Godfrey Sullivan, president and chief operating officer with Hyperion oversees most Hyperion business operations including sales, marketing, professional services, customer support, development and human resources. He sat down with
Computing Canada this week at the company’s Solutions 2004 user conference in Chicago to talk about the business of business performance management.
Computing Canada: You acquired Brio last year, what has that acquisition meant in terms of expanding your customer base and how did the transition go?
Godfrey Sullivan: We announced the acquisition in July and closed it in late October, so it’s been five months since we obtained ownership of the company. The integration has gone quite smoothly. You always have some people you lose through that whole process. Of the downsizing that occurred, about 60 to 70 per cent were from Hyperion and 30 per cent were from Brio, so we were very careful to evaluate skill sets and work experience and try to make good decisions around people. For example, in the development organization I think we retained everyone but one or two people.
There were two things we had going for us. One was that our products were highly complimentary and there was very little overlap. The other is that we were two miles apart geographically. I moved into the old Brio building with some of the other exec staff so our exec teams are in both places and we have a nice cross-pollination of ideas going on. There was minimal product overlap and I think that’s a pretty important issue. I think Business Objects and Crystal (Decisions) are really struggling with that right now because it’s two relational reporting companies coming together, so it’s about who wins and loses and it’s Vancouver versus Paris and those tend to be more challenging.
CC: The arena is getting a little smaller in terms of business performance management and business intelligence vendors. Does Hyperion have plans to pursue further acquisitions?
GS: We’ve stated that our three priorities for acquisition are adjacent applications in the financial area, strengthening our overall platform and a distant third is market consolidation for consolidation’s sake. So last year, as an example, we purchased The Alcar Group, which became Hyperion Strategic Finance, which is a good example of an adjacent financial application. Our sales force knows how to sell it, we know that market well so it was a tuck-in application into the business. Brio fits more into strengthening the platform side from a standpoint that we needed stronger relational reporting capabilities, we needed stronger dashboard capabilities. We haven’t done much on the pure consolidation side. As we look into the future those three principles still apply. We can’t talk about specifically who we look at but that’s the map.
CC: Do you see further consolidation occurring within the business performance management space?
GS: The nature of the software market is that as it matures, it consolidates. It’s impossible to say ‘No, there won’t be further consolidation.’ I can’t call out a specific prediction, but I would say yes. The larger companies tend to be buying the smaller companies. We see smaller companies in play all the time right now. We probably evaluate upwards of 50 companies a year. Last year we bought two companies so you tend to be careful about whom you select and that it’s a fit with your vision, your management philosophy, geographic proximity, and not too much product overlap.
CC: What about Microsoft playing in the reporting area? Because they are so big in so many companies, are they a major threat?
GS: We pay attention to every competitor, Microsoft included. I think their latest announcement, especially their reporting services product, tends to threaten the traditional BI vendor whose products are focused on standard operational reporting. The bread and butter BI vendor in my mind has a lot to worry about with reporting services, just because it’s just one more free piece of software for Microsoft that turns into a slowdown in the selling cycle. The customer has it to evaluate free and it tends to populate itself through the SQL server connection so it’s not unlike bundling solutions in Office. If you’re using Windows and you bought Office you got some stuff for free you didn’t expect to get. Where we tend to focus is on financial markets first and operational markets second. Our reporting tools have a strong functionality in terms of financial reporting both for internal management purposes but also for external statutory uses. We tend to view reporting services as more of a vanilla, bread and butter management tool. Our focus tends to be more specialized so I haven’t seen it (Microsoft) in a competitive situation yet but I would guess Crystal and Cognos are seeing it on a regular basis.
CC: We have heard at Solutions this week that one of Hyperion’s focus areas in the year ahead will also be on integrating with the big ERP companies, specifically with SAP. Why did you single out SAP?
GS: Only because their data tends to be the most difficult to get to. Most of the other companies, like Oracle and PeopleSoft and Siebel, they are pretty open about their table structures. It’s a relatively straight-forward exercise to get at their data, but SAP doesn’t publish its table structures so there are several companies that make a healthy living out of reverse engineering those table structures. They also have No. 1 market share, so they are the most important company in the accounting area and general ledger. They also have the most proprietary data structure so you have to work harder to have all your tools get through that data cleanly. So because of that it’s important to our customers.
CC: Are you working directly with SAP on this?
GS: Yes. You need to be a certified partner in order to have the technical support needed, and we do that. We just certified the intelligence product on the SAP BW and we just certified our SQR reporting product on native R3. There tend to be two levels within SAP in terms of certification. It’s ongoing work and we feel it is worthwhile to call out to our customers that there is a specific effort underway for SAP because they do understand the level of technical effort required to certify.
CC: Is business performance management being driven more by the need for greater scrutiny of the bottom line or compliance for things like Sarbanes Oxley?
GS: Competitive pressure. It’s the good old-fashioned basics of running a business. Every business is trying to deliver great products, great services, grow market share, be the best – those competitive pressures that cause you to look for every edge. What additional thing can I do to grow revenue? What additional thing can I do to save on expenses? That’s every CEO’s first worry. You expect your CFO and CIO to deliver integrity in your systems, the books have to balance and you have to have good principles around revenue recognition but what you really have to be worried about is how to be the leader in your marketplace. The things that have helped us as a business performance management vendor are those pressures. There was this whole perfect storm at the end of the dot-com era. The recession and the whole focus on transparency and visibility to the external community all came at the same time. That really said to everybody, ‘We need good software tools as well as good practices in order to look for every edge.’ Whether it’s monitoring variances good or bad and to act on them quickly. Good analysis for the business, that’s what you’re worried about when you’re running a business.
I think until two years ago, customers thought about business performance management in piece parts. Of course we’re doing analytics, of course we’re doing consolidation and reporting. It’s only in the last couple of years the notion of business performance management as a software category and a unified set of activities in the customer’s mind really started to solidify. Now people really start thinking about linking their strategies to their operating plans. They really think about monitoring variances and feed that back through the planning cycle. They think about dashboards as really the face to the BPM. See variances, highs and lows, traffic lights. The dashboard is the magnifying glass, if you will. Everybody is tired of the two-inch thick stack of paper reports. Employees can’t figure out what to do from a stack of reports. Where’s the variance that is meaningful to my efforts? So dashboards have been a way to personalize the information to what you as an individual, no matter where you are in the organization, what are the KPIs important to you. How do your goals and measurements align and what are the variances that matter to you? They’re probably different than what matters to somebody else.
CC: When do you presentations to clients do they have concerns about the concept of policing versus performance with dashboard tools?
GS: I think there is an element of that, from the standpoint that if the systems are designed correctly everyone wants more visibility into their activities. But if it’s a boardroom-level activity where just the execs have the dashboards and they can see what you’re doing, it feels like inspection, it feels like policing. The secret is to make dashboards available to everybody so everybody has their own performance metrics. If you know what your goals are and you have good systems feedback about how you are doing against your metrics, you’re generally pretty happy. That’s empowering and that’s performance as opposed to inspection. But the secret is you have to have a system, a technology and a set of practices that enable dashboards to be deployed widely. Seeing an under-performing situation gives you an opportunity to do something about it. Under-performing, if on a people issue, maybe it points out a resource constraint. It’s not as much about casting blame as it is about identifying where you have a variance, positive or negative and then knowing what to do about it. The No. 1 complaint we hear from customers is they don’t have any information. What you really don’t like is to get criticism from you boss or peers about your area under-performing but you wish you had some information that would tell you that and tell you early enough you can do something about it. Information is power, but information closely held is not power.