One of the giants
Along with Microsoft and IBM, Oracle is one of the three largest
software companies in the world. It specializes in database and
middleware software, as well as applications, but also has a large
consulting business through which it offers strategy and analysis,
business process optimization, product implementation, enhancements
and upgrades, and ongoing managed services. Although the consulting
division only accounted for 15 percent of revenue in fiscal 2008,
it was still a billion-dollar enterprise, bringing in almost $3.5
billion. Just over half (51 percent) of 2008 revenue was generated
in the Americas, with Europe, the Middle East and Africa (EMEA)
accounting for 35 percent, and the remainder (14 percent) coming
from Asia Pacific.
The firm was founded by Larry Ellison in 1977 as Software
Development Laboratories. The name, of course, didn't stick. After
a brief run from 1979 to 1982 as Relational Software, it became
Oracle Systems, reflecting the success of its flagship product, the
Oracle Database. The firm's history in the consulting biz doesn't
go back quite as far, however, having developed out of a sales
force split in 1992 that divided sales personnel into those selling
database software and those selling applications. During the tech
boom of the late 1990s, applications and consulting services were
in such high demand that the firm's services division tripled its
revenue and became a major practice area.
Seeking the Oracle
The firm is active in an enormous range of industries, including
aerospace and defense, automotive, chemicals, communications,
consumer products, education and research, energy, engineering and
construction, financial services, health care, high tech, homeland
security, industrial manufacturing, life sciences, professional
services, public sector, retail, travel and transportation, and
utilities. Its client list features corporations starting with
every letter of the alphabet, with AstraZeneca, BP and Coca-Cola at
the start to Xerox, the YMCA and Zebra Technologies bringing up the
rear. Oracle claims that its technology is a component of the
databases of 99 of the Fortune 100.
Because the firm is a major software vendor, it is frequently in
a position to offer consulting services to clients who have
purchased licenses or application packages. It's common in the
industry for IT companies to separate their services and software
lines, but Oracle is up front about tying the two together. The
firm often strikes deals to implement and maintain the software it
has just sold. This creates a dual relationship not only with its
clients, but also with its rivals. Oracle holds alliances with a
number of other vendors, such as Accenture, HP and IBM, with whom
it also competes.
Get and spend
Oracle takes an aggressive stance on growth through acquisition.
In fiscal 2008 alone, it spent $9.4 billion snatching up other
companies. By far the largest deal that year was the $8.6 billion
purchase of BEA Systems, a provider of enterprise application
infrastructure solutions. The acquisition enhanced the firm's
middleware portfolio, especially with regard to service-oriented
architecture infrastructure. Following the fiscal year's end in
May, the firm went on to make several more acquisitions, including,
the October 2008 pickup of Primavera Software, Inc., a provider of
project portfolio management solutions. The purchase will enhance
Oracle's service offerings for project-intensive industries, such
as engineering and construction, the public sector, aerospace and
defense, utilities, oil and gas, manufacturing and high tech, and
IT and services.
A couple of significant (and pricey) acquisitions were also made
in 2007. In April that year, the firm completed a $3.3 billion
transaction for Hyperion, a maker of performance analysis and
tracking software that counts 91 of the Fortune 100 among its
clients. The deal greatly increased the firm's presence in the
enterprise performance management market. Then, in May 2007, Oracle
came away with Agile Software Corporation, a provider of product
lifecycle management solutions, for $495 million, giving a
substantial boost to its existing product lifecycle assets.