Oracle Gets Agile for PLM and Direct Materials Sourcing

Even though I'm nearly a week late in writing up the news, I thought it was still worth mentioning Oracle's recent Agile acquisition announcement. Over on The Ponderings of Woodrow, Jason Woodrow, my fellow Enterprise Irregular, offers a quick take with his thoughts. According to Jason's write-up, "Agile Software (AGIL) has agreed to be acquired by Oracle (ORCL) for $495mm in cash considerations, or $8.10 per Agile share. This is just the latest in an ongoing wave of consolidation moves for Oracle; and frankly this is one of the least surprising deals of the bunch. Agile has been meandering about struggling to generate organic growth for a long time; and has been rumored to be on the block for ages."

Jason continues: "At the end of they day, this deal serves dual purposes for the Larry and Company. One, despite lackluster growth Agile is an industry standard for BOM management and product design. This deal is another incremental brick in the walled garden it's building around SAP's partner ecosystem. Two, the multiple paid is such that it won't be hard for Oracle to generate positive EV from the transaction regardless of whether it manages to reinvigorate growth in the segment."

Good analysis, Jason. But let me attempt to add some personal personal color to it. Back in the B2B hey-day, Agile was nearly scooped up by Ariba, but according to Jason, a "market correction put the kibosh on the deal." And it's a damn good thing it did. Because at the time, the proposed combination surprised everyone because it made absolutely no sense (except to the bankers and deal mongers who put it together).

Let's see, what corporate development genius came up with the idea to combine transactional indirect eProcurement, marketplace and limited sourcing capabilities -- this was before the FreeMarkets acquisition -- with the most sophisticated bill of materials management / direct materials sourcing software provider on the market? An up-sell or cross-sell between the organizations would have involved going after an entirely different customer inside virtually all accounts (because there were no real synergies or points of intersection between the product and solution lines). In short, I still believe the failed deal was even stupider than FreeMarkets attempt to buy Adexa, another B2B shotgun wedding that never got out of the chapel (I'll take some personally blame for this one, which was nearly as dumb in retrospect).

But the good news is Agile now finally has a logical home, as part of a broader set of capabilities. Let's hope, though, that Oracle continues development rather than milking the installed base for all its worth (a strategy otherwise known as Applications Unlimited).

Jason Busch

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