Oracle buys ATG... Good, bad, or indifferent for Magento?
I’d like to take a moment to share some thoughts about Oracle’s recent acquisition of ecommerce developer, ATG.
As more and more companies realize the importance of multi-channel sales strategies, deploying state-of‐the art ecommerce sites is becoming evermore urgent. For those organizations with legacy systems such as Oracle eBusiness Suite, Oracle’s native ecommerce module—iStore—simply does not deliver the goods. Corra is already engaged in projects where we are ripping out iStore and replacing it with Magento. It would seem Oracle itself has decided to rip iStore out of eBusiness suite themselves!
What Corra is finding with our own customers that have Oracle installed is that a product like iStore that is a secondary or even tertiary application in Oracle’s overall suite simply can’t keep up with a modern web application like Magento.
Since it rocketed out of the gates in 2007, Magento systems have already processed more than $25 billion in eBusiness revenues. Magento has a huge community of developers on the platform. There are now well over 2,000 3rd party extensions for the product that do everything from integrating it with legacy systems like SAP and Oracle to simplifying the checkout process. More of these extensions come online everyday, including those developed by Corra—we use at least half-a-dozen in almost every project we do.
The theme behind Oracle’s purchase, according to Thomas Kurian, executive VP for Oracle Development, is that as a result of “[T]he convergence of online and traditional commerce and the need to increase revenue and improve customer loyalty, organizations across many industries are looking for a unified commerce and CRM platform to provide a seamless experience across all ecommerce channels.” (As an example, see InfoWorld’s coverage of the acquisition below)
This is precisely Corra’s theme and represents our core practice area. We are so busy with multi‐channel, ecommerce-driven projects right now that we can barely keep up-we’re hiring in both our engineering and consulting teams just to support growth in this area.
A couple quick thoughts about this acquisition:
1) We think it’s good for Magento. For our larger clients, ATG is an ecommerce platform for consideration. Many (most) of them, however, don’t want anything to do with Oracle and the extreme vendor lock‐in that goes with that. (Not to mention the fact that if Oracle’s almost decade‐long attempt to integrate previous acquisitions into their Fusion platform is still incomplete, ATG certainly isn’t going to be elegantly integrated into the Oracle platform any time soon. I think this opens the door for Magento in a number of accounts that might have formerly leaned towards ATG. I suspect that our current Oracle ecommerce conversion projects will be the first of many more.
2) It validates Corra’s operating premise that implementing and rationalizing multi-channel sales strategies and technologies is one of the key challenges for businesses of all sizes. Magento and SugarCRM are now so mature and scalable that they provide a platform as compelling as anything Oracle can put together. The cost difference, i.e., total cost of ownership, is so striking between the commercial open source approach and something like the Oracle/ATG/Accenture type option that the market for Magento—and Corra—is vast and growing rapidly. Add in the time for implementation and, therefore, time to ROI, and unless you’re a hard-core Oracle shop, our alternative starts to look pretty darn attractive.
3) The scale of the acquisition (although modest for Oracle) demonstrates the value and valuation of ecommerce platforms and likely brings more attention to the space. Stay Tuned!
Oracle To Acquire ATG For $1 Billion Full-‐service ecommerce house will complement Oracle’s back-end analytics software and hardware
________________________By Paul McDougall, InformationWeek Nov. 2, 2010 URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=228100031
Oracle said Tuesday it reached an all-‐cash deal to buy out e-‐ commerce solutions provider Art Technology Group for $6.00 per share, or about $1 billion—the latest sign M&A action in the IT sector remains hot. ATG provides software and services that help organizations establish Web storefronts and conduct e-‐commerce operations. The news drove ATG shares up more than 45%, to $5.97, in early day trading, while Oracle held steady at $29.38. The deal, expected to close in early 2011, remains subject to shareholder and regulatory approval.
Oracle said ATG’s front-‐end commerce tools will fit nicely with its lineup of back-o-house customer analytics and database offerings. “Driven by the convergence of online and traditional commerce and the need to increase revenue and improve customer loyalty, organizations across many industries are looking for a unified commerce and CRM platform to provide a seamless experience across all ecommerce channels,” said Thomas Kurian, executive VP for Oracle Development, in a statement.
“Bringing together the complementary technologies and products from Oracle and ATG will enable the delivery of next-generation, unified, cross-channel commerce and CRM,” said Kurian.
ATG’s customers include blue chippers like AT&T, Best Buy, AARP, and CVS drugstores. The fast growing company on Tuesday said third-‐quarter revenues increased 16% year-ove-year to $50.3 million while net income of $4.2 million was roughly flat compared to the previous year. Oracle’s deal to buy ATG is the latest splash from a wave of consolidation that’s swept across the IT industry over the past several quarters. Big vendors like IBM, Hewlet-Packard, and Oracle itself are racing to assemble comprehensive product portfolios that extend from data center hardware to custome-facing applications and services.
Their hope is CIOs will prefer to fulfill the bulk of their requirements through a single vendor rather than risk an integration mess by cherry picking offerings from multiple sources. Oracle fired the first big salvo with its $7.4 billion purchase, completed earlier this year, of server builder Sun Microsystems, and has followed up with deals for Silver Creek, Convergin, AmberPoint, Phase Forward, and several others.
Since September 15, IBM has announced or closed buyouts of integrated risk management solutions vendor OpenPages, business analytics appliance maker Netezza, data center specialist Blade Network Technologies, and cloud-‐based marketing software developer Unica. In May, IBM agreed to acquire B2B ecommerce specialist Sterling Commerce from AT&T for $1.4 billion.
And this year alone, HP has bought out Fortify Software, ArcSight, 3PAR, and Palm, spending about $5 billion in the process. Most analysts believe the acquisition sprees are likely to continue as the big three round out their portfolios in bids to top each other.
Corra is a digital agency creating transformative commerce experiences for fashion, beauty and lifestyle brands. With headquarters in New York, Los Angeles and London, Corra provides strategically led creative and technology solutions to a growing global market.