Renaissance in Portfolio Management & GRC?

Renaissance in Portfolio Management & GRC?

Summary: Why Oracle Bought Primavera Now ?(Note: I actually prepared this post 24 hours before the Oracle - Primavera announcement.

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TOPICS: Oracle
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Why Oracle Bought Primavera Now ? (Note: I actually prepared this post 24 hours before the Oracle - Primavera announcement. Now, it seems a bit obvious.)

A few months ago, businesses had access to vast amounts of inexpensive capital. With lots of exceptionally low cost capital at their fingertips, businesses could afford to greenlight a large number of capital initiatives. Many of these capital initiatives involved IT.

When capital is constrained and/or expensive, businesses must make a number of careful decisions to optimize the use of this scarce resource. Well-run firms look at the entirety of their capital initiatives to decide: - which ones should be funded - which ones require another initiative to deliver the complete expected value - which ones best match overall business strategy - etc.

When looked at as a portfolio of potential projects, business executives make a number of decisions when choosing to fund, cancel, postpone or alter suggested initiatives. Projects with clear and immediate positive returns on investment (ROI) often get funded while discretionary initiatives with an unclear or negative ROI get deferred or dropped altogether. Likewise, projects that help advance the company's strategic mission often take precedence over projects that do not materially contribute to the success of the firms current or future product/service offerings.

Today, executive teams and IT leaders must reevaluate their proposed capital project plans and align these with the new restrictions and higher costs related to capital. Project portfolio management (PPM) vendors should experience a rebirth in interest in these products as businesses will struggle to make the correct (King Solomon-like) capital allocation choices today.

A pessimist might argue that a fancy tool, like a PPM tool, is not needed as a spreadsheet could do the same job. For smaller scale organizations, that assessment would likely be true. Where in initiatives must balance the needs of many diverse business units, product lines, internal functional groups, etc. a better smarter tool may be exactly what is needed. As capital becomes constrained, many more projects will be deferred or canceled and these decisions must be done intelligently.

Interestingly, GRC (governance, risk management and compliance) solutions may also experience a rebirth of interest as some of these products can help manage potential downside risk with capital projects. Admittedly, the connection to GRC is not as strong as to PPM tools; however, there can be no denying that managing risk in today's economy, an economy where there is far less cheap money available to throw at projects, is more important than ever.

Postscript - Now that Oracle has stepped into the fray with its Primavera deal, one has to ask why they chose the timing they did? I would speculate that: - Oracle believed it wanted more market share in the verticals (construction, engineering, consulting, etc.) that Primavera possesses - Oracle wanted to beef up its existing PPM and PSA solutions - Oracle sees this as highly complimentary to the JD Edwards solutions it acquired with PeopleSoft - Primavera was priced right and Oracle was ready for another applications deal - some of Primavera's investors were itching for a liquidity event

and finally, - Oracle thinks it's time to shake up the PSA/PPM space. Remember, it was just a couple of months ago that NetSuite acquired OpenAir. CA already owns the Niku Clarity line. Primavera already owned Evolve. That leaves QuickArrow (Austin), Planview (Austin), Deltek, Meridian Project Systems and a few more left. If the big ERP vendors come thundering into this space, it should make for an interesting time in th PSA/PPM market.

Topic: Oracle

About

Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

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