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When Oracle announced in December 2004 that it had worn down PeopleSoft's resistance and would acquire its rival, veteran PeopleSoft partner Dan Maude didn't know what to expect, but it sure wasn't this: Three years later, he's booking record sales on PeopleSoft's products.
"We've done more business in the last year and a half with Oracle on PeopleSoft than we did in the last five with PeopleSoft," said Maude, president of Beacon Application Services in Framingham, Mass. "'Thrilled' is probably the right word to describe my feeling about the experience with Oracle, much as it surprises me."
Oracle's acrimonious $10 billion PeopleSoft takedown was the first major deal in an unprecedented shopping spree that has consumed 41 companies over the past four years and cost Oracle more than $25 billion. Several years into the buying binge, solution providers in the company's ever-expanding ecosystem say Larry Ellison & Co. have done the near-impossible: successfully integrated the technologies and development teams they've bought, and turned Oracle's rapacious strategy into a channel success story.
"We had record revenue last year and we're expecting the same this year," said Rich Woll, executive vice president of eVerge Group in Plano, Texas, a PeopleSoft and Siebel solution provider that joined Oracle's partner program through the acquisitions. "From the standpoint of Siebel—they have continued development on it, there's a road map, and there are more people selling Siebel now than when Siebel was independent."
This isn't how the story was supposed to go. Observers across the board—analysts, customers, partners, investors and press—expected Oracle's ambitious acquisitions campaign to eventually end in disaster. IT mergers are famously challenging: Witness the sturm und drang of Hewlett-Packard's Compaq integration. And then there's the example of the last major software company to chase growth through pricey acquisitions: Computer Associates, now CA, spent the '90s gobbling up smaller vendors, a strategy that turned into an arms race. When CA ran short of cash and targets, it inaugurated its infamous, illegal "35-day month" to camouflage its stalled growth.
Oracle has never shown any signs of susceptibility to the accounting chicanery that ravaged CA and sent some top management to prison, but CA's name was pervasive in discussions of Oracle's frenzied spending back at the shopping spree's start, as a symbol of all the ways a "roll-up" acquisitions strategy can fail. Former Ellison protg Marc Benioff, now CEO of Salesforce.com, made the comparison explicit. "When I was at Oracle, we watched Computer Associates buy all those mainframe software companies and milk them for their license revenue. I never thought that's what Oracle would be doing one day, and yet, here it is," Benioff said in September 2005, on the day Oracle announced it would buy Siebel.
Two years and a dozen acquisitions later, the strategy is working. Oracle's revenue and earnings are at record highs, but more important to partners, so is channel satisfaction. In this year's VARBusiness Annual Report Card study, Oracle topped its software categories, and North America channel chief Rauline Ochs landed Channel Executive of the Year honors, based on feedback from Oracle's VARs.
So what happened? Where did Oracle go right?
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