HOT TOPICS: Customer Experience Marketing Automation Social Business SharePoint 2013 Document Management Big Data Mobile DAM

Digging Inside Oracle's Acquisition Strategy

customer experience, Digging Inside Oracle's Acquisition Strategy

Oracle’s latest acquisitions show it believes Software-as-a-Service (SaaS) is for real, that CRM is a major growth space and that it must strengthen its cloud-based applications, analysts told CMSWire.

In December, Oracle, one year after it announced its $871 million buy of marketing automation company Eloqua, announced plans to acquire marketing cloud player Responsys for $1.5 billion

And last month, Oracle, led by CEO Larry Ellison (pictured left) scooped up marketing technology specialist BlueKai for what some say is an estimated $350 million to $400 million deal. 

“The big picture is they clearly see an opportunity to establish themselves as a major force in two places,” said Tim Jennings, chief IT analyst who covers Oracle for Ovum Research. “On a macro level, it’s the broad customer experience space, and specifically, the marketing world.”

Customer Experience Wins

The Responsys and BlueKai grabs create for Oracle a “pretty substantial portfolio of marketing and customer experience,” Jennings added. Further, it enables Oracle to become a force in the enterprise applications arena, and “they see it as a space where they’ve got an opportunity" to steal some pork from SAP and others.

Oracle wants to “outstrip their big competitors in this enterprise app space,” Jennings said. Oracle’s goal has also been to build a strong portfolio of cloud-based applications, and most of these recent acquisitions play into that space, Jennings said.

“If you look at Oracle Fusion Middleware — how do they move that into the cloud?” he asked. “They’re in the process of doing that.” 

Andrew Bartels, who covers Oracle for Forrester Research, said tech vendors like Oracle acquire companies to either fill out the portfolio of what they already offer their existing customers, or to acquire new customers.

“Oracle has emphasized in its history one or the other and in some cases both,” Bartels said.

With acquisitions like Siebel (2006), PeopleSoft (2005) and BEA (2008), Oracle made those deals to acquire clients and revenues.

“There was some technology involved,” Bartels said, “but by and large it was secondary. There was the potential to sell products to those clients … and maybe convert them to Oracle.”

At the same time, Oracle’s not “forcing” new clients to convert. It’s learned its lesson from the “hostile” takeover of PeopleSoft, which included an attempt from the US Government to block the merger based on antitrust issues

Now, Oracle is not “forcing the issue” when it comes to client converts — and it’s been Oracle's “stated policy" since the PeopleSoft merger nine years ago.

Technology that Meshes

Chad Eschiner, Gartner’s lead Oracle analyst, told CMSWire Oracle’s acquisitions strategy has focused in areas such as database, business intelligence, middleware, data integration, master data management, security and systems management.

“They’re rounding out their capabilities where it would have taken too long to reinvent,” Eschiner said. 

Through its acquisitions, Oracle wants technology that is sound from an infrastructure functionality and technical standpoint. It also must have a decent install base or the ability to work with Oracle’s existing install base.

With an acquisition like Endeca in 2011, Oracle applied technology across a large variety of its existing applications, “allowing them to enhance their functionality.”

A main driver today with some of Oracle’s acquisitions, Eschiner also noted, plays into the surge in CRM applications. Eschiner said the CRM market is getting close to the perhaps ERP in size. “Everybody’s rushing toward more CRM solutions,” he said.

Oracle’s also interested in filling gaps in a vertical sense, with acquisitions such as ClearApp (clinical trials, 2008), Acme Packet (communications and media, 2013) and Tekelec (communications and media, 2013). “If Oracle sees a particular need within an industry to fill a gap it will go out and acquire,” Eschiner said.

SaaS Focus

A major part of Oracle’s acquisition train, Bartels said, is its dive into SaaS. Oracle has realized “SaaS is real, after many years of Ellison pooh-poohing it,” he added. “Oracle’s made a number of acquisitions to bolster its capabilities in the area of SaaS.”

Bartels cited as examples the 2012 grab of Taleo and the big Eloqua deal

“The dominant pattern in the last two to three years of acquisitions are acquiring vendors who have both a specific function Oracle feels is weak in its own portfolio and also those who are SaaS vendors,” Bartels said. “They’ve done a 180 and come to the recognition that SaaS is real, and multi-tenant SaaS is what they need to do.”

In his company’s latest earnings call, for Fiscal Year 2014 Q2, Ellison said bookings for Oracle’s cloud applications grew strongly at 35 percent, “reflecting a continuously improving win rate versus the new generation of SaaS specialist.”

He said engineered systems bookings also grew rapidly: 34 percent.

“We think,” Ellison said, “these three product areas — database, cloud applications and engineered systems — will drive Oracle's growth in calendar year 2014.”

 
 
 
Useful article?
  Email It      

Tags: , , , , , , , , , , , , , , ,
 
 

Resources

 

Featured Events  View All Events | Add Your Event | feed Events RSS