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News Analysis: Oracle Buys RightNow For $1.43B

Published on October 24, 2011 by R "Ray" Wang

The Acquisition Machine Heads To The Public Cloud

Users gathered at the Customer Summit 2011 at the Broadmoor Hotel woke up to the shocking announcement that Oracle (NASDAQ: ORCL) announced a $1.43B acquisition of leading SMB CRM vendor RightNow Technologies (NASDAQ: RNOW) today. According to Thomas Kurian, “Oracle is moving aggressively to offer customers a full range of Cloud Solutions including sales force automation, human resources, talent management, social networking, databases and Java as part of the Oracle Public Cloud,” said Thomas Kurian, Executive Vice President, Oracle Development. “RightNow’s leading customer service cloud is a very important addition to Oracle’s Public Cloud.”

A quick analysis of the acquisition reveals:

Oracle sees RightNow as an anchor in its public cloud strategy. RightNow signals the first of many acquisitions foundational to a market place strategy. CRM plays a pivotal role. Bozeman, Montana based RightNow brings over 2000 customers, and 10 billion transactions per year in volume. In fact, Kurian’s press statement hints at other areas that include anything from infrastructure to apps.

Point of View (POV): Oracle’s success in the public cloud will require more than just a multi-instance virtualized cloud offering. The lack of true multi-tenancy will prove to be a detriment to both customers and Oracle. Oracle will need to deliver a multi-tenant version of Fusion Middleware to provide customers with the full range of deployment option choices from on-premise, hosted, multi-instance, and multi-tenant. However, investors and customers should view the public cloud as more than an offering or technology play. In fact, this is Oracle’s new merger and acquisition vehicle.

Oracle pokes at Salesforce.com on the customer service side. While Salesforce.com would most likely not acquire RightNow, Oracle brings on a key customer service competitor to Salesforce.com and aligns it with the Oracle sales and marketing machine. Meanwhile, Oracle gains an emerging web experience and social experience product line to complement a robust contact center and solid customer experience suite.

Point of View (POV): With most of RightNow’s customers coming from the customer support side of the house, Salesforce.com will feel the heat in the market place. Despite the Assistly acquisition, Salesforce.com still has a lot of work to move the Service Cloud offering to par with competitors. Quite frankly, this is a direct attack by Larry Ellison to Marc Benioff in this space.

Oracle plans a long term customer experience play. Oracle’s previous acquisitions of FatWire, Endecca, ATG, and Sigma Dynamics signal a potential play to get serious about customer experience management. Oracle will need to re-purpose assets to the core CRM team to share in the innovation.

Point of View (POV): Social business, online experience optimization, and gamification represent huge holes in Oracle’s product portfolio. RightNow brings tremendous amounts of thought leadership to the table should Oracle retain the product teams. More importantly, the SMB focus will help Oracle bring in a new customer base.

The Bottom Line For Buyers: Proceed With Caution

RightNow customers should shore up existing contracts and extend maintenance and subscription pricing as far out as possible. As with most acquisitions, expect Oracle to raise rates to fund the acquisition. Customers and prospects should seek additional guarantees in product road map commitments and service level commitments.

The Bottom Line For Vendors: This Acquisition Makes Little Sense At First.

Vendors and competitors will most likely wonder why Oracle started this process with RightNow. As with the PeopleSoft and Siebel acquisitions in the past, competitors were caught off guard. Expect companies such as eGain, Moxie, Mzinga, Taleo, SuccessFactors, Zuora, Xactly, and others to be targets on the buy list. Had Oracle or another vendor rolled-up the SaaS vendors during the 2008 downturn, they would have only expended less than $1B for all the players smaller than Salesforce.com. Instead, cloud has now emerged as threat to legacy vendors such as Oracle. After waiting on the side lines for the right moment, Oracle now enters the ring and will do what it does best – acquire and assimilate innovation. In the long-term, Oracle will directly compete with Dell, Salesforce.com, and VMWare for the SMB market place via cloud.

Your POV.

Does this announcement surprise you? Are you a RightNow customer? Will you be ready to make the leap with Oracle? What has your experience with Oracle been post acquisition? Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

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Related Resources

20111024 IDG News Service – Chris Kanaracus “Oracle buys RighNow for about US $1.5B”

20111024 Wall Street Journal – Matt Jarzemsky “Oracle Buy Cloud-Based Right Now”

20111024 GigaOm – Barb Darrow “Why Oracle paid $1.5B for Right Now”

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Quick Take: Infor and Golden Gate Gain Definitive Agreement To Acquire Lawson For $2B

Published on April 26, 2011 by R "Ray" Wang

New Firm To Focus On Verticals And Growth Markets

Golden Gate Capital and Infor entered an agreement to acquire Lawson at $11.25 per share. The transaction is valued at $2B. Following the 7am ET press release, a conversation with Charles Phillips and Duncan Angove highlighted key elements of the deal:

Focus on growth. Infor sees an opportunity to cross-sell products from both companies into the existing 75,000 customer install base. Lawson’s HCM product line and Infor’s new release of Sun Systems Financials will provide the back office engine that was missing as independent companies. The firm expects two-tier financials to be a growth opportunity.
Commitment to vertical differentiation. Infor’s trengths in distribution, manufacturing, and hospitality will complement Lawson’s core in healthcare, financials, equipment service rental, and public sector. Charles and Duncan both provided compelling examples of how products from both companies could be used to solve industry problems such as nursing shortage and asset management in healthcare. Time and attendance, planning, scheduling, and analytics would come together to solve a difficult customer problem.
Investment in integration. The combined firm intends to focus on bringing applications together through integration. Initial thoughts are to achive a common customer experience. The engineering teams will begin with aligning ION to Lawson Process Platform. The goals – ensure that the common user experience layers are delivered adn bringing together common integration points.

More to come later in the day.

Your POV.

Does this announcement surprise you? Are you a Lawson customer? What do you think of an Infor takeover? What do you hope Lawson will do? Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

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News Analysis: Salesforce.com Acquires Radian6 For $316M

Published on March 30, 2011 by R "Ray" Wang

Salesforce.com Bets Big On Social Media Monitoring And Socialytics

Salesforce’s definitive agreement to acquire Radian6 continues the consolidation of 100′s of social software vendors in the marketplace. Radian6, a social media monitoring and customer engagement platform, provides tools for companies seeking to harness the power of social media and related social networks. Most customers utilize Radian6 for brand management and monitoring, sales and lead generation, Social CRM (SCRM), customer service, competitive intelligence, trend analysis, and crisis management.

The company’s focus on the enterprise has paid off with over half of the Fortune 100 deploying Radian6′s products and 1700 customers worldwide. Marquis customers include AAA, Dell, GE, Kodak, Molson Coors, Pepsico, and UPS. The deal represents a $256M cash and $50M stock offer. The following is a first take analysis of how Salesforce.com envisions applying the assets of Radian6 for its customers to:

Bring social analytics or socialytics to the Salesforce.com offerings. Sales and Service Cloud will gain new capabilities in social media monitoring and engagement. Today’s companies seek the tools to bring social customer strategies with existing CRM processes and organizational structures. A social media monitoring and engagement platform provides a critical tool for success in Social CRM (SCRM).

Point of View (POV): While this acquisition does not solve the lack of a good analytics platform in Salesforce.com today, a Radian6 acquisition delivers social analytics or socialytics capabilities for Salesforce.com. customers. Social media monitoring delivered by Radian6 provides the first step in the journey to engaging customers in social channels. Advanced users often find they need to couple a sentiment analysis tool such as Clarabridge, Lymbix, SPSS, or Textlytics to improve accuracy.

Because Salesforce.com customers have proven to be more cutting edge in adopting disruptive technologies, natural synergies will emerge among these CRM pioneers. Whether Salesforce.com can build an SCRM solution in parallel remains the bigger question.

Apply learnings to the Force.com platform. Salesforce.com hopes its developers will build new products using the Radian6 platform. The intent is to add social elements into future products.

POV: Force.com currently lacks the social graph required to build social software. Learnings from Radian6 should help the Force.com team identify the key additions to the platform required to enable social software development. Developers can expect these offerings to take at least 9 to 12 months to be incorporated into the platform. More middleware components will be required in the long run.

Build a bridge from Chatter to public social networks. Chatter today remains within the closed walls of the enterprise.Salesforce.com sees opportunities to apply Radian6′s engagement platform to expand the capabilities of Chatter. Expansion into public social networks opens new insights into the enterprise.

POV: Users seek feeds from Facebook, Twitter, YouTube, LinkedIn, and other social media. Radian6′s engagement platform can quickly be applied to expand Chatter. The integration will remove a key deficiency with Chatter, an inward only focus. However, Salesforce.com will have to ensure that the offering meets enterprise class standards and addresses the challenge of information overload in activity streams.

The Bottom Line: Salesforce.com Going After The Five Pillars Of Consumer Technologies For
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News Analysis: Infor Extends $1.84B Unsolicited Offer For Lawson

Published on March 14, 2011 by R "Ray" Wang

Unsolicited Offer Marks Chuck Phillips’ First Acquisition Attempt At Infor

On March 11th, St.Paul, MN, based Lawson announced that Infor and Golden Gate Capital made a $1.84B unsolicited offer. This comes after the March 8th news that Lawson retained Barclays Bank to evaluate options. An acquisition by Infor (the 3rd largest ERP vendor) and Lawson (the 6th largest ERP vendor) could result in:

New revenue streams for Infor. As with Lawson, Infor’s revenue mix heavily relies on maintenance revenue. Despite high estimated retention rates in the 95% range, its estimated that Infor has not successfully grown new license revenue at a rate and pace to keep up with retention losses. Infor must find new revenue sources to grow and cover its debt obligations while preparing for an anticipated IPO.

Point of View (POV): Lawson’s S3 offerings in human capital management (HCM) software, public sector, and healthcare provide the drivers for growth. Infor’s lack of a full HCM suite provides many opportunities for a cross-sell Lawson HCM and build on Infor’s Workbrain customer base. Infor’s Hansen public sector offering will deliver good cross-sell opportunities with Lawson’s Public Sector HCM and Financials offering. Healthcare will deliver overall incremental revenue growth.

Long term economies of scale for Lawson customers. Lawson earned $736.4M in revenues in 2010. Lawson’s acquisition of Intentia in 2006 was long and hard but provided a global presence and some economies of scale, especially in R&D. Lawson gained better user experience and a more complete offering through the M3 products. In general, the acquisition placed Lawson into the Top 10 of ERP vendors by revenue and was seen as successful. However, cross-sell opportunities did not materialize as intended in the North American market for M3 and for EMEA in S3. On the positive side, Lawson’s new distribution product resulted in big deals in a very under served market and created growth synergies between S3 and M3.

(POV): From a size and scale perspective Infor will provide significant scale for Lawson customers. As with the Intentia acquisition, scale could come from the R&D side of the house and of course back office efficiencies. Given the need to support a large maintenance revenue base, customers can expect continued investment in service, support, sales, and product. No acquiring vendor would be foolish enough to kill these areas. Both Infor and Lawson have made steps to adopt Microsoft .NET platforms and coordinated efforts in R&D should provide the necessary scale to advance the technology across the product lines.

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News Analysis: Salesforce.com Buys Heroku For $212M – Shows Commitment To Next Gen Apps

Published on December 8, 2010 by R "Ray" Wang

Acquisition of Heroku In Line With Platform Future of Salesforce.com

At Marc Benioff’s keynote, the CEO reiterated his commitment to 6 clouds: Sales, Service, Data (Jigsaw), Collaboration (Chatter), Cloud Platform (Force.com), and Database (database.com). As Salesforce.com continues to diversify its portfolio into adjacent markets, the platform as a service (PaaS) component remains a key area of emphasis. Without a strong developer ecosystem, the Cloud pioneer would relegate itself to a one-trick pony. Consequently, the recent VMforce announcement targeted the Java community. Now Salesforce.com seeks to win the hearts and minds of the Ruby ecosystem. This platform as a service (PaaS) acquisition is significant because Heroku:

Delivers the full Ruby platform. As a multi-tenant platform and hosting environment, Heroku keeps it simple and hides the complexity of servers, infrastructure, slices and clusters from users. Application code dynamically scales using a technology called the Dyno Grid. Using compiled slugs, a self-contained and read only version of code, Heroku addresses scalability and high availability for developers in a contained and self-managed system..

Point of View (POV): Next generation apps developers seek the simplicity of not having to manage servers and installs. PaaS options accelerate time to market for new solution. Cloud2 will require ultra fast elasticity and Heroku has proven this model out.

Serves the hot mobile and social apps market. With over 105,000 mobile and social cloud applications built on Heroku, Salesforce.com intends to provide the leading platform for next gen apps development. Heroku delivers the backbone behind many of the new consumer tech innovations.

POV: Future apps development and developers align more with the consumer tech world. Salesforce.com’s acquisition thrusts the cloud vendor into a new world of mobile and social apps. If successful, Salesforce.com will attract the next generation of developers.

Aligns with the database.com acquisition. Heroku’s pricing model is based on dynos, a single web process running code and responding to http requests. The more dynos used the more concurrency achieved. As users consume code, they increase database usage through a portfolio of options (see Figure 1.).

POV: database.com can fit neatly into the PaaS stack for Heroku users. The pricing model could prove complimentary for database.com and other Salesforce.com users.

Figure 1. Heroku Offers A Wide Range Of Database Options

Source: Heroku

The Bottom Line: Salesforce.com Intent On Paving Its Future
Already in the Cloud, Salesforce.com sees its future aligned with mobile and social. This move provides the significant infrastructure to win the hearts and minds of the next gen apps developer. Unlike many of its enterprise software competitors, Salesforce.com realizes that the platform is key to its future and success. If successful, this move will also help Salesforce.com extend its reach into the consumer tech side of applications. While there are many benefits of PaaS, customers moving to Heroku should seek provisions in The Customer Bill of Rights: SaaS.

Your POV.

Do you think Salesforce.com can transform into a full PaaS? Have the failures in APEX taught Salesforce.com the lessons learned for success in this new platform? Please post or send on to rwang0 at gmail dot com or r at softwareinsider dot org and we’ll keep your anonymity.

20100429 SoftwareInsider – R “Ray” Wang “News Analysis: Salesforce.com and VMware Up The Ante In The Cloud Wars With VMforce”

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Disclosure

Although we work closely with many mega software vendors, we want you to trust us. A full disclosure listing will be provided soon on the Constellation Research site.

News Analysis: Deltek Pays $60M For INPUT, Solidifies GovCon Ecosystem

Published on September 30, 2010 by R "Ray" Wang

Deltek Expands Core Vertical While Diversifying Profit Streams

Project Based Solutions (PBS) vendor Deltek plans to close its $60 million acquisition of INPUT, a government contracting market research and business development firm, on October 1st, 2010. The transaction will add $26.2M in annual revenue, 160 employees, and a rich government contracting ecosystem. Analysis of the Herndon, VA, based Deltek’s eighth acquisition since 2005 reveals that:

INPUT adds market insight and opportunity information to the customer base. INPUT’s solution delivers opportunity information and identification, pipeline development, and capture and proposal management across the public sector market place (see Figure 1). INPUT’s teaming capabilities, greater reach and membership, and centralized market intelligence matched to opportunities will enhance today’s existing GovWin capabilities (see Figure 1).

Point of View (POV): INPUT provides the information, analysis, opportunity identification, and community stewardship for the government contracting industry. Deltek gains a key asset that allows government agencies to find potential contractors. Private sector contractors add the ability to find teaming partners, track competition, and manage the contracting sales pipeline. The merger expands the reach of GovWin and adds much needed lead information to Deltek’s project initiation, project execution and delivery, and financial management capabilities.

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Research Report: The Upcoming Battle For The Largest Share Of The Tech Budget (Part 2) – Cloud Computing

Published on August 9, 2010 by R "Ray" Wang

Welcome to a part 2 of a multi-part series on The Software Insider Tech Ecosystem Model. Part 2 describes how the cloud fits into the model. Subsequent posts will apply the model to these leading vendors:

Overview

Cloud

Cisco

Dell

HP

IBM

Microsoft

Oracle

Salesforce.com

SAP

The aggregation of these posts will result into a research report available for reprint rights.

Cloud Computing Represents The “New” Delivery Model For Internet Based IT Services

Technology veterans often observe that new mega trends emerge every decade. The market has evolved from mainframes (1970′s); to mini computers (1980′s); to client server (1990′s); to internet based (2000′s); and now to cloud computing (2010′s). Many of the cloud computing trends do take users back to the mainframe days of time sharing (i.e. multi-tenancy) and service bureaus (i.e cloud based BPO). What’s changed since 1970? Quite plenty — users gain better usability, connectivity improves with the internet, storage continue to plummet, and performance increases in processing capability.

Cloud delivery models share a stack approach similar to traditional delivery. At the core, both deployment options share four types of properties (see Figure 1):

Consumption – how users consume the apps and business processes
Creation – what’s required to build apps and business processes
Orchestration – how parts are integrated or pulled from an app server
Infrastructure – where the core guts such as servers, storage, and networks reside

As the über category, Cloud Computing manifests in the four distinct layers of:

Business Services and Software-as-a-Service (SaaS) – The traditional apps layer in the cloud includes software as a service apps, business services, and business processes on the server side.
Development-as-a-Service (DaaS) – Development tools take shape in the cloud as shared community tools, web based dev tools, and mashup based services.
Platform-as-a-Service (PaaS) – Middleware manifests in the cloud with app platforms, database, integration, and process orchestration.
Infrastructure-as-a-Service (IaaS) – The physical world goes virtual with servers, networks, storage, and systems management in the cloud.

Figure 1. Traditional Delivery Compared To Cloud Delivery

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Research Report: The Upcoming Battle For The Largest Share Of The Tech Budget (Part 1) – Overview

Published on July 27, 2010 by R "Ray" Wang

Welcome to a multi-part series on The Software Insider Tech Ecosystem Model. Subsequent posts will apply the model to these leading vendors:

Overview

Cloud Computing

Cisco

Dell

HP

IBM

Microsoft

Oracle

Salesforce.com

SAP

The aggregation of these posts will result into a research report available for reprint rights.

Business Models Converge During Recessions

Is your technology provider a hardware vendor or a software vendor? Does your System Integrator now provide solutions in the cloud? These questions will continue as models converge. Hardware, software, and system integration vendors must reinvent new models of revenue. The economic recession has forced business model shifts at the major technology companies. The goal – own the largest share of both the business and IT technology budget, As these sellers attack new profit pools, buyers can expect continued convergence of business models because:

Hardware companies seek higher margins. Most hardware vendors face single digit margins in their core business. To bolster margins, many vendors acquired system integration firms. For example, HP purchased EDS and Dell acquired Perot Systems. The next logical step requires the hardware vendors to get into software. Software margins hover from 10% to 50% depending on the market. Expect a hardware vendor such as Cisco, Dell, or HP to acquire a SaaS based company to move into the software business.
Service providers build differentiated intellectual property (IP) using the Cloud. Service providers should go on the SaaS/Cloud offensive if they want to deliver rapid innovation to customers and break the cycle of dependence on packaged apps vendors. Service providers can take market share through SaaS by investing in white spaces in the solution road map with verticals and other pivot points that have not been well served. In addition, expect forms of SaaS BPO to emerge as clients seek best of breed SaaS and hybrid deployments.
Software companies use Cloud to transform into information brokers. SaaS and Cloud deployments provide companies with hidden value and software companies with new revenues streams. Data will become more valuable than the software in the Cloud. Three areas of growth will include benchmarking, trending, and prediction.
Companies by-pass software vendors for competitive advantage. Roper Industries acquisition of iTrade Networks on July 26th, proves a key point. Smart and innovative companies will put custom development in the cloud to meet last-mile solution needs that packaged apps vendors or system integrators fail to deliver. Companies may also acquire software vendors if they can’t build the solution.

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News Analysis: Deltek Offers To Buy Maconomy For $72.7M

Published on June 4, 2010 by R "Ray" Wang

Acquisition Consolidates Two Market Leaders In The Project Based Solutions Market

Deltek announced on June 3rd that they would acquire Maconomy for $72.7M ($3.39/share (DKK 20.50)). Maconomy is a leading project based solutions (PBS) software company with ~35.6M in revenues (2009) based in Copenhagen, Denmark. Deltek is a 265.8M revenue (2009) PBS software vendor based in Herndon, VA. This acquisition is significant because the combined companies:

Improve geographic coverage. Maconomy employs over 220 employees with 600+ customers in 58 countries. eltek reaches 12,000 customers around the world across its portfolio of product lines that includes Costpoint, GCS Premier, Vision, and its Enterprise Project Management suite. Deltek also offers govWin, an online network dedicated to solving common business problems for government contractors.

Point of View (POV): Maconomy’s customers mostly originate from EMEA. Less than 12% of Maconomy’s revenues come from the US. Maconomy built good partnerships in Eastern Europe. South Africa, Canada, and India. Meanwhile, Deltek has a strong base of business in the US public sector and was beginning to move towards greater international expansion.

Address a range of PBS vertical industries. Maconomy’s products focus on professional service organizations with about 46% of its revenues coming from consulting and 26% of its revenues coming from marcomm. Deltek dominates the architecture and engineering space along with government contracting. The company has shown success in key verticals such as construction services, public sector, and transportation services.

POV: Deltek can boast that 80% of the Engineering News Record 2009 Top 500 Design Firms are customers. Maconomy’s products X1 and PeoplePlanner demonstrate a strong professional services focus. Together, they have an opportunity to expand into research organizations, legal services, and audit/tax firms.

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News Analysis: IBM Buys Sterling Commerce From AT&T

Published on May 24, 2010 by R "Ray" Wang

Merger Ties B2B Integration Tools With Selling And Fulfillment

On May 24th, IBM surprised the market with its $1.4B, all-cash, definitive agreement to buy Dublin, Ohio based Sterling Commerce from AT&T. Sterling Commerce was purchased by SBC Communications in 2000 for its strengths in B2B integration. As an AT&T company in 2005, they acquired Yantra for its supply chain fulfillment and distributed order management solutions (DOM). In 2006, the company acquired Nistevo for transportation management systems (TMS) and in 2007 bought out Comergent, a leader in selling and order management solutions. Sterling Commerce currently employs 2500 people and has 18,000 customers around the world. According to Sterling Commerce’s CEO, Bob Irwin and IBM Websphere’s General Manager, Craig Hayman, the acquisition occurs for a few reasons:

Integration solutions for dynamic business networks. Sterling focuses on B2B integration and managed file transfer (MFT). B2B integration solutions include offerings such as GenTran, Collaboration Network, Integrator, eInvoicing, Mobile Solutions, and B2B Managed Services. MFT helps organizations move vast quantities of information quickly and securely across data networks. Sterling delivers the services in both on-premise and on-demand.

Point of View (POV): Sterling’s flagship product “the VAN”, brought external business and trading partners together. They built a reputation connecting businesses with their trading community of suppliers, customers, banks and transportation providers. IBM built a strong platform for inter-enterprise integration and SOA governance. Should the acquisition succeed, customers will gain integration across business networks and improve decision making through richer integration. Key Sterling Commerce integration customers include BNP Paribas, Union Bank, Toshiba, Tenneco, Sony, Nordstrom, True Value and others.

Selling and fulfillment solutions that extend the value chain. Sterling Commerce owns the leading order selling and fulfillment suite in the market. Solutions allow organizations to deliver configure, price, and quote complex products and services (CPQ), cross channel order fulfillment, inventory logistics, and transportation management. Sterling often competed with WebSphere commerce solutions for customers.

POV: Sterling originally made commerce application acquisitions with Comergent, Yantra, and Nistevo to extend the value of the integration network. The result – an end to end order and fulfillment suite that solved the tough issue of delivering a “perfect order”. Sterling Commerce’s order hubs often beat out traditional ERP solutions that tried to force fit end to end processes into their functional focused solutions. Consequently, IBM WebSphere Commerce gains key components to improve its technologies. More importantly, on-demand delivery will play a significant role going forward. Key order hub customers include Best Buy, Walmart, Staples, Lowes, Guthy Renker, LifeTouch, Cabellas, and others. More…