Oracle continued its consolidation of the business applications market today with the announcement it is to acquire business intelligence (BI) software specialist Hyperion for approximately $3.3bn.

Oracle chief executive Larry Ellison said the combination of Hyperion's performance management capabilities with Oracle's existing BI tools would allow the company to offer an end-to-end performance management suite "that includes planning, budgeting, consolidation, operational analytics and compliance reporting".

The company also hinted that the deal was designed to put the squeeze on arch rival SAP by targeting SAP customers that use Hyperion. "Thousands of SAP customers close their books with Hyperion," said Oracle president Charles Phillips in a conference call announcing the acquisition. "This is consistent with our other surround SAP products… we are achieving critical mass in SAP accounts."

Experts broadly welcomed the move, claiming that while Oracle has some BI functionality in its portfolio, it has lagged behind BI specialists such as Hyperion. "Oracle has been missing an enterprise reporting capability and Brio [which was acquired by Hyperion in 2003] would fill that gap," said Ian Charlesworth of analyst Ovum. "It also looks a better portfolio fit than Oracle's other apparent recent target, Business Objects, which has a lot of data integration technology that would have overlapped with Oracle's."

However, any acquisition would create some duplication of reporting tools because Oracle already has an online analytical processing (OLAP) product and analytics functionality it acquired from Siebel. "A bit of duplication has never stopped Oracle acquiring anyone in the past," said Charlesworth. "But it will be very interesting to see how they unpick the two portfolios, deal with the areas where there is duplication and fold the new products into Fusion [application integration] programme."

Concerns are also likely to be raised amongst Hyperion customers operating rival database systems. Pure play BI vendors, such as Hyperion, have long claimed their major competitive differentiator to BI suites from application vendors, such as Oracle and SAP, is that they are application and database agnostic and can work more effectively in heterogeneous software environments – a quality some customers may fear will be lost if Oracle controls Hyperion.

However, Charlesworth maintained that while such concerns were understandable, they were increasingly outdated. "If you are running Hyperion on IBM, it is a rational reaction to be concerned," he admitted. "But the whole story around Fusion is that Oracle's applications are meant to play with other vendors' software. A few years ago their fears would have been justified, but now Oracle has a much stronger story around supporting heterogeneous environments."

The deal is also likely to raise fresh questions about the future of other BI vendors, including Business Objects and Cognos, both of which have been the subject of merger speculation in the past. Long-standing rumours have linked IBM and HP with various BI vendors, and experts have claimed that the market is ripe for consolidation.