Consolidation hits BI sector

Business intelligence software consolidated this week with Business Objects agreeing to acquire enterprise reporting software company Crystal Decisions in an $820m deal and Hyperion agreeing to buy Crystal rival Brio Software for $142m. Both Business Objects and Hyperion are seeking to increase their appeal as one-stop shops for corporate customers.

Business Objects' move will bolster its enterprise reporting capabilities and help the vendor to fight off growing competition from Microsoft and Oracle, which are both loading their databases with more business intelligence capabilities.

Steve Broughton, UK managing director at Business Objects, said the deal would allow the firm to broaden its portfolio of business intelligence offerings. "The marketplace is relatively crowded and our view is that what customers want is clear leadership - they are fed up with buying tools from 10 to 15 vendors," he said.

Analysts said the deal makes sense as the two firms' products are complementary. Business Objects previously focused on ad-hoc query tools and enterprise analytics, while Crystal Decisions has been strong in enterprise reporting, according to Credit Suisse First Boston (CSFB).

Reporting tools are becoming more important for firms as they find themselves subject to a growing number of regulations governing boardroom management, such as the Sarbanes-Oxley Act in the US and the UK's new code on corporate governance.

In a research note, analysts at CSFB said the acquisition prevents a big vendor such as Microsoft from swallowing Crystal Decisions, which could have undermined the long-term prospects of vendors that specialise in business intelligence tools.

CSFB said the deal would help Business Objects offer a fuller range of tools now that many firms are trying to reduce the number of software vendors they deal with. However, CSFB warned that the deal could also lead to delayed product releases as Business Objects is in the middle of a new product cycle.

However, Broughton said, "We've got the new product out there right now [Enterprise 6.0] and the next two releases are set in stone."

Hyperion said its acquisition of Brio would provide customers with integrated query, reporting and analysis tools. Hyperion plans to fold Brio's products into a new Business Performance Management suite that extends from basic reporting to dynamic performance monitoring of key performance indicators. As part of a separate licensing deal also announced last week, Hyperion will begin selling Brio's products with immediate effect.

Combined 12-month revenues for the companies total $613m and Hyperion said that the increased viability of the merged company could help tip buying decisions.

Meanwhile, rival business intelligence vendor Cognos has enhanced the scorecarding capabilities of its performance management solution with the release of Cognos Metrics Manager Version 2.

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