To the eyes of many observing the enterprise software market, Oracle has completely redefined the role of consolidator in the applications arena. They've turned M&A into a machine -- I know this first-hand because of my own work in the tech acquisitions market over the years -- starting with screening deals (deals under certain revenue thresholds that do not move the needle, like $50 million, require significant hoop jumping to pull off) and progressing through acquisition integration. They can also move nimbly for such a larger organization when it comes to pushing acquisitions through at a speed that seems an order of magnitude faster than rival SAP.
But might SAP be changing its stance when it comes to M&A? And might Waldorf continue to turn its sights at the Spend Management marketplace, following on its small yet strategic acquisitions of Frictionless and Analytics, Inc? The answer is: yes, with a high degree of certainty. A recent MarketWatch story sheds some light on topic on a macro level. It's also something that everyone -- from current SAP customers to competitors -- should pay attention to.
SAP indeed appears to be changing its strategy to look more like Oracle and less like, well, the SAP "not invented here" monolith. In a recent earnings call, Oracle's Larry Ellison reiterated his intentions of pursuing SAP's core markets as well as the SMB segments. MarketWatch also opines that on the call, "Ellison [was] probably really annoyed about SAP's recent statements that it plans to start doing more acquisitions ... [because] the last thing Ellison wants [is] more competition in his quest to buy Oracle's continued growth. Oracle does not like to get involved in bidding wars that could possibly raise the price of its acquisition targets, the number of which seem to be dwindling. Oracle has snatched up about 38 companies since it began its buying spree in earnest in 2004."
The article concludes by noting "it remains to be seen how SAP will fare, since it lacks Oracle's successful acquisition history. But clearly it looks like David hopes to beat Goliath at its own game." Still, I'm not so optimistic they'll pull it off -- or even bring the right talent on board. Building a competency around tech M&A is no easy feat. Granted, there are many tech investment bankers who would love to come over to the corporate development side and work fewer hours under less stressful conditions, even if the pay is less. But dealing with the SAP snail's pace bureaucracy could frustrate even the most patient banking-type. And more important is acquisition integration, which building a competency around can take years, especially when it comes to doing it on a large scale.