Oracle’s buy profitable and logical, says analyst

PeopleSoft, check. Retek, check. ProfitLogic, check.

Oracle Corp.’s recent purchases are likely to propel the company to a position of leadership in the lucrative retail market, an analyst said.

Oracle announced yesterday that it had completed the acquisition of Cambridge, Mass.-based retail software firm ProfitLogic.

The buy positions Oracle to compete more effectively in the retail enterprise market with rival firm Walldorf, Germany-based SAP AG, said Joshua Greenbaum, principal at Enterprise Applications Consulting, a research and technology consulting firm in Berkeley, Calif.

Retailers all across North America have recently been spending a tremendous amount of money on technology, Greenbaum noted. The exponential growth of complex supply chains in the retail sector, he said, “has made retailers notice that their IT infrastructures are outdated, outmoded and non-competitive.”

According to the analyst, while SAP AG may have locked-in certain markets, such as the oil and gas industry, it cannot be considered a leading enterprise applications provider in the retail sector. Bottomline: Oracle has “a lot of room for competition.”

“Oracle feels – and rightly so – that with the right product mix, they can really get there and compete strongly for the retail market to create a market leading, if not a dominant, position.”

And Oracle has not ventured into the retail space without proper ammunition.

Last April, the Redwood Shores, Calif.-based company signed a US$ 630 million deal to acquire retail management software developer Retek Inc. Oracle did not disclose the amount of its ProfitLogic acquisition.

Combining Retek’s retail planning and execution offerings and ProfitLogic’s profit optimization software with the Oracle Retail business suite provides retailers with a comprehensive “insight-driven” platform aiding strategic business decisions, according to Duncan Angove, general manager of Oracle’s Retek Global Business Unit.

He said customer demand insights should be the foundation for all retail decisions. “We should take this…insight and leverage this across the entire merchandising or category life cycle decision framework,” Angove said.

The Oracle executive said his company plans to “invest deeply” and establish a leadership in the retail industry.

A great many Retek and ProfitLogic customers are Oracle users. As complementary technologies, the integration of the three into a single enterprise platform would not result in any duplication, Angove said.

Oracle expects the resulting enterprise platform’s “insight-driven capability” will be its biggest value proposition – from the retailers’ perspective. By combining supply chain management systems, merchandising processes and customer-centric initiatives, business managers could develop strategies and make intelligent decisions based on factual data, said Thomas Madigan, Oracle’s VP of retail in North America.

“We have bundled capabilities that we deliver to the marketplace that allow retailers to manage by facts – facts about people, facts about operational data, and facts about merchandise – enabling an insight-driven enterprise focused on true customer insight,” Madigan said.

Related links:

Rocky road for PeopleSoft, Oracle union

Oracle overcomes SAP to acquire Retek

Oracle rings up win for Retek

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