Welcome!

Mobile IoT Authors: Zakia Bouachraoui, Pat Romanski, Yeshim Deniz, Carmen Gonzalez, Liz McMillan

Related Topics: Recurring Revenue, @CloudExpo

Recurring Revenue: Blog Post

Oracle Mergers & Acquisitions: Who’s Next?

I’ve identified the following five target criteria that I think Oracle will stick to in any blockbuster deal

Beginning in late 2004 with its acquisition of PeopleSoft, Oracle initiated an acquisition campaign that has brought over forty companies into the Oracle fold. During that time, Oracle has made five multi-billion dollar acquisitions – about one per year – all of which have made for big news in the ERP software market.

But which company will be next? I would argue that there is a logical way to analyze Oracle’s recent decisions and define a set of strategies that have not only guided past acquisitions but may also tell us where Oracle is headed. Below is a chart that displays the size of each acquisition Oracle has made in the past five years as well as the layer of the technology stack into which that acquisition would be placed.

Based on this data, I would argue that the motivations behind Oracle’s major acquisitions are:

  • Grow market share leadership in key enterprise markets;
  • Expand profitability by consolidating high-margin support revenue; and,
  • Increase strategic relevance by offering a complete technology stack.

Each of Oracle’s five blockbuster deals met these requirements. Peoplesoft, Siebel and Hyperion all bolstered Oracle’s market share position in the applications market while contributing captive customer bases that pay highly profitable support fees. BEA Systems was particularly strategic given its leadership in the middleware market – an increasingly critical part of the Oracle strategy given the need to integrate so many applications. Finally, Sun Microsystems brought recurring support revenue but was most interesting because it demonstrated Oracle’s willingness to move into a major new layer of the stack – servers and storage (including hardware).

With these requirements in mind, we can begin to consider what Oracle’s next move will be. However, it is important to establish a framework that keeps our ideas from getting too radical. Toward that end, I’ve identified the following five target criteria that I think Oracle will stick to in any blockbuster deal:

  • A large customer base with substantial recurring support revenue;
  • A leadership position in an enterprise technology market;
  • Relevance to Oracle’s integrated technology stack strategy;
  • An accretive pro forma combination, assuming cost synergies; and,
  • A valuation that represents up to 20% of Oracle’s valuation, no more.

Among the companies that meet these requirements and should be taken into consideration are:

  • Teradata. This data warehousing and business intelligence (BI) play would check a lot of boxes, augmenting Oracle’s strength in databases and BI. Moreover, Teradata brings strength in key verticals. At 21x P/E, the price might work.
  • Sungard. This very large applications vendor and its various business units bring leadership positions in a range of vertical markets. The company was taken private a few years ago by savvy private equity investors, so an exit event is likely just over the horizon. However, Sungard brings a large services organization that might not be Oracle’s thing.
  • F5 Networks. If Oracle wants to strengthen its application delivery and data center story, F5 would be an interesting step. The company’s application delivery and networking systems would provide a growth vehicle in the networking layer.
  • Allscripts. The healthcare market is hot as providers adopt electronic health records (EHRs) to meet government requirements. Allscripts is the biggest player in the EHR market and is a consolidator itself. Its recent move to acquire Eclipsys, as well as its rich valuation, might take Allscripts off the table.

To see the full list of fourteen potential targets I have suggested, as well as participate in our “Which company will Oracle acquire next?” poll, be sure to visit the full article here.

Read the original blog entry...

More Stories By Stephen Jannise

Stephen Jannise is ERP Market Analyst at Software Advice. He writes about various topics related to ERP software, with particular interests toward manufacturing, distribution, and supply chain management. He came to Software Advice after graduating from The University of Texas at Austin with a master's degree in communications, and he blogs about films at AustinCinephile.com.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
IoT is rapidly becoming mainstream as more and more investments are made into the platforms and technology. As this movement continues to expand and gain momentum it creates a massive wall of noise that can be difficult to sift through. Unfortunately, this inevitably makes IoT less approachable for people to get started with and can hamper efforts to integrate this key technology into your own portfolio. There are so many connected products already in place today with many hundreds more on the h...
The standardization of container runtimes and images has sparked the creation of an almost overwhelming number of new open source projects that build on and otherwise work with these specifications. Of course, there's Kubernetes, which orchestrates and manages collections of containers. It was one of the first and best-known examples of projects that make containers truly useful for production use. However, more recently, the container ecosystem has truly exploded. A service mesh like Istio addr...
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Charles Araujo is an industry analyst, internationally recognized authority on the Digital Enterprise and author of The Quantum Age of IT: Why Everything You Know About IT is About to Change. As Principal Analyst with Intellyx, he writes, speaks and advises organizations on how to navigate through this time of disruption. He is also the founder of The Institute for Digital Transformation and a sought after keynote speaker. He has been a regular contributor to both InformationWeek and CIO Insight...
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
To Really Work for Enterprises, MultiCloud Adoption Requires Far Better and Inclusive Cloud Monitoring and Cost Management … But How? Overwhelmingly, even as enterprises have adopted cloud computing and are expanding to multi-cloud computing, IT leaders remain concerned about how to monitor, manage and control costs across hybrid and multi-cloud deployments. It’s clear that traditional IT monitoring and management approaches, designed after all for on-premises data centers, are falling short in ...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence. Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busine...