Oracle Fuses BI, Performance Management

Oracle has maximized its PeopleSoft and Hyperion acquisitions by creating a hybrid business intelligence/performance management application. The company views it as a two-pronged attack on the market.

Its Oracle Enterprise Performance Management (EPM) System is a component of Oracle Fusion Middleware. It integrates performance management applications and technologies from Hyperion, which Oracle bought in March 2007, and BI applications and technologies from Siebel, which Oracle bought for $5.85 billion in September 2005.

The EPM System targets two totally different markets with different buying preferences. It integrates performance management and business intelligence, or BI , technologies from Hyperion into Fusion Middleware. Oracle bought Hyperion in March 2007.

The EPM System is “the first and only system bringing together performance-management applications with BI applications on a common foundation,” says John O’Rourke, senior director of the Oracle EPM Global Business Unit.

These Hyperion technologies include Oracle’s scalable BI foundation and Oracle Applications. EPM also features Oracle Hyperion Profitability and Cost Management, a new performance-management application that provides detailed views of cost and profitability drivers in an organization.

In addition, EPM allows enterprises to clearly see which products or lines of business are profitable so they can better plan their strategies.

According to O’Rourke, the application provides reporting analytics as well as forward-looking modeling, forecasting and predictive analytics. He said it will draw data from Oracle and non-Oracle sources, including SAP.

Direct costs

The Oracle Hyperion Profitability and Cost Management application lets enterprises understand all direct costs associated with a product or function and allocate them accurately with traceability maps. It not only shows the standard cost of manufacturing and selling a product, but also other overhead, such as IT organization costs, and costs of finance, sales, marketing and human resources.

Management can then allocate these costs to products or business segments. Traceability maps, which are a visual representation, let line managers see where costs came from, as well as how they are calculated and allocated to their cost centers.

“Line managers get profit and loss statements for their product lines, but these are usually black boxes,” O’Rourke said. “You can’t see the details behind the cost allocations. Traceability maps, which are unique to Oracle, solve this problem.”

This ability to understand the full spectrum of costs in detail is critical, Andi Mann, an analyst at Enterprise Management Associates, told “We always talk about aligning IT with business and how much more can you do that than with cost management,” he said. “Everyone’s doing performance management, change and configuration management, and so on, but cost management is fundamental.”

In addition to components from Hyperion and Fusion, the EPM System incorporates Essbase Studio, a new wizard-driven design environment for Oracle Essbase. It also has a new calculation tool, which lets businesses graphically design, validate and administer business rules across planning and financial consolidation applications. The product also has feature for administration and life cycle management across the system.

Enterprises can purchase the EPM System’s components together or separately. This is key, as “people aren’t buying EPM suites, just like they aren’t buying other suites from Oracle or any vendor,” Mark Smith, an analyst at Ventana Research, told

Next page: Problems ahead?

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Problems ahead?

Smith foresees other problems for Oracle. One is competition, which abounds in both the BI and performance arenas. “Oracle, SAP, IBM, Microsoft, IBI, Microstrategies, all have BI products and the list goes on and on,” he said. “Then there’s the SaaS players and the smaller vendors selling into lines of business.”

Another problem is that people just aren’t buying large suites. “With the economic challenges and IT going into cost reduction, suites won’t make it,” he said. “You have to solve a specific problem.” Also, BI suites are considered complex because they take a lot of time to bring up and deploy.

Oracle’s track record is another issue, according to Smith. “A lot of cost and management functions need specialized people, so you have to get it to the right skilled individual in the right business area, and Oracle’s had problems in that area,” Smith said.

Finally, Oracle may have jumped the gun because most organizations are not yet ready for a product with this level of sophistication. “Two-thirds to three-quarters of organizations still use spreadsheets for these functions,” Smith said. “Is that a good idea? No. But that’s the reality, and they’ll continue to use spreadsheets.”

*Correction clarifies the makeup of Oracle’s EPM System

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