Q&A: Hyperion’s CEO on business intelligence, IT governance

Jeffrey Rodek also talked about the return of BI portals

Hyperion Solutions Corp.'s user conference in Chicago this week drew more than 3,000 customers to talk about business performance management software and its impact on how their companies manage finances and comply with new government regulations. With its acquisition of Brio Software last year, Sunnyvale, Calif.-based Hyperion expanded its user base from 6,000 to 9,000 customers worldwide.

Computerworld editor in chief Maryfran Johnson caught up with Hyperion CEO Jeffrey Rodek at the conference to talk about the expanding business intelligence market, the return of dashboards and how IT governance is changing.

What has changed in the business intelligence market that's made this such a high-interest topic and the focus of so many IT projects in 2004? Three things. First is the frustration over ERP installations, which around Y2k companies spent so much on and will admit they wasted so much money on there. When they put these ERP systems in, they had no insight into their business. They had lousy reporting, no profitability analysis, etc. Second would be the power and interoperability of the solution sets [in the market] around business performance management, or BPM. Third, it's a renewed interest in growing the business—not just cutting costs—but growing it in a smart way. People are realizing, "If I could be planning more proactively, doing my reporting, my dashboarding and getting to that 'single version of the truth, I could stay on top of my business better.'"

Isn't the spending on BI software also prompted by concerns about regulatory compliance? Yes, but above and beyond regulation, it's just good governance. That requires better insight into the company, better sharing of information. You have boards [of directors] requiring more information of management, and you certainly have more reporting to meet these regulations, so you have to have more clarity.

How do you see IT governance changing from, say, three years ago? There's more of a recognition now of getting out of spreadsheet hell, where companies recognize they've unconsciously chosen Excel, which is a great desktop personal productivity tool, as their enterprise software. But the spreadsheets aren't linked, and you often don't know where the data came from, and you can't collaborate. Under Sarbanes-Oxley 404, all the key data that could impact how you value an organization needs to be handled by a proper process. IT will be very much involved in that.

Hyperion CEO Jeffrey Rodek
Hyperion CEO Jeffrey Rodek

When it comes to using BI or other business performance measurement tools across the enterprise, what kind of impact are you seeing on the relationship between the CIO and the CFO? Today, these larger enterprise systems—whether it's our Essbase or a large [financial] consolidation system—are often IT's way into the business. So IT is part of the evaluation, part of the solution and ends up partnering with the CFOs. The CFOs realize that if they're going to be change agents for their companies and affect things other than just for the finance people, they need their partner, the CIO, to help them do that.

You mentioned the importance of interoperability—meaning beyond Hyperion's own products? Yes, the whole area. There's a recognition that BI as a category is expected to play well with others, and that's been its forte for a long time. Another data point to consider is that most companies are still dealing with a number of big transactional vendors. Think of the average company, and where's your HR data? In Peoplesoft. Where's your general ledger? In the U.S., it's in Oracle; in Europe, it's in SAP. Where's your supply chain information? Manugistics. Where's your customer data? Siebel. Though in Asia, it's in Salesforce.com. You start mapping that out—all these sources for this information—and you see that to do what we do, you have to be interoperable with all these systems.

Do you think customers are all that clear on the distinctions between BPM software and BI? Do they even care? Not yet, no. People use different terms to describe this whole area, and sometimes they say BPM, but a lot of times they don't. What they do say is, "I want more accurate data, I want to get better insight" or "I want the ability to plan and model on the fly." All of that is business performance management. To do BPM, you need to do rolling forecasts, financial consolidation, customer and product profitability calculations. You can't just say "sales by customer"—which is what people think of when they say BI.

Hyperion has about three times the market share in the financial planning and BPM market as your closest competitor. Doesn't that set you up as an attractive acquisition target by, say, Oracle? Hyperion is a public company, so if someone comes to me with a great offer, I have to listen. But we believe that customers want a degree of separation and independence between their transactional system vendors and their BPM software. We don't think we need to be acquired to be successful. There will be consolidation, of course. We bought two companies in the last 12 months. It's the nature of the business.

All this talk about the tech spending upturn lately—are you seeing evidence of it? I think it's a little bit real. The bigger thing for us is to grab a bigger market share and not just wait around for the total IT spend to go up. There's no reason we can't get to be three times as big as we are today, but we're such a small piece of total technology spending, which includes staffing, call centers, infrastructure, software and hardware. A lot of the IT spend is labor, and that's what's really been going down, with all the outsourcing going on. The software spend, I'm feeling pretty bullish on.

BI "dashboards," or portals, are gaining momentum as a way to deliver information and business metrics to various employee groups, but many companies struggle with the cultural issues of getting users to actually adopt them. Do you see that with your own customers? Yes. You see it in two ways. One is in trying to wean them off that spreadsheet. They say, "Don't take away my Excel!" So with a lot of the dashboards, you make them look like Excel. The second, bigger thing is the cultural transformation. One of the presentations here at the conference, for instance, was on dashboards for the sales force. At first, when the sales force saw the dashboard, they thought it was great. Then they started realizing how the executives could look at it and see everything in their pipeline—by category, by customer, by product, by partner. That was a big change.

Copyright © 2004 IDG Communications, Inc.

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