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7/27/2003
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Consolidation Time

Hyperion and Business Objects acquisitions signal a maturing business-intelligence software sector where customers want fewer vendors

The long-anticipated consolidation of the business-intelligence software industry has begun. Last week, Hyperion Solutions Corp. revealed a deal to acquire query- and reporting-app vendor Brio Software Inc. for $142 million. That came just days after Business Objects SA moved to buy Crystal Decisions Inc., a developer of enterprise reporting software, for about $820 million.

SLOW BUT STEADYThe acquisitions aren't on the scale of Oracle's $7.5 billion effort to buy PeopleSoft or even PeopleSoft's $1.8 billion buyout of J.D. Edwards & Co. But in the fragmented business-intelligence sector, where the 10 largest vendors account for only 60% of the total market, according to IDC, the acquisitions of Crystal Decisions (with $270 million in annual sales) and Brio ($103 million in annual sales) are significant.

"It's a tell-tale sign of the maturing of an industry when consolidation occurs," says Gerald Cohen, president of Information Builders Inc., a $300 million business-intelligence software company. "Buyers have been telling us for a very long time that they want to deal with fewer vendors."

Consolidation will likely continue. Vendors are trying to build complete lines of reporting and analysis apps. That was Cognos Inc.'s goal when it bought financial-planning application vendor Adaytum Inc. for $160 million earlier this year. Vendors also are expanding beyond mainstream business intelligence into areas such as performance management because IBM, Microsoft, and Oracle are providing more basic reporting and analysis capabilities built into their database software.

Business Objects' buyout of Crystal Decisions could benefit users, says Tuan Chu, chief architect for the E-health system at Per-Se Technologies Inc. Per-Se processes reimbursement transactions for health-care providers and uses Crystal Decisions' software to provide clients with financial reports. But, Chu says, Per-Se's clients are asking for more advanced capabilities that Business Objects' products might offer.

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