Hyperion Software Corporation History
Stamford, Connecticut 06902
Telephone: (203) 703-3000
Fax: (203) 595-8500
Incorporated: 1981 as Information Management Reporting Services
Sales: $222.83 million (1997)
Stock Exchanges: NASDAQ
SICs: 7372 Prepackaged Software
Improving Customers' Financial Performance Through Analysis. Analytic solutions from Hyperion Software enable companies to improve financial performance by maximizing the value of information. Hyperion's market-leading, Internet-enabled applications support and enhance enterprise-wide financial processes including planning, budgeting, forecasting, accounting, consolidation, and performance analysis. Hyperion is recognized for outstanding customer service and rapid, successful implementations.
Hyperion Software Corporation is one of the world's leading providers of financial software. It ranks first worldwide in budgeting software revenue and third worldwide in client/server accounting software revenue. Some 3,000 businesses and organizations, including 50 percent of the Fortune 500, use its high-tech products for analyzing their present finances, planning future earnings, and studying past growth as a means of predicting growth to come.
In the old days, a company might have hired a financial analyst, but in the frenetic business climate that evolved in the late 20th century, it became necessary for a number of people along the corporate ladder--not just a single analyst&mdashø understand aspects of the company's financial picture. Packages and applications from Hyperion offer users the ability to consolidate the various parts of their financial database and work on solutions together, thus facilitating a much greater degree of responsiveness to changing business conditions. In the fast-moving world of global commerce, it was not surprising that Hyperion's growth was similarly meteoric: from $66 million in annual revenues during 1993 to almost four times that much in just four years.
Beginnings As IMRS
Robert Thomson formed the company that would become Hyperion in 1981. Thomson, a native of Scotland, had worked for Citicorp in London before coming to the U.S. While employed by the multinational bank, he had begun to see the need for improvement on the old methods of providing financial information via computers. Up to that time, such information had been delivered by a method called time-sharing, the use of a large mainframe server to provide data. Time-sharing was cumbersome, and required the extensive involvement of a company's information services (IS) or information technology (IT) departments.
Thomson realized that if he could develop a software product that would make it possible for a number of users to access financial data via their personal computers rather than a mainframe, companies would pay to access this type of technology. Out of this inspiration came a company, which Thomson named Information Management Reporting Services or IMRS. (By 1985 the acronym would become the name, and the company would drop the lengthier title for which it had originally stood.)
The first product produced by IMRS was Micro Control, which it began selling in 1983. Micro Control could be described as second-generation financial software, because it used the emerging computer technology of networks rather than mainframes. Whereas a mainframe was a single all-important server accessed by terminals that only allowed for limited input of data, networks offered users the opportunity to link autonomous personal computers or PCs. It was like the difference between requiring an operator to place a call, as the first telephone users had to do, and being able to dial a number directly.
Perakis Makes His Mark
In 1985, Thomson asked James A. Perakis to come on board. Forty-one years old at that time, Perakis had worked from 1979 to 1983 as chief financial officer of Interactive Data Corporation, a company that like IMRS supplied data and software to the financial world. After serving for two years as senior vice-president and general manager of Chase Decision Systems, an Interactive Data subsidiary, Perakis in September 1985 joined IMRS as a director and CEO.
As Perakis recalled in an interview with Management Accounting a decade later, some venture capitalists of their mutual acquaintance had introduced the two men because Perakis's skills offered Thomson an opportunity to make use of professional management in order to grow the company. And grow they did, though they agreed that they would do so "slowly and carefully," especially since "The business was generating cash, so there was no need to roll the dice."
In 1986, Perakis put a direct-sales force into operation marketing Micro Control. Under his direction, they sold the product as the solution to a number of needs, not just a means of reporting financial transactions. Like Thomson before him, Perakis had seen that their product could perform an important function for businesses, but he took it a step further, observing that the old mainframe system placed enormous demands on a company's IS department to analyze data and produce reports. Micro Control promised to take the burden off IS while delivering information more quickly and with greater efficiency.
A Critical Juncture
Perakis in 1987 took over as president from Thomson, who remained a member of the board of directors. Around this time, the company came to what would turn out to be a crucial turning point, though no one--Perakis included--realized it then.
In the area of hardware, Micro Control was made for PC-based systems linked in local area networks (LANs), and this was clearly the wave of the future in 1987 and 1988. But what about a software platform? DOS, long the standard operating system for IBM-compatible software, had seen its day, and makers of applications such as Micro Control were at a crossroads as to whether they would go with OS/2 technology or Windows-based systems.
IMRS chose Windows, and that made all the difference. Perakis, however, was quick to admit that the all-important decision was due more to the input of users rather than any sort of prophetic gift regarding the future of operating systems. Users of Micro Control had evaluated OS/2 as cumbersome and expensive, and they judged Windows more efficient.
Therefore in 1989, IMRS produced its first Windows-based product, OnTrack, and soon afterward began re-creating Micro Control as a Windows application. During the same year, the company purchased the FASTAR product line from competitor Hoechst Celanese, and in 1991 it went public on the NASDAQ. Clearly IMRS was poised for takeoff, and there was just one thing holding it down: its name.
Soaring with the Sun God
Perakis, who called the IMRS name "a handicap," believed that in conjunction with the move to Windows technology, the company could effectively relaunch its products with a newer, sexier brand name. Seeking to highlight the hypertext capability of OnTrack, which allowed a user to access information about a particular topic simply by clicking on the title of that topic, Perakis went looking in the dictionary for words which began with hyper-.
There he found the name of the titan Hyperion, a quasi-divine figure from Greek mythology who ruled over the sun, moon, and stars. Whereas "IMRS" was a liability because it was not memorable, the name Hyperion stuck in people's minds, and that was why, four years later, the entire company changed its name to Hyperion. After the February 1995 name change, Perakis observed, "I think we have more equity now in the name Hyperion than we did in the name IMRS over its 14 years."
Meanwhile, Hyperion grew rapidly, both in its annual sales and in its worldwide presence. In 1994, it acquired the Pillar Corporation and its product line, as well as a Scandinavian subsidiary, and established development offices in Beaverton, Oregon. Sales grew at the staggering rate of more than 40 percent a year: from $66 million in 1993 to $94 million in 1994 to $137 million in 1995. By 1996, the rate of increase dropped as sales grew to $172 million, but in 1997, the growth picked up again as it climbed to more than $222 million.
On June 4, 1996, Perakis turned over the role of president to Peter F. DiGiammarino, 42 years old. The latter also took on a newly formed chief operating officer position and became a director on the board, while Perakis maintained his dual role as chairman and CEO.
The company caused a big splash with the introduction of its online analytical processing (OLAP) software in 1996, and the stock market responded favorably to a May 1997 announcement of a strategy to integrate its programs with the Microsoft BackOffice suite. Two months later, in July, Hyperion scored an international distribution coup by entering into a sales agreement with the Baan Company, a Dutch software marketer, for the remarketing of its software solutions.
Strategic alliances have been, and continue to be, a key element in Hyperion's growth strategy. On October 29, 1997, for instance, the company entered into a partnership with Mincom, a Brisbane, Australia-based software maker. Also on that day, it formalized its Alliance Network into three categories: Software Alliances such as the one with Mincom; Technology Alliances with companies that assist it in being able to deliver a higher standard of solutions to its customers; and Service Alliances such as an agreement with the "Big 6" accounting firms, whereby all elements work to study customers' needs and develop integrated solutions.
Poised for Continued Growth
Over the years, Hyperion has built a number of product and service lines, among which are Hyperion Enterprise, Hyperion Pillar, and Hyperion OLAP. Hyperion Enterprise is an application for consolidating business information and reports, bringing together numerous ledgers into a single unified whole. Development began in mid-1988, and the product debuted in July 1991. In the three years leading up to 1997, when Hyperion released its fifth edition of Hyperion Enterprise, the product accounted for some 60 percent of the company's worldwide revenues.
Hyperion Pillar is a flexible Windows-based solution that allows users to import and export materials to and from virtually any financial software system. As its name suggests, it is made for up-and-down integration and interaction within a corporate financial structure, enabling users to build their budgets from the ground up. Starting with a series of line items, the budget comes together in a method modeled on the way people actually think, using units, rates, and amounts piece-by-piece to arrive at a comprehensive whole.
Hyperion OLAP, released in April 1996, offers users the ability to implement multidimensional analysis for solving such complex problems as how to increase product line profitability by making incremental changes here and there. "Multidimensional" means just that: whereas most spreadsheets are two-dimensional, in the shape of a graph or at best a three-dimensional cube, Hyperion OLAP allows analysis in as many as 16 dimensions. Online access makes it possible for a number of users in various parts of the world to work with the data at the same time.
Perakis had promised in 1995 that accounting applications would be one of the company's primary areas for growth in the future, and in March of that year, Hyperion had already released the first of its accounting products. Made for ease of use, they allow users to "drill down," going from the top-line figures by successive steps to the raw data from which those figures were derived. Accounting products include Hyperion Ledger, Hyperion Reporting, Hyperion Tools, Hyperion Admin, Hyperion Payables, Hyperion Receivables, and Hyperion Assets.
The company produces several modules made to be used with a variety of its products, and one of the most notable is "Spider-Man," which debuted in August 1996. Like search engines on the World Wide Web, it is made to "crawl," in this case through a company's financial reports to provide an intelligent view of the data contained in them. Hyperion Analyst, released in April 1996, and Hyperion Schedules, a product introduced in November 1995, also provide specialized cross-application capabilities.
Hyperion markets services, including design consulting and implementation support for its products. The company also offers training to improve proficiency with its applications. Some of these services are covered in the annual software license agreement, whereby a customer pays a fixed percentage of the list price for which they bought the software in the first place, and in return receives ongoing customer support. Other services are charged on a time and materials basis. In the 1990s, Hyperion made approximately half of its money from new software licenses, and the other half from renewals of existing licenses and services.
The company has an active user group composed of outside people who use their products. They help Hyperion identify areas for improvement in its products, and make suggestions about how to enhance the solutions it provides. In 1997 the company held its annual conference for the user group in Orlando, Florida, with 2,300 people in attendance from more than 850 companies.
As of 1997, Hyperion had licensed use of its software applications to more than 3,200 companies. Among Hyperion's customers have been Aetna Life & Casualty, American Express, Bayer, BellSouth, Campbell Soup, Chase Manhattan, Eastman Kodak, Ford Motor Credit, Glaxco Wellcome, Johnson & Johnson, Lotus Development, Pepsi, Rockwell International, and UPS.
James Perakis, in his 1995 interview with Management Accounting, said that the greatest challenge for his company was to maintain its momentum. Though Hyperion did not continue in the late 1990s to sustain the wild rate of growth that had characterized the early part of the decade, it was by any measure a healthy enterprise with great promise. The future continued to look bright for the company that bore the name of the sun god.
Principal Subsidiaries: Hyperion Software Operations Inc.; Hyperion Software Corporation of Canada, Ltd.; Hyperion Software Europe S.r.l. (Italy); Hyperion Software Italia s.r.l.; Hyperion Software Foreign Sales Corp. (Barbados); Hyperion Software (U.K.) plc.; Hyperion Software Deutschland GmbH (Germany); Hyperion Softwarevertribs-Gesellschaft MbH (Austria); Hyperion Software France S.A.; Hyperion Software BeLux S.A. (Belgium); Hyperion Software Nederland, B.V. (The Netherlands); Hyperion Software Asia Pte. Ltd. (Singapore); IMRS Hyperion Software Iberica, S.A. (Spain); Hyperion Software Nordic AB (Sweden); Hyperion KK (Japan).
- Frye, Colleen, and Deborah Melewski, "Top 100 Independent Software Dealers: ... Hyperion Software Corp," Software Magazine, July 1995, p. 105.
- Greenberg, Ilan, "Hyperion Acquires OLAP Engine to Rev Up Enterprise Line of Financial Apps," InfoWorld, December 11, 1995, p. 46.
- Krill, Paul, "Solutions Arrive for Year-2000 Data Date Glitch," InfoWorld, January 6, 1997, p. 30.
- Stein, Tom, "Hyperion Adds OLAP," Informationweek, November 11, 1996, pp. 100--02.
- Teach, Edward, "View Masters," CFO: The Magazine For Senior Financial Executives, January 1997, pp. 47--52.
- Williams, Kathy, and James Hart, "Hyperion: Software Titan," Management Accounting, September 1995, pp. 75--78.
Source: International Directory of Company Histories, Vol. 22. St. James Press, 1998.