Buyouts surge among data analysis vendors

The number of independent business intelligence software vendors continued to shrink this week, when Hyperion Solutions Corp. announced plans to buy query and reporting tools maker Brio Software Inc.

The deal between Sunnyvale, Calif.-based Hyperion and Santa Clara, Calif.-based Brio came just five days after Business Objects SA announced on July 18 that it had agreed to acquire Crystal Decisions Inc.

Analysts said the consolidation moves will likely accelerate as vendors look to offer more complete suites of data analysis products, partly to fend off growing competition from Microsoft Corp.

Such mergers can both help and hurt corporate users, said Mike Schiff, an analyst at Current Analysis Inc. in Sterling, Va. Although the acquisitions may give users a single vendor to deal with in areas such as product support, they could reduce customers’ bargaining power by limiting their ability to shop around, Schiff said.

He added that after buyouts, vendors typically weed out the less successful products they have acquired, which could affect the companies that depend on those technologies.

That possibility is a concern for Charles Castleberry, assistant director of IT architecture at Fox Filmed Entertainment in Los Angeles. Fox uses tools developed by Palo Alto, Calif.-based Crystal Decisions for decision support.

“I have yet to see a merger of companies making similar products in which one or both products weren’t significantly affected,” Castleberry said. “Usually, either the product line in the purchased company is phased out, or the products are merged together in some fashion.”

But Business Objects user David Rewerts, an IT systems analyst at Principal Financial Group Inc. in Des Moines, said the combined resources of Business Objects and Crystal Decisions would most likely result in better efficiencies of scale and improved research and development efforts.

John Olsen, president and chief operating officer at Paris-based Business Objects, said there are no plans to phase out any applications or to delay rollouts of new products. He noted that Crystal Decisions’ tools are used to design reports for end users, whereas Business Objects’ applications are tailored for power users who want to format their own queries and do extensive slicing and dicing of data.

A spokeswoman for Hyperion said that the company will disclose more information about its product plans in the coming weeks, although she noted that Hyperion’s own applications will remain intact. Hyperion did say that it’s dropping a reseller deal with Crystal Decisions and will immediately start offering Brio’s tools.

Both acquisitions are expected to be completed in the fourth quarter. Schiff said that Brio, which last week reported a first-quarter loss of US$2.1 million on revenue of US$24.8 million, was financially troubled and in need of rescue by another vendor. Crystal Decisions is in much better financial shape, he noted.