Customers want consolidation, Oracle CEO Mark Hurd tells Which-50. And they are likely to get plenty of it for some time yet as companies like Oracle, Adobe and Salesforce jockey for leadership in the rapidly emerging marketing cloud space.
The marketing tech sector saw a wave of rapid and ever-escalating acquisitions over the last few years and, while the trajectory has softened a little on the M&A front, expect a new wave as the market consolidates further.
There are already high-profile casualties, with Teradata pulling the pin on its efforts late last year.
During our time at this week’s Modern Marketing Experience event in Las Vegas — which marked the completion of Oracle Marketing Cloud’s second year — we came across the story of a company which sold its business to Oracle. That experience, from an insider, was instructive and helps explain why Oracle is now a tier-one marketing tech contender while SAP — its long-term historical rival — appears to have missed the boat.
When it came to due diligence the Oracle tiger team was obsessed with the source code and the product, while SAP sent accountants to run the numbers. Oracle won the prize, and the source of my story never needs to worry about making the rent.
We spoke to Oracle CEO Mark Hurd after his Wednesday morning keynote about this small vignette and what it says about the company’s approach to building out its marketing tech offering.
He told Which-50 “Our view is simple — we want to buy the best products. That’s really important to us. If I asked you a pop quiz — so what did we pay for Eloqua? — my guess is you would say ‘I don’t know’. And my guess is if I asked our investors the same question today they would say ‘I don’t know’.” *
According to Hurd, on the day a deal is announced it might generate some excitement over the price but over a the longer arc of time it doesn’t really matter. “What matters is, do you have the right solutions for customers.”
That comes with a caveat, of course. “We tend to try to buy the best product, but it’s important to us that they are technically sound.”
While not wanting to get too deeply into the technical details, Hurd said these issues all fed into outcomes such as customer satisfaction, usability and upgradability.
He said even with these limitations, Oracle might still buy the company — but it would have to consider the complexity (and presumably the cost) of rewriting the solution at some point.
The real-life experience of the customers of a potential acquisition are equally important, he suggested. “Do you have customers using the product? How is the user experience? Is it really solving the problems you say it does?”
The due diligence process is fairly extensive, he said, with a heavy emphasis on understanding both the technology stack the solution is built upon and all the various use cases.
According to Hurd, “That tends to be the way we do it. If we like it and we think its the best thing on the market we are focused on going and getting it.”
* For the record, Oracle paid $US871 million for Eloqua — that figure is net of Eloqua’s cash. Source: Wikipedia.