Posted by Mark Rittman
at March 04, 2007 12:37 PM
It’s 9.40am on Sunday morning, and I’m writing this sitting on the train up to Heathrow Airport. Next week is the first full week for my consulting startup and I’m flying off to Reyjavik to do some work with the very nice people over at Miracle Iceland. Ben and the team have a number of BI & data warehousing clients, and I’m working with some of these clients and his team on a few of their projects. One of the things my company is looking to do is to partner with smaller, expert-level consultancies such as Miracle, and we’ll be looking to do similar things with complementary companies in the USA, Europe and ASIAPAC.
Anyway, whilst I’m on the train, it’s an appropriate moment to think about some of the impact and repercussions of Oracle’s proposed takeover of Hyperion. Whilst many of us were caught by surprise by the move (including most people within Oracle, I suspect) the business logic does in fact look pretty compelling, and I think this is a hugely positive move by Oracle. Whilst in the past, there’s been criticism of how Oracle have incorporated previous BI purchases (more on this in a minute), in recent times, the purchases and integration of Peoplesoft, Siebel and the SOA/Identity Management companies have all subsequently been seen as well executed.
In fact, given how the Siebel acquisition went, you can probably expect more changes within Oracle than within the Hyperion team when the takeover is bedded in - if you look at the org chart within Oracle BI product management post- the Siebel and Peoplesoft acquisitions, most of the key roles now are taken by ex-Siebel and Peoplesoft people, with Siebel management taking over BI tools management, and Peoplesoft EPM management taking over Oracle CPM management. Going in to the future, you can certainly see the Hyperion management and sales staff moving over wholesale into a new BI Enterprise Performance Management team at Oracle and driving the business using a distinctly Hyperion style - which will be good for Hyperion’s existing customers, and good for the wider Oracle customer base given their success in the past.
Looking back at my comments when the takeover news broke, my thoughts were mainly around Essbase and how this would relate to Oracle’s existing OLAP server, the OLAP Option to Oracle Database 10g. This is understandable; they are both very capable OLAP servers, both have very strong advocates, and often went head-to-head on customer proof of concept engagements. I’ve heard similar concerns about Discoverer; does this mean the end of Discoverer, will Brio take over, will all the attention now move decisively toward BI EE and the new Hyperion applications? Or, perhaps worse - will customer confusion mean that they won’t buy anything or start any new projects, or even migrate across to tools and applications by other vendors?
The thing is though, to think of this in terms of Essbase vs. Oracle OLAP, or Brio vs. Discoverer, or even Hyperion’s applications vs. Peoplesoft EPM is, I think, to miss the scale or the enormity of what’s going on. What this is really about is Oracle vs. SAP - all Oracle does now, strategically, is framed in it’s desire to be the number one enterprise software vendor, which means being the number one ERP vendor, as all else flows from that. Oracle now is an ERP vendor with a nice sideline in databases and development tools, not the other way around, and they’ll happily live with a more heterogeneous tools and technology environment if it means they can get closer to that goal.
I remember going to Open World or user group presentations only three years ago and hearing the message - get your data on to an Oracle database, move your business on to Oracle E-Business Suite and use Oracle’s infrastructure - then we can start talking. Nowadays, in a process driven by people like Thomas Kurian, and by the people coming in from the various acquisitions, it’s all about a larger goal, one that’s much bigger than just those customers who’ve standardized on Oracle technology. Buying Essbase doesn’t therefore necessarily lead to Oracle OLAP being discontinued - they’ve got very different architecture and one is more suited to certain situations than the other.
Similarly, Brio underpins much of Hyperion’s financial applications, whilst Discoverer provides much of the ad-hoc reporting for a very large percentage of E-Business Suite customers, so why alienate these customers by de-emphasising or desupporting their products? I think over the last few years, Oracle has done a very good job in extending and enhancing the products they’ve bought, and whilst obviously in time, Oracle will want to migrate them all to a common, next-generation platform, in the meantime there’s very good business to be had in supporting existing customers, and upselling them all the other technology that Oracle can offer.
That said though, it is a pretty significant event that Oracle have bought Essbase, the most obvious, direct rival to Oracle OLAP and one that frankly, has beaten Oracle OLAP hands-down in the market over the past five years. Integrating Essbase, and it’s salespeople and technologists, into Oracle will be a very bitter pill to swallow for many Express and IRI veterans, a bit like George Graham becoming manager of Tottenham Hotspur to use an analogy close to my heart. Whilst the architecture of Oracle OLAP is, in my opinion, superior to Essbase (and there are as many advocates on the Essbase side who would beg to differ), what’s happened to the product over the past five years has been nothing short of a tragedy, and one that is largely made up of Oracle shooting itself in the foot, repeatedly.
To go back five years: both Essbase, and Oracle Express Server, the predecessor to Oracle OLAP, both had similar architectures. They were standalone multi-dimensional OLAP (MOLAP) servers, with their own suite of applications (OFA and OSA for Express, plus developer tools such as Express Objects and Web Agent), and similar market share (Essbase around 30%, Express around 20%). Now over that time, both tools have been affected by the introduction of Microsoft Analysis Services and the subsequent commoditization of what was previously, a very high-cost market, but the paths taken by the two companies have been very different.
Essbase was originally owned by a company called Arbor, who had their own relationship with IBM and Microsoft but saw the writing on the wall with Microsoft’s move into the OLAP market. It decided to deal with the issue by merging with a much larger company called Hyperion Software, who sold analytical applications that Arbor believed would complement their OLAP solutions. Now, over a period of several years after the merger, this new merged company went through it’s own problems (see Nigel Pendse’s OLAP Report, subscription required, for the full historical story) but over time, they bought other complementary companies (including Brio Software) and created their own niche in the Enterprise Performance Management area. They did dabble with database integration - IBM’s DB2 being the chosen platform - but they let IBM do all the work and when it didn’t sell, it was IBM’s problem not Hyperion’s, and they didn’t get sidetracked from the core, MOLAP message. Now over the past five years, Essbase’s market share has fallen from 30% to 20%, but the company itself has held up through selling wider, integrated solutions to the CFO, and of course now has sold out to Oracle for around $3bn, quite a turnaround from their near-disaster following the merger in 1999/2000.
For Oracle’s OLAP offerings though, it’s been a different story. Oracle announced in 2000 that Express was going to be replaced, and enhanced by a new database-integrated OLAP server called Oracle OLAP. The idea was laudable and well received at the time - take the OLAP engine, which in it’s standalone form is dogged by scalability and manageability concerns, but nonetheless runs faster than it’s relational cousin - and embed it in the Oracle database, allowing you to benefit from the enterprise-class scalability and performance of the Oracle database.
The problem however was in the execution; it took Oracle until Oracle 9i Release 2, and more honestly, 10g Release 1 and 10g Release 2, before you had a product that was stable and functional enough to replace Express Server. Oracle took the decision back in 2000 to remove the client-server SNAPI interface and replace it with an internet-enabled, Java API, which whilst in itself a laudable aim meant that OFA and OSA wouldn’t work on this new architecture. All the existing customers of OFA, OSA and custom-build Express applications had to wait until BI Beans became available - an order of magnitude more complex to develop with compared to Express Objects and Web Agent - or, even worse, until Enterprise Planning and Budgeting became available. If only they’d made Oracle OLAP compatible with SNAPI, all the existing OFA and OSA customers could have migrated to Oracle OLAP, kept their existing applications in place, and then migrated in time to the new, Java-based applications.
Couple that with the needless diversion into ROLAP storage, which never performs as well (Essbase and MS AS offered this same option, but no-one uses it as it just doesn’t perform as well as MOLAP storage),the steadfast refusal to support MDX or XML/A, and constant changes over the five years to APIs and metadata, and you eventually end up with a situation where you have a product with an excellent architecture, amazing scalability and functionality, but no customers. Compared to Essbase, Oracle OLAP’s market share has fallen from around 20% five years ago to around 4% now. Oracle made the right decision back in 2000 to enable Express for the internet, and to embed Oracle OLAP in the database - that’s where BI data should be held - but the market read it as five wasted years of architectural navel gazing and the competition - Hyperion with their financial apps and Microsoft with their low cost and wide developer base - got on with the job of winning new customers.
The ironic thing is - where they are now, it’s a superb product. SQL access, accompanied by MDX and XML/A support, with the scalability of Oracle Database 10g - that’d be a world beating product, were it not for the fact that the horse has bolted, unfortunately. That said, from my conversations with customers and attendees at my BI seminars, Oracle are starting to pick up interest now from relational data warehousing customers who are looking to supplement their relational star schemas and MVs with analytic workspaces, and now the tools are so easy to use (AWM 10.2.0.3, OWB 10.2) it’s relatively straightforward and painless to add AWs to your relational data warehouse. Things look bright for Oracle Database 11g as well - from reading the tea leaves at Oracle Open World, AWs and relational storage are starting to come together in a vision that was originally put forward by Oracle with the Oracle 9i OLAP release, where DBAs will be able to switch MVs and AWs interchangeabily with the same tools and SQL techniques used for both forms of storage.
Still, that’s all history now, and certainly with the purchase of Hyperion Solutions, and the previous moves on Siebel and Peoplesoft, it’s clear that firstly, Oracle are seriously delivering on their vision of encircling and then beating SAP in the enterprise software stakes, and secondly, they’re deadly serious about BI, even if it means admitting mistakes in execution in the past. Given what Oracle are offering now - powerful, integrated OLAP in the database, OLAP-enabled “best of breed” financial applications for the CFO, and a powerful, RAD-enabled BI development toolset in BI Enterprise Edition, they’ve certainly got all their bases covered when compared to platform vendors such as MS and IBM, and BI specialists such as Cognos and BO.
The interesting thing, going into the future, will be seeing what elements of each package emerge when Oracle start delivering the BI components of their forthcoming Fusion range of applications. I suspect the Hyperion products will play a very large part in this future architecture - BI Suite EE will provide the business analytics for mid-managers, whilst Hyperion’s products will provide enterprise performance management for the C-level customers. Should be interesting, and in the meantime I’ll be keeping an eye on edelivery.oracle.com after the merger goes through to see when the products become available for download.