Has Oracle stopped making big acquisitions?
- 24 May, 2011 07:33
As midyear approaches, Oracle has made only two small acquisitions. This is out of character for a vendor that has made buying other companies a core growth strategy, doing as many as 13 deals each year since 2005, for a total of roughly 70 since then.
In February, Oracle picked up some intellectual property assets from privately held Ndevr, maker of software for environmental reporting and analytics, followed by last month's purchase of data quality vendor Datanomic. Sale prices were not disclosed in either instance, suggesting they weren't material to Oracle's bottom line.
Oracle's biggest acquisition in recent years was Sun Microsystems, a US$7.4 billion deal that closed in early 2010. Since then, Oracle has been working to shore up Sun's hardware business and started pushing a vision of integrated systems spanning from disks to applications.
While those efforts as well as the long-awaited Fusion Applications launch are likely keeping Oracle officials busy, it seems doubtful the company is through buying vendors.
For one, Oracle CFO Safra Catz referred to former Hewlett-Packard CEO Mark Hurd's experience "operating a $100 billion business" as a reason for bringing him aboard as co-president last year, and it seems unlikely that Oracle intends to get to such scale solely through organic growth.
However, Oracle may also be no longer interested in gaining scale by consolidating ERP (enterprise resource planning) vendors, as it did with high-profile purchases like PeopleSoft, which had previously bought JD Edwards. Some expected Oracle to make a counterbid for vendor Lawson Software in recent months, but original suitor Infor appears to be walking away with the ERP company in a $2 billion transaction.
Instead, Oracle is likely to focus its buying efforts in a few key areas, according to observers.
"Everyone and his brother" is going after technologies related to the open-source Hadoop framework for large-scale data processing, said Forrester Research analyst James Kobielus.
Oracle has probably been working on its own Hadoop capabilities for years, and possible acquisition targets include Datameer, KarmaSphere and Cloudera, which offer a variety of Hadoop tools and services, he said.
Oracle lacks products in a couple of other key areas, namely mobility and social software, said analyst Ray Wang, CEO of Constellation Research.
"There may be a shift in their portfolio [strategy] to pick up those things," he said.
To help its mobile application bona fides, Oracle could take a look at PaaS (platform-as-a-service) vendors such as Joyent or Engine Yard, according to Wang.
For social applications, Oracle has a wide variety of choices, among them oft-rumored acquisition candidate Jive Software.
Expect Oracle to focus on verticals as well, Wang said.
One certain focus will be health care, and not just for electronic medical records, Wang said. Oracle could target areas such as nurse recruiting and adverse event reporting for pharmaceuticals with analytic applications it builds on top of its core BI (business intelligence) stack, he said.
Oracle may not have just software on its mind, given the company's increasing emphasis on hardware.
Last year, Oracle announced a strategic investment in Mellanox, maker of Infiniband interconnects, but so far it hasn't made a big hardware acquisition.
Also, while few expect Oracle will invest heavily in professional services to compete with the likes of Hewlett-Packard and IBM, it could make smaller acquisitions of specialist systems integration firms, particularly for BI.
An Oracle spokeswoman declined to comment on the company's plans.
Overall, there's no telling whether Oracle's next phase of acquisitions will be as dramatic as its 2005-2010 run, but users of products in many categories should be braced for change.
When Oracle bought project management vendor Primavera in 2008, customers initially faced some problems, according to one user.
"There was a lot of confusion the first year, year-and-a-half because it wasn't clear where to go for support," said Daniel Williams, chairman of the Oracle Primavera Special Interest Group. Adding to the problem was that Oracle was upgrading its support site at the time.
Primavera customers also had to deal with "a lot of confusion with salespeople. It was not always clear who your Oracle rep was," he said.
The Oracle acquisition also spelled the end for Primavera's much-loved annual conference. Instead, Oracle welcomed Primavera users to its annual OpenWorld show.
"But it wasn't really the same thing," Williams said. "It was more of [a] sales and marketing type of conference."
In addition, "Oracle wants to sell their software to very large companies," he said. Primavera is used by enterprises, but very small companies as well, Williams said. "That's caused a lot of stress."
Some changes have been good since the Oracle acquisition, particularly in terms of product development, Williams said. "The service packs are coming out quicker, things are getting fixed and new features are getting added."
Things have also improved as Primavera customers formed relationships with other Oracle customers, Williams said. The Primavera SIG works closely with the Oracle Applications Users Group and Quest International Users Group.
Ultimately, customers who find one of their vendors acquired by Oracle should try to link arms with peers who use similar software products sold by the company, Williams said. That should help them transition to Oracle's way of doing business.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com