The BPM vendor will acquire predictive analytics vendor Decisioneering, which should help beef up its risk management functionality.
Posted Jan 24, 2007
Business performance management player Hyperion disclosed on Tuesday that it has made a play toward integrating risk management capabilities more deeply with its offerings by signing a definitive agreement to scoop up privately held predictive analytics company Decisioneering. Terms of the acquisition were not disclosed. Hyperion intends to operate the firm as a standalone business unit. The deal, expected to close within the next month, is subject to customary closing conditions, according to the company.
The core of Decisioneering's functionality lies in its Crystal Ball risk analysis package of Microsoft Excel-based predictive analytics, simulation, and modeling tools for business users. Crystal Ball has more than 4,000 customers, is used by 85 percent of Fortune 500 companies, and is embedded in the curriculum of more than 700 business schools and universities, according to Hyperion.
"This acquisition is consistent with our first M&A priority of acquiring adjacent applications that will allow us to reach new customers and new markets, address desktop usage for modeling and simulation, and to ultimately integrate risk management functionality more deeply into our solutions," said Godfrey Sullivan, Hyperion's president and CEO, during the company's Q2 2007 earnings conference call yesterday.
Most planning activities, be they financial or operational, require a healthy dose of prognostication, but today most rely on a seat-of-the-pants approach to prophesizing future performance, according to John Hagerty, vice president and research fellow at AMR Research.
"Long known for its planning application, Hyperion is looking to close this gap between guesswork and statistical prediction by acquiring an experienced vendor: Decisioneering," he wrote in an AMR alert article. "What we found quite interesting about this product [Crystal Ball] is how it plays in the area of risk management. When modeling scenarios of future performance, there can be a range of possible outcomes. Understanding the likelihood of these possible outcomes lets managers make well-informed decisions, thereby reducing risk--or at least making decisions understanding the risk profile of specific actions. In my opinion, anything that will allow for risk-aware decision-making is a great addition to any analytic portfolio."
He adds in the article, though, "the fact that this product is only a desktop tool limits its rapid expansion within the traditional Hyperion portfolio today. But many firms co-mingle data from platforms like Hyperion with other data in spreadsheets, and that's where companies will see initial synergy. Still, we anticipate Hyperion will evaluate how to incorporate much of the science into its analytic engine over the next several quarters."
Gareth Herschel, research director at Gartner, sees the acquisition as a reflection of a good strategy. "The idea of bringing more data mining or predictive analytics into the planning and forecasting processes is the next logical evolution or progression of performance management," he says. "If Hyperion can do a good job of integrating [Decisioneering's] capability into its application then it will help close the gap marginally against SAS Institute. I don't think it's a knockout blow by any sense. But it does make Hyperion a slightly more well rounded solution, a slightly more interesting solution, and as a reflection of this strategy about where performance is going, it's a good [sign] that Hyperion is thinking ahead."
In other Hyperion news, the company reported total revenues for its fiscal second quarter ended December 31 of $222.9 million, a year-over-year 20 percent upswing from Q2 2006's $185.5 million. Software license revenue grew 14 percent from Q2 2006's $74.4 million to Q2 2007's $84.9 million while maintenance and services revenue increased 24 percent from Q2 2006's $111 million to Q2 2007's $138 million.
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