Sluggish Sales for Hyperion System 9 Continue Due to High Price Tag and Migration Cost; No Relief In Sight from Upstream Acquisition or Upcoming BPM Architect Product 



yperion is projecting a 10%, or $28 million, in fiscal 2007, which is seen by many in the financial community as a major disappointment, given the September 2005 launch of S9, upcoming releases such as BPM Architect, and recent acquisitions including Razza Solutions (which brought the Master Data Management product, Hyperion’s fastest-growing product). First Analysis Securities Corporation estimates that UpStream and MDM combined can contribute 5%, or $14 million, in incremental license revenue in fiscal 2007.  That leaves only $14 million from incremental sales of System 9, not a very rosy picture, indeed. 


According to First Analysis Securities, high license fees and lengthy migrations are a significant hurdle for customers considering an upgrade to System 9. They comment, “Our key takeaway is that System 9, like many of the integrated BI platforms, is a step function improvement in performance and usability. However, that benefit carries a high price tag of a long and complex implementation process and sales cycle, making the timing of customer upgrades somewhat uncertain. Despite earnest customer interest in the new product capabilities, we don’t see this cycle ramping results in the near term.â€� 


Poor Hyperion Q3 results seem to confirm that System 9 sales are suffering from technical issues and/or the new license (i.e. migration) fee. According to First Analysis, “We talked with one of Hyperion’s larger international customers at the event that “continues to struggleâ€� with the S9 license fees. First Analysis also spoke with Hyperion customer, Norway Post, which incurred licensing costs in excess of $1 million to migrate to S9 and purchase additional products. In spite of this, they are articulating a strong valuation proposition for the product. 


In a confirmation of Hyperion’s challenges with System 9 sales, according to a First Analysis Hyperion User Conference Report, three important partners (each located in the three major regions, east, central, and west) focused on the business intelligence platform business have not yet completed more than a handful of migrations in total.  They said, ‘While we did hear from partners about improvements with S9 in the area of configuration and trouble-shooting, negative comments focused on a lack of S9 documentation, as well as a shortage of pre-sales talent and in-depth knowledge across the entire offering (i.e. relational and OLAP).â€� 


BPM Architect  

The fall release of BPM Architect (part of version 9.3) will likely be a major release and innovation for application customers. BPM Architect will allow Hyperion customers to build and maintain applications (e.g. Planning and HFM) in a single environment with shared dimensions and properties, as well as data synchronization. Hyperion claims that like Essbase 7X, System 9 will have slow and steady growth until sales pick up in 12 –24 months. Hyperion also claims that BPM Architect will help to accelerate this growth. Question is, how much and how complex will the migration path be from the current set of completely disparate development environments, AND how much training will be required?? No doubt, this will add to the challenge of moving to System 9.   


Other Announced Enhancements  

As per the recent user conference, Hyperion will focus on the following areas in the upcoming release: 

  • Business language search for simplicity and ease-of-use (see below) – OK, like everyone else.. 
  • Prescriptive metrics for guided analytics – not sure where and how they will do this… 
  • Adaptive visualization for personalization – Again, not sure what this means, but everyone is improving visualization. 



Skinny on Upstream  

Hyperion’s acquisition of UpStream provides financial data quality. UpStream provides a data readiness and guided workflow application for tracking the movement of financial information from source to report. UpStream software supports data collection and transformation, internal control, repeatable financial processes and audit trails back to the source systems. UpStream’s data quality workflow platform — WebLink DM – allows organizations to control and track data utilization back to source systems. WebLink DM automates business workflow processes that incorporate strict integrity controls required for verifiable financial data quality processes. WebLink DM moves data from multiple source systems, transforms the data, and then loads it into a customer’s analytical applications — including Hyperion BI applications – through a repeatable, defined workflow. The product provides a comprehensive audit trail to address Sarbanes-Oxley requirements. 


The acquisition fills a key capability gap for Hyperion in data quality and auditing capability needed for SOX compliance. While Oracle and Business Objects have their own robust and broad DQM capabilities, which can match the functionality provided by Upstream, this acquisition provides niche Financial Data Quality Management capabilities, specifically, which will be attractive to Hyperion’s traditional Finance target customer base. Hyperion hopes that the purchase will accelerate migrations from Enterprise to HFM. It is unclear whether or not Hyperion/ Upstream will continue to support 3rd party data quality tools. 

   Upstream Acquisition Positive Comments 

  • Focus on the Financial DQM problem and provides enabling capability specifically for SOX and HIPPA 

  • DQM offering for business users 

  • Complementary to other Hyperion products; little overlap 

  • Upstream supports both process-oriented compliance (i.e., automation of financial data-quality workflows) and also feedback-oriented compliance (i.e., provision of a comprehensive audit trail on these workflows) 
  • Adds a differentiator for Hyperion CPM products 

   Upstream Acquisition Negative Comments 

  • With this acquisition, there are potentially multiple workflow technologies/ environments in Hyperion’s portfolio. Hyperion has not yet announced plans to rationalize these. The existence of multiple environments (BI, CPM, MDM) would make achieving a single source of truth difficult. This would constitute a significant rearchitecture and future migration issues for Hyperion customers 
  • No indication of whether or not the Upstream will continue to support 3rd party DQM products 

·         The niche financial data quality offering confirms Hyperion core target customer base, Finance. The acquisition does nothing to rescue Hyperion’s relatively unsuccessful attempts to make inroads into other departments within the organization, which has effectively limited Hyperion’s applicability as an enterprise CPM platform.

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