• June 27, 2012
  • Oracle launched its customer experience push this week with an announcement by co-president Mark Hurd.  The new direction begins to pull together the results of Oracle’s latest buying spree in which it purchased ATG for e-commerce, RightNow Technologies for customer service and other technologies for analytics in cyberspace.

    While Oracle will always draw skeptics the way a dog finds fleas, I think at least some of the new direction makes good sense but not necessarily for the reasons stated.

    The big push into customer experience leaves much unsaid, especially the idea that customers are increasingly turning off vendors and their messages and seeking out indirect approaches to getting the information and products or services that they need.

    The push into social media and especially analytics for gauging customer sentiment is a case in point.  People have a natural reticence about revealing too much to a vendor correctly assuming that anything they say in a sales conversation might be later used against them.  Fair enough.  But people are still remarkably unguarded about what they reveal to their peers and hence the boom in all things social.

    However, if you look at the quotes recently put out by Oracle executives they’re really still selling old style CRM with the new label of customer experience.  They’re still talking about costs saved and calls avoided because those are the things that make vendors buy and it’s the vendors who are Oracle’s customers — end users not so much.

    The strategy is smart because we are in an era of severe cost cutting and not simply for the usual economic reasons.  First off, and I have been saying this since 2007, companies like Oracle have to deal with the fact that energy and transportation costs are escalating making it harder for vendors to visit customers at a profit as well as more difficult for consumers to visit the mall.  This is the age of indirect selling for both these reasons.

    But add on the idea that the economy has not grown in real GDP terms since 2008 and you see another dynamic.  A whole generation of people is trying to launch into life and finding it very difficult to form households.  Without household formation things like carpets, refrigerators, sofas and maybe even cars are not being bought in the numbers they would be under other circumstances.

    In this age of austerity and stagnation, increasing profits to produce the illusion of growth comes from reducing overhead and avoiding margin gobbling expenses like conventional selling.  So you get things like this strategy of customer experience.  It makes sense to me and positions Oracle and a few other companies in a leadership position so good for them on that.

    I also noticed though this curious line in a fine article by Chris Kanarkus of IDG News discussing the Oracle announcement; “Larger companies such as IBM, Adobe and are also building out CEM portfolios.  None of them can compete with Oracle’s breadth of technologies, [Anthony] Lye maintained.”  Of course, Anthony Lye is senior vice president of CRM at Oracle and the architect of the CEM or CXM strategy.  He was the guy buying up the CEM companies last year.

    I found it interesting that Salesforce was lumped into the “larger companies” rubric with IBM and Adobe.  Oracle and Salesforce sometimes act like two Tomcats in a cage but keep in mind that Salesforce has yet to crack the Fortune 500 though it is making strides.  At any rate, this looks to me like an attempt by Oracle to set up some competitors for easy knockdown rather than something more substantial on the product front.  I don’t really understand the Adobe reference and while IBM has lately made strides in CRM and analytics the efforts seem directed elsewhere.

    As for Salesforce, their efforts are in the enterprise with collaboration and highly socialized applications that are increasingly penetrating new niches.  The Salesforce strategy resembles Apple’s and both riff off the idea of a “Blue Ocean Strategy” that was subject of a book by the same name.

    If I had to sum it up, and I do, I’d say we’re at a point in time when the market is splitting up and rather than the monolithic approach to social that we’re seen since the middle of the last decade, companies are developing specialization.  So we see Salesforce focusing on enterprise IT in the true cloud, and Oracle focusing on the vendor-customer transaction while others are carving out their own niches.  Yes, Oracle has a cloud strategy too as well as a hardware division.

    So it’s the age of austerity, of reduced personal outreach and increasing relationships with and through machines and we now have the technologies to support the zeitgeist   Eventually, growth will be back on the menu.  Even Lent only lasts a short time.

    Published: 10 years ago

    I found out about Oracle’s purchase of RightNow, a multi-channel contact center company, when Chris Kanarkus of IDG News rang my cell.  Ironically, I was sitting in the departure area waiting for a flight that will take me to the RightNow Summit, the annual user meeting which is being held in Colorado Springs at the Broadmore resort.

    Kanarkus was looking for comment, which I am always happy to provide, and lots of thoughts ran through my head that I chose to pass by.  The deal was worth one and a half billion dollars at the $43 per share offering price, a nice bump to the share price.

    It had been my observation that the stock prices of many companies rose just before or during their user meetings as good news was usually announced there and the financial press in attendance post their scoops.  A couple of years ago I watched RightNow’s stock gain two or three points as CEO Greg Gianforte gave his keynote but this year the news appears to be built in to the share price already.

    One and a half billion bucks is a lot to spend and that’s even truer for a company that last year generated $200xxx million in revenue.  A multiple between seven and eight is usually reserved for less proven and smaller companies with some kind of social angle.  But RightNow has been around a while and it’s track record, while sterling made me, at first, somewhat skeptical.

    True, RightNow has a great focus on the customer experience and on helping its customers craft great experiences for their customers.  Also, it’s a SaaS company with a SaaS strategy that mirror’s Oracle’s which is to say they are multi-tenant but not fanatics about it.  However, RightNow is not a Fusion application and Oracle has its share of customer service/call center, call them what you will, apps so they weren’t exactly desperate to get another one.  I recall that Oracle paid one billion dollars for ATG, a company focused on e-commerce, so perhaps the company only knows how to write checks with nine places to the left of the decimal.

    Seriously though, Oracle, ATG and RightNow might be a thing in the future.  Multi-channel communication combined with e-commerce outreach could be very important.  Add to this Oracle’s success in what it has called clienteling (sp?) in which store sales associates carry mobile devices that can orchestrate customer centric shopping, and you might see a pattern.  If the customer can’t come to the store, perhaps the store will come to the customer.

    But this takes nothing away from RightNow’s core strengths today.  The company has become something of a missionary bringing the message of customer centricity to its customers.  In teaching the religion, RightNow has helped them navigate the social divide and some of that teaching might be very useful to Oracle which has a boat load of older technology products that it is in the process of “Fusing” and those applications need to adopt more socialized approaches.  Presumably, Oracle will protect the brand as it has with other acquisitions and Oracle RightNow does not appear to be that hard to say.

    Competitively, this is interesting. another big CRM vendor recently bought Assistly which provides service functionality in an unassisted mode, or to say it differently, it is more of a customer self-service solution for the small business space.

    Nonetheless, these are merely starting positions; it’s hard to know the ultimate destination some of these packages will have.  Part of that issue resides in a couple of social facts of life.  First, socially mediated processes are completely scalable working across the internet equally well for all sizes of company. Second, socially mediated business processes have very low costs and for that reason are attractive to anyone with a pulse especially in this economy.

    There are other companies in the market that might make interesting buys for one of the bigger CRM companies and you can start with the CRM Idol finalists — Assistly’s stablemates, CrowdFactory, GetSatisfaction and Stone Cobra.  Each does something different and each is worthy of a vote or even a billion.

    Finally, we should ask why in the middle of a terrible economy there is so much company buying going on.  The answer is that the corporate economy replete with M&A activity and some very good IPO’s this year has little to do with the real economy.  We’ve reached a point where some very good but siloed solutions have matured and a time when the big companies have ample cash that they aren’t spending on things like hiring people.  Buying a promising company is like R&D spending all bundled up and you get the result more or less right away.

    So there it is.  Oracle buys RightNow for a king’s ransom.  I wonder if they’ll be serving champagne at the Broadmore tonight.

    Published: 11 years ago

    One of the more interesting developments of the last week has been the announced acquisition of ATG (Art Technology Group) by Oracle Corporation.  ATG is one of the leading suppliers of ecommerce solutions and Oracle liked their stuff well enough to plunk down a cool billion bucks for the logo.

    I thought it was a good idea at the time but I am also interested in hedging my bets.  Questioning or being skeptical of Oracle’s acquisitions has not always been a good career move.  I was one of many voices who questioned the sanity of the binge that Oracle went on when it bought up much of the front office industry in the middle of the last decade.

    Several years later the product set that once looked like Marshal Tito’s Yugoslavia still hangs together and Oracle says it is about to release for general availability the new technology stack that will “fuse” it all together.

    Only a company like Oracle or Microsoft or a few others, with deep pockets, could pull off something like this.  In addition to the billions it took to buy the companies, billions more had to go into not only Fusion’s development but also the care and feeding of so many disparate brands during the interval.  I assume the acquired companies have been throwing off enough cash to make the deals palatable but I have no first hand knowledge of this.

    So when I look at the ATG acquisition part of me says, not to worry, Oracle has it all figured out; besides, it’s only a billion bucks.  (In truth, that last bit about the billion bucks makes me blanch.)  The other part of me says this is a lot of money, especially now in this part of the recovery and this part of the front office software life cycle.

    Now, to be sure, ecommerce is really important for a variety of reasons and I can envision scenarios where it continues to gain in popularity.  For example, buying on-line will likely increase in popularity if we see another gas price spike that makes people go to the mall less often.  But I also know that as demand for ecommerce software increases the trend toward commoditization will likely increase.  Ironically, one of the commoditizers in this case is none other than NetSuite, affectionately known as Larry’s Other Company.

    NetSuite’s (NYSE: N) got game—they’re global (just opened a development center in the Czech Republic), they’re all SaaS and their ecommerce functionality is already tightly incorporated with their ERP and CRM.  There’s a lot to like with NetSuite (and they are not a client).  But N isn’t even the only alternate player in the universe.  There are many players in the space starting with IBM and moving through the alphabet to 3dCart, Volusion, and Venda just to pick some names out of a hat.  In addition there is a growing list of open source software to contend with.

    Now, certainly, these vendors don’t all compete for the same business.  A company like Oracle has to have a credible system that it can offer to its Global 2000 customer base, especially when competing with the likes of IBM and many of the smaller vendors chase business in the SMB world.  I’ve recently has some experience with the open source content management system, Joomla! (Yes the “!” is part of the name.)  It’s a good product and they’ve got a robust community of developers and a secondary market of people who implement and sell the product as a download or as a hosted offering.  And it has ecommerce functionality.  Free.

    My point is that the cost of good software has dropped to a very low level.  Companies are making more of their money in services rather than product, at least in ecommerce as far as I can see.  So the idea of paying a billion dollars for an ecommerce software company, even one as accomplished as ATG, seems a little out there to me.

    But maybe Oracle sees something; maybe they see a future in which they sell more services and an ecommerce product makes sense to them as something that fills a need for solutions that sell services.  That might sound crazy but in the last year Oracle became a hardware company with the acquisition of Sun Microsystems.  You might not have been able to see that coming five years ago but there it is.

    So, Oracle and ATG—good idea?  I really don’t know.  If past is prologue then deep pockets might again make a funky strategy into a winner.

    Published: 12 years ago


    The news is that Oracle is buying independent ecommerce software provider, ATG (Art Technology Group) of Cambridge, MA for $1 billion.  I think it’s a good move for both companies.

    ATG is known as a premium provider of ecommerce solutions at a relatively affordable price with more pre-built solutions that its larger competitors who have delivered ecommerce more or less as a toolkit.  However, I also think that the company lacked the size to compete on its own with companies like IBM whose reputation still has a great deal of weight in the board room where decisions about which technology to spend millions of dollars on come from.

    The only other company in a similar position is NetSuite the leading provider of SaaS based ERP which also has a good ecommerce product.  Interestingly, NetSuite’s (NYSE: N) majority owner is Larry Ellison, CEO of Oracle.

    With Oracle behind it and a ready customer base of Oracle CRM and ERP customers—including Oracle CRM On-Demand—it looks like Oracle will recoup its investment quickly.  ATG, meanwhile, will gain a larger audience and Oracle’s backing.  There’s a lot to like in this.

    Market fit

    Oracle may be looking down the road at a world that will be more dependent on ecommerce.  As transportation prices increase due to high-energy costs, there is evidence that consumers may travel less and ecommerce solutions will undoubtedly be called on the fill some of the gap for retailers who will begin to see fewer people in their mall stores.

    Regardless of whether the transportation scenario plays out, it is a reasonable conclusion that if a vendor like Oracle can get behind a company like ATG, which offers lower cost ecommerce solutions, market demand for these solutions will expand because the lower price point brings out new demand.



    Published: 12 years ago