Oracle Makes Project Portfolio Play With Primavera Acquisition

Oracle (Nasdaq: ORCL) is acquiring Primavera Software -- a best-of-breed vendor in the project portfolio management niche.

The company already has some in-house functionality in this asset category; it now plans to leverage its existing technology with the Primavera product line to produce an enterprise application.

Oracle Enterprise PPM will target project-intensive industries such as engineering and construction, aerospace and defense, utilities, oil and gas, manufacturing and professional services -- essentially, Primavera's main user base.

Primavera staff will join the newly created business unit, led by Primavera's CEO Joel Koppelman as senior vice president and general manager. The transaction is subject to customary closing conditions and is expected to be complete by the second half of this year. Until the deal closes, the two companies will continue to operate separately.

Indeed, on the same day that Oracle announced the deal, Primavera announced the general availability of ProSight version 7.5, a supporting application to Primavera P6, which integrates with Microsoft (Nasdaq: MSFT) Project Server 2003/2007 to import summarized data from various sources, including client data.

Financial details of the acquisition were not disclosed.

Economically Relevant

Acquisitions have become Oracle's way of building out functionality to sustain its installed base. That said, the project portfolio market holds interesting opportunities for Oracle outside of this larger strategy .

Primavera's PPM software helps companies propose, prioritize and select project investments, as well as plan, manage and control projects and project portfolios using real-time data -- functions that are particularly valued in the current economy.

Furthermore, enterprise PPM itself is becoming a significant software category, according to Oracle President Charles Phillips, who notes that 20 percent of the world's GDP (gross domestic product) is spent annually on projects.

Putting the Pieces Together

Oracle will be at the top of this market now, with the acquisition of one of its leading vendors, Melinda-Carol Ballou, program director for IDC's application life cycle management research, told CRM Buyer.

Primavera is well established in all of the industry sectors that rely on project management software, she said. The challenge will be to integrate the disparate products -- Primavera's technology plus the bits and pieces that were part of the JD Edwards and PeopleSoft portfolios.

The underlying architecture in both products should lessen any difficulties, Ballou said. "It will not be easy -- and I am not entirely sanguine about the deal for that reason -- [but] I think it will be a positive for both firms."

If this is the only hurdle standing in Oracle's way, the Primavera deal should flow smoothly. Oracle has become a professional acquirer of technology; indeed, it is arguably one of the vendor's core competencies.

Oracle's track record of successfully integrating acquired tech and talent into its corporate family is a good one, Nucleus Research Vice President Rebecca Wettemann told CRM Buyer.

"This is what Oracle does well -- making smart decisions about acquiring best-of-breed vendors that complement its existing technology," she said.

Primavera has also developed a track record of successfully incorporating new corporate DNA into the fold. In its 25-year history, it has has made some 12 acquisitions, including a strategic play in 2006 when it bought another purchased portfolio management software company -- ProSight -- and a partner vendor of risk mitigation software, Pertmaster.