Oracle bulks up with BEA buy

Oracle Corp.'s acquisition of BEA Systems Inc. will give the ever-growing company a competitive edge over some of its rivals, while creating opportunities for other companies that have specialized products that fit into Oracle's plug-and-play approach, industry analysts said.

"What it means for folks running up against Oracle is there is one more competitive advantage Oracle brings to the table, so it makes it tougher to compete with them," said John Slye, manager of federal industry analysis at Reston, Va.-based market research company Input Inc. "The acquisition also takes one more teaming partner off the table, at least overtly."

Oracle agreed to acquire BEA for about $8.5 billion in cash. Oracle officials expect the addition of BEA products and technology to extend Oracle's Fusion middleware suite. Oracle Fusion middleware has an open architecture that makes it possible to couple BEA's WebLogic Java Server to virtually all the components of the Fusion software suite.

These kinds of acquisitions are forcing smaller companies to specialize, Slye said.

"The companies in $250 million in revenue range can't be the one-stop-shop generalist, they just don't have the economies of scale that the big guys do," he said. "So there's pressure to be a niche player to survive. As Oracle continues to drive critical mass to a service-oriented architecture framework, that will open up opportunities for companies that have specialized niche products that can plug into this."

Government agencies are under pressure to integrate systems, improve workflows and eliminate obsolete systems. That's the reason many states and federal agency are turning towards an SOA approach, said David O'Connell, senior analyst at Nucleus Research, Wellesley, Mass.

"Agencies need to also comply ? and prove that they are complying ? with the E-Government Act of 2002, which mandates that government agencies pursue opportunities to leverage information technology in order to do things like reduce costs and improve service levels," O'Connell said. "All of those things rely upon integration."

For agencies already running Oracle applications it should be easy to integrate offerings from BEA. And the same should be true for BEA's existing customers.

"So if you're already running applications that were acquired by Oracle, then BEA is a little more accessible to you as a way to integrate those applications," O'Connell said. "Anytime integration becomes easier it's a good thing, and especially for government because they have lots of mandates to fix broken workflows."

Further consolidation of major companies serving the government is no surprise, Slye said.

"This is not a big surprise, we've seen a lot of this going on over the last 18 months for sure, and Oracle has been doing this for 10 years now," he said.

About the Author

Doug Beizer is a staff writer for Washington Technology.

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