Oracle Builds on Vertical Strategy with Portal Acquisition

The database giant continues its shopping spree, buying Portal Software, a maker of billing software for the communications industry, for $220 million.

Oracle, on a buying frenzy for nearly two years, announced April 12 the acquisition of Portal Software, a company that will fit in with its already bursting-at-the-seams business applications division.

Portal Software, which Oracle is acquiring for $220 million, develops billing and revenue management software for a specific vertical market—the communications and media industry.

Oracle has had a single-minded goal since it began acquiring applications companies in 2004 with its contested bid for PeopleSoft: beat SAP as the No. 1 ERP (enterprise resource planning) software vendor in the world.

With its successful $10.3 billion takeover of PeopleSoft in January 2005, Oracle skipped from the third position to the second, but still has yet to overcome SAPs 21 percent enterprise applications market share; excluding the Seibel acquisition, Oracles market share is currently 10 percent, according to AMR Research. Oracles plan, according to officials, is to dominate in vertical industries—particularly in North America—and by sector where it can.

The acquisition of Portal Software will fill one of those goals by providing expertise in the communications industry.

"We supply technology and applications to over 90 percent of the communications companies worldwide today, and billing is a logical and complementary addition for these customers," said Charles Phillips, Oracles president, in a statement.

Through its $5.85 billion acquisition of Siebel Systems, completed Jan. 31, Oracle had also stocked its wares in the communications industry, particularly in the telco call center area, officials said (though Siebel is most widely known for its customer relationship management capabilities, both on-premise and on-demand). Oracles technology stack, which includes its namesake 10g Database and TimesTen in-memory database—also a recent acquisition—is likewise widely used in the telco business, Oracle officials said.

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Portal Softwares applications enable users to bill and manage a bevy of communication services, including wireline, wireless, broadband, cable, voice over IP, IPTV, music and video.

Two Portal Software executives, Bhaskar Gorti and Dave Labuda, will come over to Oracle with the acquisition. Gorti, Portal Softwares senior vice president of worldwide sales, services and marketing will head the Communications unit as general manager; Labuda will become chief technology officer.

Oracle is in the process of developing its next-generation application suite, Fusion Applications, that will be based on its Oracle E-Business Suite, with "best of" functionality from PeopleSoft, JD Edwards, Siebel and other acquisitions built in. Its not clear yet how Portal Software will fit into that integration plan.

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