
July 2009SPSSData Mining IBM $1.2 bn
September 2009Agent Logic CEPInformaticaDI, DQN/A
December 2009Xenos Document Streaming
ActuateReporting$35.5m
July 2009: IBM acquires SPSS
IBM acquired SPSS with a view towards the increasingly fashionable market for predictive analytics. IBM paid a premium of over 40% over the market price. Furthermore, SPSS’s key feature is increasingly under pressure from the open source R programming language. SPSS’s major competitor, the much bigger SAS, has relied increasingly on data management to increase revenues in recent years, with its Dataflux subsidiary now accounting for more than half of its revenues. But perhaps by combining SPSS with other components, IBM can find new customers with SPSS. 2008
2008 was a slow year for takeovers after the feeding frenzy of 2007.DateAcquired companyProduct typeAcquiring companyProduct typePrice
March 2008Teragram Text mining SASBIN/A
March 200890 Degree Software Content ManagementMicrosoft N/A
April 2008Identity Systems DQMInformaticaDI$85m
May 2008NuTechPredictive Analysis NetezzaDW Appliance N/A
June 2008Insightful Data MiningTibcoBPM, Analysis $25m
July 2008Zoomix DQMMicrosoftERP, BI $20m-$30m
July 2008DatAllegroDW ApplianceMicrosoftERP, BI $60m
July 2008Cubeware BICranesStatisticsN/A
2007: The year of consolidationDateAcquired companyProduct typeAcquiring companyProduct typePrice
January 2007Celequest BAMCognosBIN/A
January 2007Decisioneering SimulationHyperionBIN/A
February 2007
Pilot BSCSAPERP, BI N/A
March 2007HyperionBIOracleDBMS, ERP, BI$3.3bn
April 2007Cartesis Planning, ConsolidationBusiness ObjectsBI$300m
April 2007MetaMatrixData FederationRed HatMiddlewareN/A
May 2007SpotfireVisual Analysis TibcoBPM$195m
May 2007OutlookSoft Planning, ConsolidationSAPERP, BI $375m
May 2007CorvuBI, BSCRocketInfrastructureN/A
July 2007Stratature MDM
MicrosoftERP, BI N/A
July 2007Data Mirror DIIBM $170m
August 2007BonaVista (MicroCharts) VisualizationXLCubedBIN/A
September 2007Applix Planning, AnalysisCognosBI$306m
September 2007PurismaDQ,MDMDun & BradstreetCompany Information$48m
September 2007Fuzzy DQBusiness ObjectsBI, DI N/A
October 2007Business Objects BI, DISAPERP, BI $6.8bn
November 2007CognosBIIBM
$4.9bn
November 2007Longview PlanningExactERP$52m
December 2007SolidDBIn-memory DBMSIBM €20m
November 2007: IBM returns to the application software business by buying Cognos
IBM confirmed longstanding rumors when it announced on November 12, 2007 that it was to buy Cognos for $5bn cash, representing a modest nine percent premium on the already takeover-speculation-boosted closing price on November 9. The deal closed at the end of January 2008.
Unlike other recent acquisitions, there is little product overlap between the product ranges, though IBM’s large services business with other BI vendors’ products may suffer. Also, unlike other large BI acquisitions, there are few apparent synergies between the IBM and Cognos software businesses — IBM has in recent years focused on infrastructure rather than application software. Its earlier forays into BI have all been less than successful: AS, IOC, Metaphor and DB2 OLAP Server all came to a sticky end, and it had looked like a bruised IBM had turned its back on the BI software business.
This also represents a U-turn for Cognos. When the SAP acquisition of Business Objects was announced barely a month earlier, Cognos instantly issued a detailed (obviously pre-planned), bullish response:
“Cognos is now the only independent leader in the marketplace and we remain laser focused on delivering the benefits of that independence to our customers. … This is a great opportunity for Cognos. The market continues to want an independent, open and interoperable Business Intelligence and Performance Management solution. In fact a Goldman Sachs survey showed that more than 60% of CIOs preferred to purchase their business intelligence from an independent vendor – not an application or database vendor. … Cognos is committed to being an independent player and through our PM solutions giving customers equal access to their entire infrastructure, all their applications and all of their data sources. Customers have multiple ERP systems and warehouses like SAP, Oracle E-Business, JD Edwards, Siebel, Peoplesoft, Microsoft, IBM, and Teradata, and they have other data sources such as XML, Excel, and Blogs. And they also have a mixed bag of infrastructure like Portals, Security systems and Application Servers and as they acquire and merge with other companies these scenarios get even more complex. … Customers need an independent performance layer that fits into their enterprise infrastructure and that sits on top of all of their applications and data sources.”
IBM and Cognos have long had a productive business partnership, with technical and services cooperation, and perhaps IBM was worried that if Cognos went the same way as Hyperion and Business Objects, it could lose out on some of its remaining BI services revenue. Certainly, this acquisition looks like a defensive knee jerk response to Oracle’s and SAP’s large BI acquisitions earlier in 2007, though IBM claims otherwise. It is also believed that IBM was an under-bidder for Hyperion and Business Objects (both of which also had active IBM partnerships). And perhaps Cognos was more worried than it claimed about the prospect of having to compete as an independent against Oracle, SAP and Microsoft?
Cognos becomes a new unit of IBM’s Information Management division focused on BI and performance management. It will continue to be led by Rob Ashe, the current Cognos CEO, reporting to Ambuj Goyal, General Manager, IBM Information Management. This appears to be a similar strategy to that being adopted by SAP with Business Objects, whereas Oracle has integrated Hyperion to a much greater extent. As IBM does not have an existing BI software business, forced integration with other parts of IBM probably would not make much sense.
After this, MicroStrategy and Actuate will be the last remaining public BI vendors, though there remain two larger private BI vendors, SAS Institute and Information Builders.
One side effect of this and other large BI acquisitions is that BI now has much less visibility on Wall Street. Not so long ago there was a thriving community of public BI vendors, which kept financial analysts focused on this sector. Now, with only two medium-sized public BI vendors left, this attention will wane.October 2007: SAP abandons its organic growth strategy to acquire Business Objects
The wave of BI acquisitions in 2007 got a dramatic boost on October 7, when SAP announced that it was acquiring Business Objects for €4.8bn ($6.8bn) cash (or $5.9bn net of cash in hand). The price of €42 ($59.35) per share is an 18 percent premium on the closing price of $50.27 on October 5. The deal completed in January 2008. This was the largest BI acquisition ever, and was almost certainly another response to Oracle’s acquisition of Hyperion earlier in the year.
The announcement came on the same day that Business Objects issued a profit warning for the third quarter of 2007. It blamed weak license fees for the shortfall. Despite including Cartesis, the quarterly license fees were expected to be only about $139m, compared to $131.6m in Q3 2006.
SAP says it will keep Business Objects as a separate business unit under its existing CEO, John Schwarz, who is expected to become a member of SAP's executive board. Bernard Liautaud, chairman and founder of Business Objects, is to be proposed for SAP board membership at the company's next shareholder meeting. In the meantime, he will serve as an adviser to SAP CEO Henning Kagermann. September 2007: CPM consolidation continues apace as Cognos buys Applix
Cognos announced on September 5, 2007 that it had reached a definitive agreement to purchase Applix for $17.87 a share, or $339m ($306m net of Applix cash on hand). The deal closed on October 26, 2007. This was the fourth CPM acquisition in 2007 (not counting Pilot).
Applix had always seemed a takeover candidate: it was much too small to remain as a public company in the Sarbanes-Oxley regulatory era, and was competing with companies far larger than itself. But it was nevertheless one of the fastest growing BI vendors, and TM1 is a well-respected OLAP server. Indeed, it is the only OLAP server to have grown its market share faster than Microsoft Analysis Services.
Cognos had at one time been a major OLAP vendor, but it has lost its way. PowerPlay has had little investment for the last few years, and Cognos 8 has not been seen as a strong OLAP client for other vendors’ OLAP servers. The older Cognos financial applications were also unsuccessful. Cognos has therefore had to resort to acquisition to re-establish its presence, with Adaytum in 2003, Frango in 2004 and now Applix in 2007. It will be interesting to see if TM1 continues to be marketed as a product in its own right in the long run, or if it is absorbed into the Cognos 8 platform.
Cognos is keeping the TM1 and Executive Viewer brands and products for some time, but will rapidly phase out the Applix name. TM1 is likely to be positioned as the Cognos tool for financial performance analytics, with less emphasis on its planning capabilities, as this role is assigned to Cognos Planning. A version of Cognos 8 that links directly to TM1 cubes is likely in the second half of 2008. The Applix products, as well as Cognos Planning (the former Adaytum) and Controller (the former Frango) will form a new Financial Performance Management division. This will be run by the former Applix CEO.
Both Applix and Cognos are likely to be affected by Microsoft PerformancePoint, which was also launched in September 2007. It is a low-priced, aggressively marketed competitor for Cognos Planning and TM1, which will get a lot of attention. The first release is not fully competitive functionally, but it may be adequate for many customers, and so is a threat to all existing CPM products. This is likely to have been a trigger for the sudden wave of CPM acquisitions in 2007.April 2007: Business Objects adds to its PM collection with Cartesis
Business Objects announced on April 23, 2007 that it had agreed to buy Cartesis for €225m (~$300m) in cash. The deal closed earlier than expected, on June 1, 2007. Business Objects and Cartesis are both originally French companies, headquartered in Paris, though in recent years, Business Objects’ focus and much of its management team has moved to North America. Cartesis was much less successful in North America, and remained as a mainly French company.
Although both Paris-based, the Cartesis and Business Objects headquarters are almost four miles drive apart whereas, strangely enough, the former ALG Paris office is literally next door to Cartesis, and overlooked by the Cartesis executive terrace. The Business Objects and Cartesis main UK offices are also less than a mile apart as the crow flies, both in Maidenhead, but in the US, they are at opposite ends of the country, in San Jose, CA and Norwalk, CT. It is no coincidence that the latter location is very close to the former head office of Hyperion Software, as the US branch of Cartesis was initially staffed mainly by ex-Hyperion people (the same is true of OutlookSoft).
Business Objects was reluctant and late to join the performance management race, and loudly derided Cognos when it acquired Adaytum. But after competitive pressure from Cognos and Hyperion, which were able to persuade many customers that they should be buying both BI and PM from the same vendor, Business Objects was forced to act. By then, many of the more obvious acquisition candidates had already gone — for example,
Business Objects should probably have bought Adaytum, its then planning partner, rather than letting Cognos snap it up in 2003, and it could probably have bought Cartesis in 2004 from PwC for a fraction of the €225m it is paying Cartesis’ VC owners now.
Instead, Business Objects bought two smaller, less well known PM companies: SRC in 2005 and ALG in 2006. Both SRC and ALG had planning products, as does Cartesis, thanks to its acquisition of INEA in 2005. This puts Business Objects in the awkward position of owning three acquired, incompatible planning products, each from a different country (something that would not have happened had it purchased Adaytum in 2003 and Cartesis in 2004). At the same time, Cartesis has been beefing up its front-end analytical capabilities using an OEM version of Panorama NovaView, ironically replacing its unhappy former OEM use of Crystal Analysis Pro. It will probably now end up with a descendent of that product as its analytic front-end yet again.April 2007: Oracle buys Hyperion Solutions for $3.3bn
In by far the biggest-ever BI consolidation, Oracle has acquired Hyperion Solutions for $3.3bn cash, with the deal closing on April 19, 2007. By April 18, Oracle had purchased 91.3 percent of the outstanding shares for $52 per share. After the closing of the offer, the purchase of the remaining shares became compulsory.
Hyperion itself was based on a series of mergers and acquisitions, bringing together products that originated in at least a dozen separate companies (AppSource, Alcar, Arbor, Brio, Decisioneering, IMRS, Pillar, Razza, Sapling, Sqribe, Tableau and Upstream), and in Oracle, it has joined a BI/CPM stable that includes products from the former IRI Software, PeopleSoft, nQuire (which became Siebel Analytics) and Oracle’s own Discoverer.
There is considerable overlap between these various BI products: for example, there are several different relational reporting tools, and several OLAP servers. Clearly, not all will survive, and it is Oracle’s home-grown BI tools and applications that are the weakest. But it is likely that Oracle was most attracted to Hyperion by its market leadership in the faster growing CPM space. It puts Oracle in a better position to compete with SAP’s existing SEM CPM applications and Microsoft’s pending PerformancePoint. Previously, Oracle only had the ancient Oracle Financial Analyzer (which dated back to the 1980s) and its unsuccessful newer Enterprise Planning and Budgeting application. These are likely to be replaced by the equivalent Hyperion products, just as Essbase is likely to become Oracle’s primary OLAP server (despite Oracle’s claims that both Essbase and its unpopular own OLAP Option will both continue into the future).
Ironically, Hyperion had spent the previous 18 months starting the integration of its many tools into its new System 9 platform; now Oracle has to start this all over again, as it attempts to rationalize and merge its messy range of overlapping BI and CPM tools, and then integrate them with its other tools and applications. This could be a rough ride for both Oracle’s products and their users. But after PeopleSoft, Siebel and a series of smaller enterprise software acquisitions, Oracle certainly knows how to execute such deals.February 2007: Pilot changes hands for the sixth time
Pilot Software was acquired by SAP in February 2007. Depending on how you count, this is arguably the sixth time Pilot has changed hands.
Pilot Software had reappeared in the guise of Pilot Software Acquisition Corporation in May 2002, a new company formed by members of the Pilot management team backed by
institutional investors. This reborn Pilot Software purchased Accrue’s Pilot and Hit List software product lines, including related intellectual property, customer contracts and other assets. Accrue received $1.5m in cash and retained rights to use the Pilot technology within Accrue G2. John D’Albis transferred from Accrue to resume his old role as CTO of Pilot Software, a role he continued to perform when SAP acquired the company in 2007.
Accrue had bought Pilot from Platinum Equity Holdings in August 2000 for approximately $20m in stock. Before August 1997, Pilot was owned by Cognizant Corporation. Dun & Bradstreet, Cognizant’s predecessor, had bought Pilot in November 1994, before which it had been independent since it was formed as an EIS pioneer in 1983. In 1987, in another all-paper deal, Pilot had acquired Thorn-EMI Computer Software, previously EPS Consultants, which was formed in 1972. Today’s Essbase also had its roots in EPS’s FCS product line.2006DateAcquired companyProduct typeAcquiring companyProduct typePrice
January 2006Performancesoft Balanced Scorecard ActuateReporting$17m
January 2006Similarity Systems DQMInformaticaDI$55m
February 2006FirstLogic DQMBusiness Objects BI$69m
March 2006Geac Planning, ERP ExtensityBI$1 bn
March 2006Veridiem
Marketing IntelligenceSASBIN/A
April 2006ProClarity AnalysisMicrosoftBI$50m
April 2006UpStream DQMHyperionBIN/A
April 2006Systems Union BI, ERPExtensityBI£237m
May 2006Hummingbird ETL, BI Symphony Technology GroupCPM$465m
May 2006Unicorn Metadata RepositoryIBMBI, DI, DWN/A
June 2006Solonde DISybaseDBMSN/A
July 2006Extensity BIInfor
ERPN/A
August 2006Sigma Dynamics BAMOracleDBMS, ERP, BIN/A
September 2006ALG PlanningBusiness ObjectsBI, DI $56m
October 2006Sunopsis DIOracleDBMS, ERP, BIN/A
November 2006Nsite SaaSBusiness ObjectsBI, DI N/A
December 2006Itemfield DIInformaticaDI$55m
April 2006: Microsoft gets more aggressive with BI front-end tools by acquiring ProClarity
On April 3, 2006, Microsoft announced that it had agreed to acquire the privately held ProClarity. The price was not disclosed, but we speculate that it was close to or just below $50m, which is lower than ProClarity had been seeking in 2005. The deal closed in May 2006. The OLAP Survey 6 found that ProClarity was the most widely used third party front-end for Analysis Services, which may be one of the reasons for this acquisition.
Unlike Microsoft’s three previous BI acquisitions, where Microsoft acquired just the technology from very young companies, and not the companies themselves, this time Microsoft emphasizes that it is buying the entire ProClarity organization and business. It says it intends to build on all ProClarity’s strengths, including its technology, sales and marketing, partner networks and future plans.
Unlike those previous acquisitions, ProClarity has a relatively mature product line, now on its sixth major release, and some 1200 established customers. Microsoft will therefore be keeping most of ProClarity’s products unchanged in the short term. The one exception is the Java-based ProClarity Live Server, which will be withdrawn from the market, though some of its capabilities are likely to surface in future Microsoft BI products.
As part of this continuity, the ProClarity organization will become a Microsoft subsidiary and continue to be based in Boise, Idaho, and most of the management and employees are expected to be retained. The ProClarity sales force is likely to be integrated into (or form the nucleus of) Microsoft’s own growing BI sales and marketing organization. Microsoft wants to be seen as a fully-fledged BI vendor, not just a large software company with some random BI modules, and for this it needs some credible front-end tools, which ProClarity provides. Previously, Microsoft was hard-put to compete for enterprise BI business without the help of partners such as ProClarity.
Microsoft has not yet disclosed what will happen to the ProClarity name, nor the detailed road map of how ProClarity’s products will fit into the Microsoft product line or how they will be priced. But it is almost certain that they will remain as products in their own right, and not just be bundled with any edition of Office 2007. Previous experience suggests that Microsoft may reduce the prices and simplify the price structure. Microsoft will probably present the ProClarity-derived products as suitable for high-end BI, whereas Excel’s embedded BI capabilities will be aimed at mainstream users.
This move is bad news for other specialist front-end tools vendors for Analysis Services such as Panorama, Targit and Temtec, as well as for the larger BI vendors, who were previously able to shrug off Microsoft’s threat to their business because of the weakness of the then Microsoft front-end tools. Microsoft will now be a much more credible one-stop-shop for BI technologies, though it may attract less support from third party tools vendors who will see it as more of a competitor than a partner. It is probably no coincidence that two hitherto loyal Microsoft partners, Panorama and OutlookSoft, announced support for SAP BW and Oracle, respectively, on the very day of Microsoft’s announcement.
An indirect consequence could be to accelerate the much-expected, but stalled, consolidation in the BI industry. The larger independent BI vendors, now certain that they will have to compete with Microsoft for an increasing proportion of their business, may feel the need to fill any gaps in their product stacks, particularly if they had previously relied on Microsoft products to perform such roles. Equally, many of the smaller specialist vendors may feel that a long-term independent future is not a feasible option.2005DateAcquired companyProduct typeAcquiring companyProduct typePrice
February 2005RazzaDI, MDM Hyperion
PMN/A
March 2005Ascential DIIBMMiddleware, DBMS $1.1 bn
May 2005ISDD DI, EII SybaseDBMSN/A
May 2005Avaki DI, EII SybaseDBMSN/A
June 2005INEA PlanningCartesisBPM$6-10m
July 2005EvokeDI, Data Profiling Similarity Systems Data Cleansing N/A
July 2005SRC PlanningBusiness ObjectsBI$100m
July 2005Advance Info Systems BICartesisPlanning & Consolidation N/A
August 2005EverstreamBIConcurrentOn-Demand Technology$15m
September 2005DWLDI, MDM IBMMiddleware, DBMS N/A
September 2005Siebel DI, MDM, BI OracleERP, DB, BI
October 2005Medience DI, EII Business ObjectsBIN/A
October 2005Infommersion Data Visualization Business ObjectsBI$40m
October 2005Ambeo Tracking & SecurityEmbarcaderoDI$6m
December 2005DecisionPointCPM, Data Modeling NCR Teradata DWN/A
July 2005: Business Objects switches strategy and acquires SRC
Having previously derided Cognos for diversifying into planning and consolidation applications, Business Objects reversed strategy and followed suit by acquiring SRC Software. The purchase agreement was announced on July 20, 2005, and the price is $100m cash. This is a high price to pay for a company with revenues of only about $26.5m in 2004 and 135 employees, though SRC’s 2005 run rate was probably closer to $35m. Business Objects expects to take a $5m charge on the conclusion of the deal.
This also adds complexity to Business Objects, as it has no previous experience developing, selling, marketing and supporting financial applications (unlike its main competitors, Cognos and Hyperion). This is one reason why Business Objects previously avoided acquiring or developing products in this area — it preferred to remain focused purely on BI (mainly meaning relational reporting, as its OLAP capabilities remain weak). Ironically, SRC’s products had previously been distributed in Europe by Frango, now part of Cognos, so many of the European SRC experts now work for Cognos rather than Business Objects. This will make it harder for Business Objects to boost SRC sales in Europe, as it must do to justify the high price it is paying.
With SRC being based in Portland, Oregon, Business Objects now has yet another development center, in addition to those in Paris, San Jose, Vancouver and Bangalore. It also has to embark on another round of integration, having just spent 18 months merging the former Crystal and Business Objects product lines. Of course, Cognos and Hyperion are also distracted by integration projects.
Once this deal concludes, Business Objects, Cognos and Hyperion will be competing across the board, though unlike the other two, Business Objects does not offer an OLAP server (apart from the discontinued Holos). Though they straddle the whole range, they each have different strengths and weaknesses:
Business Objects is the leader in relational query and reporting, but a beginner in financial applications such as planning and consolidation. It also has relatively strong ETL capabilities.
Hyperion leads in financial applications and is strong in OLAP, but is weak in BI. It has no ETL capabilities of its own.
Cognos is strong in both BI and financial applications, without leading either area. It has integrated, but weak, ETL.
Other competitors, such as MicroStrategy, Cartesis and Applix have more specialized offerings and can compete strongly for particular applications, but cannot offer the full range of functionality that the largest enterprise deals require.2004DateAcquired companyProduct typeAcquiring companyProduct typePrice
January 2004CartesisConsolidationApax PartnerVenture CapitalN/A
March 2004Avellino DQMHarte HanksDQMN/A
April 2004Trigo MDMIBMMiddleware, DBMSN/A
May 2004ActiveViews ReportingMicrosoftBI, DWN/A
May 2004Lasata ReportingSystems Union ERP, BI$18m
July 2004Evoke DQMCSIBI Consulting N/A
July 2004AlphaBlox Analytic AppsIBMMiddleware, DBMSN/A
July 2004QIQ
DashboardsHyperionPMN/A
July 2004A2i MDMSAPERP, BIN/A
August 2004Frango Legal ConsolidationCognosBI$52m
August 2004Group1 DQMPitney Bowes Document Management$321m
November 2004IntelligentApps ReportingSageERPN/A
December 2004iLytix ReportingSAPERP, BIN/A
January 2004: PwC divests Cartesis
PwC has divested Cartesis, the French consolidation system vendor, to a venture capital consortium led by Apax Partners Funds. This move was forced by the Sarbanes-Oxley rules which were preventing corporations audited by PwC from doing business with Cartesis. The other members of the consortium are Advent Venture Partners, CDP Capital Technology Ventures and Partech International. The price was not disclosed. The effect of Sarbanes-Oxley had been hurting Cartesis for some time, so it was widely rumored for months that PwC had put it up for sale.
Following the divestment, announced on December 23 and completed in January 2004, Cartesis is wholly owned by the VC consortium, with no management or employee shareholdings. There is also expected to be an injection of new funds into Cartesis which will help the company’s marketing efforts in the US and UK. The company’s management and product strategy were not initially affected by the change of ownership, as Cartesis had in any case been run on an arm’s length basis by PwC. Later, there were senior management changes and the company acquired INEA in mid 2005.2000 to 2003DateAcquired companyProduct typeAcquiring companyProduct typePrice
May 2000DataFlux DI, DQM SAS N/A
2001Informix DBMSIBMDBMSN/A
2001Maximal Analysis AnalysisMicrosoftDBMS$15m
November 2001 Torrent DIAscentialDI$46m
March 2002 Vality DQMAscentialDI$92m
April 2002 MetaGenix DQMAscentialDI$5m
July 2002ActaDIBusiness Objects Reporting, Analysis$62m
December 2002 Adaytum PlanningCognosBI$157m
April 2003Sagent DIGroup1DQM$17m
May 2003Alcar Group Financial ModellingHyperionPMN/A
June 2003Comshare PlanningGEACERP$52m
June 2003OpRisk RiskSASBI, DW N/A
July 2003Crystal Decisions
ReportingBusiness ObjectsBI$820m
July 2003BrioReporting, Analysis HyperionPlanning, Consolidation $142m
July 2003Nimble EIIActuateReporting$15m
August 2003Mercator EAIAscentialDI$106m
September 2003Striva EAIInformaticaBI$62m
September 2003Closedloop PlanningLawsonERP$4m
October 2003MIS AG AnalysisSystems UnionERP$40m
October 2003MarketMax Retail BI SAS
BI, DW N/A
October 2003Actional Adapter EAIiWayEAI, ETL N/A
December 2003Data Junction DIPervasiveDBMS$22m
December 2003Data Distilleries Data MiningSPSSData Mining $6m
December 2003Human InferenceDI, DQMPrime Technology VenturesVenture CapitalN/A
December 2003RiskAdvisory Risk ManagementSASBI, DW N/A
October 2003: Systems Union buys majority stake in MIS AG
Following on from Geac and Lawson, Systems Union has bought a planning/OLAP software and services company, MIS AG. This German company’s products include DecisionWare (including Alea), onVision, Plain and DeltaMiner. Its sales are mainly in central Europe, with efforts to expand in the US having failed.
The agreed bid is for €10 per share, valuing the company at €34.1m or just over $40m. MIS was founded in 1988, went public in February 2000 at an offer price of €50, and was listed on the Frankfurt exchange.July 2003: Hyperion Solutions buys Brio
As part of the consolidation rush in the BI industry, Hyperion Solutions announced on July 23 that it was to buy the fading Brio Software. The deal closed in mid-October.
Brio had been struggling for some time and was unable to compete against Business Objects, Cognos, Crystal and MicroStrategy so it is no surprise to see it being acquired. Hyperion had often been rumored as the buyer, so this is also no surprise. Hyperion is paying approximately $142m in another mixed cash/stock deal. The shrinking, loss-making Brio had revenues of $101.8m in the year to June 2003.
Brio scored well as a product in The OLAP Survey 2 and The OLAP Survey 3. It was also the top scoring client tool (judged in business terms) for Essbase in The OLAP Survey 3, even more so than Hyperion’s own tools, so the fit does seem remarkably good. Ironically, Crystal was the lowest scoring client for Essbase, despite being resold by Hyperion.
Hyperion is reselling Brio’s products on an OEM basis until the deal closes on October 16, 2003. The Brio brand is expected to be dropped immediately after the deal closes, though the Intelligence product name is likely to continue. It is not yet clear what the future of SQR will be.
This deal ended Hyperion’s hitherto moderately successful reseller relationship with Crystal Decisions, which has itself been acquired by Business Objects. It also makes Hyperion a direct competitor against Business Objects, as well as Cognos. Hyperion is now one of the top three general purpose BI vendors, with revenues of about $600m, comparable to Cognos but with slower organic growth.
Of all these takeovers, this probably has a better chance of working than most asthere is no overlap in the product linesthe companies are almost neighbors, with head offices only two miles apart, so there are no geographic issuesHyperion needs relational query and reporting in its solutions, and Brio is a better technical fit than Crystalthere is no confusion about which management is in charge, and there is no doubt that Brio needed to be acquiredHyperion may well be more successful in selling Brio’s products than than the faltering Brio had beenHyperion has learned a lot of lessons after the disastrous merger five years earlier, and has had several relatively successful small acquisitions since.July 2003: Business Objects buys Crystal Decisions for $1.2bn
In the largest BI consolidation so far, Business Objects announced on July 18 2003 that it was to buy its fast growing competitor, Crystal Decisions, for approximately $820m, based on the July 17 BOBJ closing stock price ($300m in cash and 26.5m BOBJ shares). The deal eventually closed on December 11, and the rise of the BOBJ stock price since July raised the net value of the deal to $1.2bn, by far the largest BI acquisition to date.
Before the close, Business Objects had a market capitalization of $2.1bn, so it is paying about 57 percent of its own pre-merger valuation for Crystal, a competing vendor about 59 percent of its size. The majority owner of Crystal Decisions, Silver Lake Partners, became the largest shareholder in the enlarged Business Objects and will have board representation but Bernard Liautaud, co-founder of Business Objects, remains chairman and chief executive officer of the combined company.
For the twelve months ended March 2003, Crystal Decisions’ revenue was $270.6m (a growth of 34 percent) while license fees grew 33 percent to $175m. In the same period, Business Objects revenue was revenue $466m (a growth of 9.6 percent, including the impact of acquiring Acta), while license fees fell 6 percent to $237m.
Crystal’s annual revenue rose to $287.4m in the year ending June 2003, a growth of 32 percent. Business Objects’ revenue for the same 12 months is expected to be about $483m, a growth of about 11 percent, including the acquired Acta. In the quarter ending June 2003, Crystal grew revenues 27 percent to $78.2m, while Business Objects’ revenue is estimated at $128m, a growth of 15 percent, including Acta’s contribution. License fee growth is expected to be much less.
The purchase price represents about 2.85 times Crystal’s trailing revenue (assuming that the Business Objects stock price does not fall significantly), a generous ratio by current standards, so Business Objects is paying a premium for the fast growing Crystal. Business Objects says it hopes for annual pre-tax cost savings of at least $25m. The joint company will have annual revenues of close to $800m, putting it well ahead of Cognos, the current largest BI vendor, which has revenues approaching $600m. Business Objects says that the combined company will be the largest BI vendor in all major geographies, though it also claimed to be the largest BI vendor worldwide even before the merger, though this was clearly not the case.
This deal has relatively little effect in the OLAP market, where Crystal’s share was minimal, but will have a much bigger impact on the reporting market, where both vendors are strong.
It had previously been assumed that Crystal, previously part of Seagate Technologies, was aiming for an IPO, but its future was threatened by the new Microsoft Reporting Services bundled add-on to SQL Server, as well as new reporting products from Cognos and MicroStrategy. This might be regarded as a defensive move on both sides to avoid Microsoft’s threat to Crystal’s core reporting market and Cognos’ increasing strength against Business Objects.
If so, it would have parallels with the 1998 merger of Arbor and Hyperion Software, which is believed to have been triggered by the then imminent release of Microsoft OLAP Services which was bundled with SQL Server 7. That merger proved to be very difficult, in part because of the cultural difficulties between an east and a west coast company. As with this new merger, that one involved a fast-growing technology company threatened by a new Microsoft SQL Server bundled add-on merging with a larger competitor whose growth had stalled.
Crystal is based in Vancouver, Canada, while Business Objects is technically based in Paris, though most of the executive management is now in San Jose, California. The merged company will have development groups in at least eight locations in Canada, France, India, the UK and the US, which will make it hard to improve development productivity, already a problem for Business Objects.
There is a definite overlap in the Business Objects and Crystal product lines, and both have large user bases whose need for compatible upgrades will make it hard to integrate the products seamlessly. Consequently, both brands will continue, though Business Objects
hopes to reduce the significant product overlap in the future. It plans to have a single sales force selling all products. Both vendors also have a large number of partners and resellers and there is likely to be channel conflict among some of these. Crystal has 1700 employees, mainly in the US, Canada and the UK; the merged company will have about 3850 employees.June 2003: Geac buys Comshare
The Canadian ERP vendor Geac announced on June 23, 2003 that it was buying Comshare, for $52m in cash. The deal closed in mid-August.
Comshare, the longest established BI vendor, was formed in 1966 and had revenues of $58.3m in the year ending March 2003. Geac is buying Comshare for its MPC product, the development and marketing of which will continue under the new ownership. However, the tarnished Comshare brand is expected to be dropped soon.
Comshare’s poor long-term financial trend contributed to the low price paid by Geac. Although Comshare remained an independent company at the end of the June quarter and fiscal year, no results were released for the quarter.
Geac sees good potential for selling MPC into its large customer base, but will also continue marketing it to new, non-Geac customers. Such customers may actually be more inclined to buy it from Geac than they were from Comshare, given Comshare’s consistently poor financial performance, so this could be a rare takeover that actually increases the sales of the acquired vendor’s products. However, it is far from clear that this is actually happening.
There are a surprising number of parallels between this deal and the acquisition of Adaytum by Cognos a few months earlier:
Cognos and Geac are both Canadian and were of similar size before these acquisitions. Both also had CEOs with British roots, though Geac’s left before the deal closed and Cognos CEO Zambonini has also announced his retirement, though he will continue as chairman.Comshare and Adaytum had almost identical revenues (of about $60m), though Adaytum’s were growing rapidly and Comshare’s were flat or falling.Cognos paid more than three times as much for Adaytum as Geac paid for Comshare.Both deals were for cash.Both Adaytum and Comshare marketed CPM software.In both cases, the acquired company’s name disappeared.December 2002: Cognos buys Adaytum
Like other private companies, Adaytum was not routinely obliged to release financial figures, but the data in this chart was obtained from the abortive S-1/A from October 2000. Subsequently, Adaytum released occasional reports that showed that its revenue had risen to $51.2m in calendar 2001; the company was still making losses but the level was not disclosed. The FY2002 revenue was $61.2m.
In the quarter ending September 2002, Adaytum’s revenue was $17.0m, a 26 percent increase over the same period a year earlier. In contrast, in the quarter ending November 2002, Cognos itself had analytic applications revenue of $10.4m, a growth of 68 percent year over year. In addition, Adaytum reported that it achieved an operating profit margin (before non-cash charges) of 11 percent, positive net income, and positive cash flow — possibly the first positive net earnings for several years.
For the first nine months of 2002, Adaytum’s total revenues were $42.7m, a 15 percent growth on 2001. This is not a significantly higher growth than Cognos’s own 13.4 percent increase in 8.5 times-higher BI revenues in the March-November 2002 period.
Cognos announced on December 19, 2002, that it was acquiring Adaytum Software, and the transaction closed on 13 January 2003. The final consideration was $157.1m, slightly lower than the $160m initially announced. Cognos views this as a business, not just a technology acquisition, and hopes to maintain Adaytum’s high growth rate, using Adaytum’s existing sales and marketing machine. It views this as justifying the high price paid — the technology alone would not be so valuable to Cognos, which already had products that overlapped all of Adaytum’s.
Adaytum had been trying to go public since August 7, 2000, when it filed its S-1 form. A second revised S-1/A was filed in October the same year. However, with the subsequent drop in the market, this IPO was repeatedly deferred, and the cash-burning company had to raise yet more private capital of $7.4m in June 2001 and $11.1m in May 2002 from its original VCs (including St. Paul Venture Capital, Accenture Technology Ventures, 3i Group, JPMorgan Chase H&Q, and Dorsey & Whitney Ventures). The company had announced a previous round $24m of VC funding in September 2000 and several smaller amounts before that.
The IPO was seeking to raise approximately $50m (already reduced from the $63m in the original S-1), about 50 percent more than other OLAP IPOs, of which there have been none for a while. It said that it hoped to sell 5m shares at an estimated price of $9-$11. The filing shows that the company had been making rapidly mounting losses. In January 2000, the company made a number of layoffs, as part of a cost control program.
This acquisition has been challenging for Cognos. There is a lot of overlap between the two companies’ products, so buying Adaytum does not take Cognos into any new markets, though it does significantly strengthen its offering in some areas. With Cognos Consolidation (the former LEX2000, acquired by Cognos in January 1999) and new Planning product, Cognos already offered budgeting, planning, reporting and financial consolidation, plus its other reporting tools and applications — in fact, a wider range of analytical financial capabilities than Adaytum. Subsequently, Cognos acquired Frango in October 2004, which is expected to replace the Lex-based Cognos Consolidation, so Cognos will have replaced both of its financial applications in quick succession.
Both Adaytum and Cognos had financial product lines that included very old APL-based modules (dating back at least 20 years) as well as more modern client/server and Web-based products, and each was working on integrating their existing sets of products; now there are twice as many integration issues to tackle. Even the APL-based modules used different variants of APL. Obviously, Cognos immediately abandoned Adaytum’s use of BusinessObjects for reporting, substituting PowerPlay in the role (including providing free Series 7 PowerPlay licenses to maintenance-paying Adaytum users of BusinessObjects reporting). Cognos only supported existing BusinessObjects usage for 90 days; after that, existing Adaytum users who wished to continue using BusinessObjects for reporting had to get support from Business Objects directly.
The recently-introduced, and promising, Cognos Planning was immediately killed off in favor of Adaytum, and Cognos Finance is being integrated with Adaytum’s products.
Cognos is also integrating the ensemble with its Series 7 products, though this will probably not be completed until at least 2006.
Both companies had development groups in the US, UK and Canada, but in different cities in each case, so it is difficult to integrate the respective development organizations, and there were some casualties. And Cognos paid a high price — 2.8 times trailing revenues — for the only recently and barely profitable Adaytum, so it will have to work hard to make financial sense of this risky move.
Cognos has acquired a number of very small companies in the past, but it paid about twice as much for Adaytum as for all the others combined. The previous acquisitions were of small technology companies which did not disrupt the Cognos organization, and whether they succeeded or failed, were no threat to Cognos. This was the first acquisition that has had a real, visible impact on all parts of the organization and which involved the acquisition of a significant installed customer base and operational sales force that had to be integrated with Cognos’s existing sales force. It was also the first that caused real product overlap. If Cognos succeeds, it will be the first relatively large and successful BI acquisition; if it fails, it will join a long list of failed BI acquisitions.
Clearly, Cognos views the risks and high cost as worthwhile in order to strengthen its CPM positioning, with Hyperion Solutions being the main target. But even combining Adaytum with Cognos Finance and Metrics Manager, Cognos still has much smaller financial applications revenues than Hyperion, though it has overtaken Cartesis (Adaytum’s former partner) to become the clear number two in the segment. In the first year after the acquisition, the former Adaytum’s growth rate dropped sharply, though they began to grow strongly again at the end of 2003.July 2002: Business Objects buys Acta for $65m
Business Objects has bought Acta, the ETL vendor best known for its ability to extract data from SAP R3, for a generous $65m in cash. The agreed deal was announced on July 9 and closed in late August 2002. This move puts the Business Objects technology stack in direct opposition to those from Cognos and Informatica, and to a lesser extent, Hyperion (with its Sagent and Crystal OEM arrangements). In each case, the vendors offer ETL technology to extract data from ERP and CRP applications, a pre-built data model, BI tools and a suite of analytical applications to present and analyze the data. Business Objects makes the point that, uniquely, each layer in its stack is composed of recognized best of breed components. With the others, at least one of the layers is much weaker. Business Objects will not be competing in the general ETL segment, and will use Acta as an integrated part of its analytical applications. Acta’s Mountain View remaining employees have moved to Business Objects’ US head office in San Jose, where its application framework is also developed.Before 2000DateCompany acquiredProductPriceAcquiring company
1994Pilot LightShip
~$28mDun & Bradstreet
1994Info-Innov Media Speedware
1995IOC Track DecisionWorks
1995IRI Software Express$100mOracle
1995Soft Systems Data-Vision$5.2mIQ Software
1995STG MetaCube$16.5mInformix
1995Prodea Beacon$36mPlatinum Technology
1996Holistic Systems Holos$84mSeagate Software
1996Sinper TM1$11mApplix
1996Panorama relaunched as OLAP Services~$15mMicrosoft
1997Pilot Software ~$5mPlatinum Equity Holdings
1997Andyne PaBLO Hummingbird
1997AppSource WIRED for OLAP$6.7mArbor Software
1998Hyperion Software Enterprise; Pillar$600mArbor Software immediately renamed to Hyperion Solutions
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