According to this Oracle, consolidation in the business software industry is the wisest move. The enterprise software giant provides a range of tools for managing business data, supporting business operations, and facilitating collaboration and application development. Oracle also offers business applications for data warehousing, customer relationship management, and supply chain management. In recent years the company has aggressively used acquisitions to expand. Unlike some software firms that have come to rely on services related to their software as their primary source of revenue, software licenses accounted for more than two-thirds of Oracle's sales in fiscal 2011.
The company's strong licensing sales and distributed geographic presence have allowed Oracle to successfully weather the global economic downturn and grow its revenues year over year while many competitors faltered. A 16% increase in software revenues helped nudge overall sales up about 33% in fiscal 2011 compared to fiscal 2010. The 16% uptick in services income and a nearly 200% jump in hardware systems sales in fiscal 2011 didn't hurt either.
In recent years the company has faced a similar pleasurable dilemma encountered by its rival Microsoft: what to do with a mountain of cash. Oracle's dominant position in the lucrative world of databases produces a steady stream of cash flow and profits, but it also has generated pressure from shareholders to put the company's cash hoard to use. In response the company has embarked on an extended spending spree with one primary goal: to expand its business applications product line, customer base, and market share through acquisitions, both large and small. Collectively, the company has spent billions on these acquisitions, with the majority occurring in the US.
In early 2012 Oracle agreed to buy human capital software maker Taleo in a transaction valued at around $1.9 billion. The purchase will add a leading cloud-based talent management offering to the Oracle Public Cloud. Talent management -- encompassing recruitment, performance management, learning and development, and compensation functions -- is in demand as organizations look to manage and engage employees in career development via a single system. Taleo is one of the world's largest providers of cloud software with nearly 16 billion transactions per year by its more than 5,000 clients. Around 15% of all US new hires are managed through the Taleo cloud. With the deal, Oracle adds a recruitment function lacking in its HR cloud offering and proves its willingness to spend cash to keep up with top competitor SAP. (In late 2011, SAP announced plans to buy Taleo competitor SuccessFactors.)
The Taleo deal comes on the heels of Oracle's purchase of RightNow Technologies, a provider of hosted customer support software. The $1.5 billion acquisition allows Oracle to offer a consistent customer experience management across all sales channels and at every point of contact. A customer service offering is seen as a vital addition to the Oracle Public Cloud. RightNow's software focuses on managing customer interactions across mobile, Web, chat, social media, and call center channels.
Oracle paid about $1 billion in 2011 for e-commerce software developer Art Technology Group (ATG) to complement its customer relationship management, retail, and supply chain product lines. ATG's software is used by businesses to unify and streamline the automation and management of online merchandising, marketing, and content management efforts. It enables personalization of shopper content, automated product recommendations, and live customer contact via browser chat windows. The deal let Oracle extend its Oracle Retail platform to include online, in-store, and mobile channels. Oracle also bought knowledge management software developer InQuira and agreed to acquire data management and Web commerce software developer Endeca that year.
Oracle scored its most ambitious takeover to date when it bought Sun Microsystems for about $7.4 billion in 2010 and made its first significant foray into the world of hardware and chips. The company used the Sun purchase it made in 2010 to extend its software expertise to Sun's servers, Solaris operating system, and SPARC chips, enabling it to offer customers integrated hardware and software systems (much like rivals IBM and Hewlett-Packard. Its hardware systems segment, which did not exist prior to the Sun acquisition, accounted for about 19% of fiscal 2011 sales.
Also in 2010 the company acquired Phase Forward for about $685 million. The deal expanded Oracle's presence in the health care and life sciences market. Phase Forward's clinical drug trial management software has been used by clients such as AstraZeneca, Eli Lilly, and Boston Scientific. Phase Forward was later absorbed into Oracle's operations.
While acquisitions have played a major role at Oracle in recent years, the company has also aggressively invested in internal product development as well, spending more than $4 billion in fiscal 2011 on internal research and development efforts. Much of its research and development efforts go into ensuring its core database products continue to dominate that market, as well as investments to ensure that technology from various acquisitions is successfully integrated into its wide-ranging product lines.
And though Oracle has been making many acquisitions in the US, international sales and operations are another major area of focus for the company, with clients outside the US accounting for nearly 60% of sales. Its international sales are also evenly distributed throughout the world, with no single country outside the US accounting for more than 10% of sales.
Co-founder and CEO Larry Ellison owns more than 22% of the company, a holding that (along with other assets) routinely places the flashy and outspoken billionaire among the world's richest people.