Oracle acquires Primavera

On October 8, 2008, Oracle announced it was acquiring Primavera Software, the developer of the eponymous Primavera project management application as well as other solutions related to managing contracts and disputes, billing and sourcing. The deal is expected to close “in the second half of 2008” — they’d better hurry; not much 2008 left! Financial details were not made public but I believe Primavera had sales on the order of $100 million in 2007. Primavera first came to my attention years ago, when it wanted to enter the hot online markets opening up for the construction industry. Remember how money and interest flowed to industria, buildnet.com and others? Primavera saw a way to leverage its presence in just about every construction company using a digital planning tool to other parts of the builder’s business. Since then, the company has grown to offer what it calls “project portfolio management” (PPM) to engineering and construction, public sector, aerospace and defense, utilities, oil and gas, manufacturing and high tech companies, as well as IT and other services providers. According to Oracle, Primavera has over 2.5 million users at more than 5,000 customers in 85 countries, managing more than $6 trillion in project value. Also according to Oracle, Primavera’s PPM products will be bundled with Oracle’s project financials, human resources, supply chain management, product lifecycle management, business intelligence, and infrastructure software to “provide the first, comprehensive Enterprise Project Portfolio Management solution. This solution is expected to help companies optimize resources and the supply chain, reduce costs, manage changes, meet delivery dates, and ultimately make better decisions, all by using real-time data.” This deal should not come as a surprise. In 2006 Francisco Partners and Insight Venture Partners acquired what was termed “a substantial stake” in the company. Given the timeframes in which private equity funds usually operate, a deal was about due. Without knowing the financial details, it’s hard to know if the deal truly is a good one. However, it is likely that Francisco, Insight and Primavera principal Joel Koppelman got a good deal for Primavera. From Oracle’s perspective, they stand to acquire 25 years of expertise in AEC, construction planning, contract management and overall project management. Too, Primavera’s customers are very, very loyal and committed to the company’s products. From Oracles’ material, it is unclear how many Primavera customers are not already Oracle customers, but one could see significant cross-selling potential — if the channel issues in bringing together these two very different businesses in scope and scale can be ironed out. Of course, this could always go badly, as statistics tell us most acquisitions fail. Standard wisdom says that Oracle must (1) keep Primavera connected to their customers (which seems likely, given that Primavera employees will be a dedicated Global Business Unit within Oracle); (2) keep product pricing at reasonable levels (ie. don’t jack them up now that it’s no longer a small company); (3) avoid forcing Oracle’s other products on customers; and (4) prove that there is a way forward for Primavera customers. Oracle appears to be doing a good job communicating its intentions — let’s hope that continues. So now the question is: who’s next?