Here’s the skinny on Oracle’s acquisition of Agile: PLM is a three-letter acronym that has never lived up to its reputation as hot number either across the enterprise or in the eyes of the investment community. That hasn’t stopped companies like Siemens from recently paying a pretty euro to buy up Agile competitor UGS, but Siemens somewhat anomalous bid belies the fact that Agile, and others like it, have failed to live up to their promised hype.
This makes Agile a radically different kind of acquisition for Oracle, which has specialized in buying viable companies like PeopleSoft and viable has-beens like Siebel. No one would argue that HRMS or CRM are hot markets, and that no market-bending turnaround was necessary for Oracle to start to make good on those investments, and others like it.
But PLM is different, and hence this deal is different too. One thing that has characterized PLM is the lack of an enterprise play, in fact too many of Agile’s users are on the engineering side of the equation, and too few are sitting in the executive offices. PLM has therefore suffered from a massively unrealized potential, one that has made it one of the few acronym failures to emerge from the 20th century.
Oracle’s challenge will be to up the ante for PLM and make it relevant for C-level execs: clearly, the notion that product innovation is a key issue for all companies forms a reasonable basis for Oracle’s efforts. Supporting product innovation and all that entails across the enterprise is a worthy goal, but it will be up to Oracle to prove that its current formulation, Agile plus Oracle E-business Suite (or JDE or PeopleSoft) plus Siebel CRM equals enterprise-level product innovation support. Especially as the Siebel to Agile connection has yet to be seen in the market, as far as I can tell.
Two other points with respect to swallowing Agile. Unlike Oracle’s other acquisitions, Agile is a actually an un-integrated set of disparate applications that are targeted for different markets and geographies. This compounds both the integration and the application support challenge. Indeed, I would not be surprised if Oracle ended up breaking its model and jettisoning one or two pieces of the Agile pie just to clean things up a little bit.
And point number two is that this is not just a discrete manufacturing play. Agile’s acquisition of Prodika put it squarely in the process manufacturing market, and Oracle is clearly interested in taking its new message to this side of the market as well. That’s an interesting twist to the traditional discrete manufacturing PLM focus.
In the end, PLM, like Agile, was a great idea that simply never lived up to its potential. Oracle’s new and unprecedented challenge in its enterprise software roll-up role is to make PLM what it never was: an enterprise-wide strategic initiative. If they succeed, this acquisition will be a true watershed moment in the industry. If they don’t, it’s because someone else has gone ahead and figured out where PLM really has to go, and then taken it there.