Acquistions: Oracle/PeopleSoft, Telvent/Miner & Miner

By Joe Francica

Oracle Buys PeopleSoft

It took 18 months but Oracle finally threw the hammer down, upped their bid, and clinched the deal to buy PeopleSoft.Although it took time, the original opposition from U.S.regulatory agencies about antitrust issues in the marketplace became moot.With the current climate in the enterprise software market, the Oracle/PeopleSoft deal looked almost minor compared to the discussions that were being held between SAP and Microsoft about a possible merger.I commented sometime ago (See Oracle - PeopleSoft: A Foreshadowing of what is to come in the GIS Market) when Oracle first made their bid for PeopleSoft about the implications in the geospatial marketplace of such an acquisition.Now that it has come to pass, the picture becomes quite clear.In time, enterprise systems in finance, human resources, and production management will become spatially enabled.That may seem obvious but it won't happen just yet; certainly not until Oracle's product platform is more tightly integrated with PeopleSoft solutions.But it will happen simply because it can.

This, in itself, is not a huge revelation.But look at the situation with the remainder of the enterprise market.In a story reported in the Wall Street Journal (December 14, 2004), writer David Bank commented that:

"Once it is finalized, the PeopleSoft acquisition will radically reshape the market for software that companies use to run their financial, human-resources, and other business functions, leaving just two big suppliers - Oracle and Germany's SAP AG.More broadly, the deal creates a four-way battle among tech giants Oracle, SAP, Microsoft Corp., and International Business Machines, each of which wants to offer corporations a broad menu of software to reduce their customers reliance on the other vendors."
And, presumably, this would include the ability to leverage the now strategic applications of geospatial data analysis.Look at those players again. All have a toe in the GIS arena and each wants more, even though it may mean only incremental revenue.Yet, it represents a strategic product positioning strategy to be able to offer geographical display and analysis.Oracle doesn't just put topological data handling, geocoding, and a linear referencing system into their database architecture because its a "nice to have" feature. It is there to make a play for enterprise systems that leverage geographically-referenced data for things like: Homeland Security, Telecommunication infrastructure, and supply chain management, not to mention enterprise resource planning and sales automation.

In a comment Larry Ellison, CEO and founder of Oracle, made to attendees to Oracle Apps World in January 2003, he said, "databases will become larger and more inclusive." He just "included" PeopleSoft as part of that strategy. And, according to the Wall Street Journal, he wants more as he now contemplates other acquisitions, BEA Systems being one such company mentioned as a possibility..

Telvent Acquires Majority position in Miner & Miner

And there was another acquisition that occurred this week with relevance to the enterprise system market.Telvent, a company that went public just this October (Nasdaq: TLVT) with headquarters in Madrid, Spain but with operations worldwide, acquired a majority position in Miner & Miner, a provider of primarily ESRI ArcFM solutions to the utility industry.ESRI founder Jack Dangermond will retain an equity position in Miner & Miner but according to the press release "Telvent has an option (and if certain conditions are met, the obligation) to acquire the remaining equity at a future date." Does this mean that part or all of ESRI's utility industry stake could go eventually be taken over by Telvent? Or is this part of a broader strategy by Dangermond to embed his software deeper into other enterprise solutions because Telvent is looking to expand into the transportation, traffic, and other real-time technology opportunities?

Ostensibly, the deal was made because ArcFM, developed by Miner & Miner, is "highly compatible with Telvent's core infrastructure product, OASyS DNA, a family of IT infrastructure and market operations products that have set the standard for modular, extensible real-time data acquisition, control, information management and decision making," again quoting the press release issued by Telvent.This sounds an awful lot like what the larger enterprise system players, mentioned above, are trying to accomplish.

Future Shock
So, to summarize, enterprise players like Oracle are acquiring companies with substantial customer bases to compete with its larger rivals, SAP, IBM and Microsoft in a horizontal software solutions marketplace.Small companies like Telvent (Market capitalization $337.22 Mil) are acquiring niche geospatial software solutions like ArcFM to attack vertical industries but with an eye on enterprise systems also.How long before the big fish meet the small fish for a clambake?

I suggest that it won't be too long before we see other geospatial technology mergers and acquisitions take place in a stepwise progression that may eventually involve the major enterprise software companies.Who might that be? A merger between Intergraph and MapInfo makes sense to me.Intergraph has cash in the bank but has only a marginally profitable GIS division; MapInfo is making all the right moves to embed their technology in business intelligence solutions and had a great year financially.Would such a merger cause Oracle to gobble up that combination? It would if it represented a significant customer base that Oracle wants to acquire.And with a large cache of customers in the federal arena like Intergraph has, and a significant installed based in business GIS like MapInfo has, it is a scenario that could very easily make a big splash.

Published Thursday, December 16th, 2004

Written by Joe Francica

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