Oracle's acquisition announcement of Hyperion -- especially coming on top of SAP's Pilot Software acquisition -- last week signals a number of things for the overall analytics and business performance management market. Above all, enterprise application and lower-level stack providers are becoming increasingly interested in also dominating the finance and analysis interface with line of business of users. ERP and large application vendors now view it critical to own not only the business process -- in SAP speak -- but also the business decision.
Enough generalist commentary. Let's cut to the procurement and operations implications of this move -- and the general trend in the sector towards eventually merging applications with analytics. In the Spend Management technology world, virtually no vendor that I'm aware of has got out of the box analytical and statistical analysis capabilities that can easily be integrated with the entire suite of buy-side technology capabilities, from up-front spend analysis through to contract management and demand planning. Many do it in silos (e.g., spend analytics, risk management, sourcing optimization, supply chain optimization). But none offer it -- at least in an easy to digest manner, without spending millions with the systems integrators to make it work -- from start to finish.
Part of this is due to the fact that few procurement and operations organizations have historically needed access to this type of analytical horsepower in all of their activities. At best, they used this type of capability in a targeted fashion (e.g., a make versus buy analysis). But top tier finance organizations -- at least in recent years -- have gone down a different path, demanding that their IT staff give them access to capabilities to make better compliance and financial decisions across their business activities. I would suspect that with the rise of Spend Management in recent years -- and the new risk management elements that are coming to light in the area -- that this sort of reporting and visibility will also become standard for procurement and operations organizations at some point in the future.
What will be possible in an integrated BI / Spend Management world? The recent and now questionable -- once the Oracle ink is dry with Hyperion -- deal between Ketera and Oracle's latest target offered a great vision. I wrote recently that "from basic executive dashboards that monitor performance, savings and spend by category and supplier to more advanced capabilities that might take into account commodity risk exposure and comparative organizational performance, the potential for BI to become an integral part of Spend Management is very real."
But who will come to dominate the analytical, risk management and compliance side of Spend Management? My guess is that it's unlikely to be any one vendor in the near-term. But Oracle and SAP will certainly have a leg-up on best of breed vendors from a suite and enterprise integration perspective if they ever get their act together with procurement and operational analytical and compliance capabilities with any breadth and depth. When that time will come is questionable. However, when it does, it will be up to best of breed vendors to prove that they're still relevant in this area. As a final aside, SAS is one dark-horse in this race as well, but until they start to make a splash in the sector, they're likely to remain under the radar of most organizations.