You know how these things start. Someone hears something from someone who heard it from someone else.
Suddenly, you have a major story. Maybe.
The current something that is doing the rounds since late last night is that Oracle is in discussions with Micros Systems with a view to taking over the Point-of-Sale (POS) vendor for… wait for it … $5 billion.
If this comes to pass, it will be one of the biggest, if not the biggest, acquisition in terms of price this year. Again, its only rumors so far and there’s a long way to go before it’s a done deal.
Even if we don’t like to repeat rumors here, in this case it’s worth mentioning especially as it seems that Oracle CEO Larry Ellison himself is directly involved, according to unnamed sources that are being cited on the financial news wires.
Why Oracle and Micros Fit
Micros Systems makes point-of-sale (POS) hardware and software for restaurants and hotels. But the real interest here is data. R "Ray" Wang, principal analyst and founder of Constellation Research told CMSWire:
The battle for POS is not about the transactions but the POS data when told of the potential deal. The data in these systems are key to building digital businesses especially in hospitality. Micros will add to the Retek enterprise, the customer cloud and other areas key to delivering the end to end retail experience."
For Tim Jennings, Chief Research Officer at OVUM IT, the move is a logical one and fits in with Oracle’s current applications strategy.
Much of Oracle’s applications growth strategy has centered on vertical applications, so the addition of an additional (and complementary vertical) is a logical move."
However the recent priority has been for Oracle to acquire (often smaller) companies with pure play cloud-based solutions. Micros Systems doesn’t fall so neatly into that category it does dovetail well though with a growing sector, has a large client base into which Oracle can sell a range of solutions, and ticks the boxes for trends including customer experience, mobility and data-driven business."
However, it has to be kept in mind that at the end of the day, Micros is about POS for the hospitality and restaurant verticals and for Forrester's Peter Sheldon, vice president and principal analyst, serving e-Business and channel strategy professionals, this deal, if it happens, is about hospitality software and nothing else.
Some press articles have hypothesized that Oracle would make this acquisition to bolster their SaaS presence and eCommerce technology. I don't believe these calls to be valid, as the majority of the Micro's portfolio is traditional on-premise software (rather than SaaS) and Oracle already has a best-of-breed eCommerce platform (ATG) that is superior to the technology that Micros has."
Instead I believe this is about making in-roads into the rapidly growing hospitality and restaurant verticals where Micros has a dominant position. These industries are undergoing a digital revolution as restaurants roll out tablet ordering and online reservations while hotels, cruise lines, event venues etc invest in CRM and digital sales tools."
Furthermore, Micros has an impressive set of retail clients using it's POS software which would nicely complement and provide growth for Oracle's own retail customer base. With some product consolidation between Oracle retail and Micros, Oracle would be able to up-sell existing Micros retail clients into the Oracle retail and e-commerce stacks."
Needless to say neither Micros nor Oracle are saying anything about it, but the deal wouldn’t be a surprise by any stretch of the imagination. It has also emerged that Oracle made a bid to buy Micros six years ago but the deal never got signed off.
If Oracle has put Micros on the back burner since then, its current sluggish finical performance, much like other big IT companies, is forcing a rethink of its business strategy.
While IBM and Microsoft have both shaken their businesses up a little bit to try and kick start sales again, Oracle has yet to do the same. Micros, though, may just be spark it needs.
Besides if Micros is a selling kind of mood and Oracle doesn’t go for it, then there are others that could, or even might, and that wouldn’t be good for Oracle.
In particular, there is SAP and IBM both of whom have the pockets, and both of whom have potential interest particularly IBM with its WebSphere e-commerce platform, which would benefit greatly from a best-of-breed POS application.
It would also keep Micros out of the hands of either Demandware or NetSuite, both of which are devouring vendors that offer any kind of sales applications and which shoot come across their respective radars.
Micros’ shares were climbing skyward in afternoon trading today, a sure sign that there is more to this than just rumor, while Oracle was also enjoying a small movement in the right direction. This is could develop very quickly so pay attention.