In a bid to quickly strengthen what the company admits has been a weakness, Oracle Corp. today announced plans to acquire Demantra Inc., a Waltham, MA, provider of demand management software. Financial terms of the deal, which is expected to be completed later this month, were not disclosed.
Demantra thus becomes the latest in a string of Oracle enterprise applications acquisitions which over the past 18 months has included big companies such as PeopleSoft, JD Edwards, and Siebel Systems.
Importantly, Demantra brings a set of best-of-breed supply chain planning and demand management tools to Oracle's product line, which, according to Jon Chorley, vice president for supply chain strategy, the software giant lacked, particularly in demand-side planning and optimization. While Oracle's E-Business Suite includes a Demand Planning module -- as part of its Advanced Planning Framework -- and the company's JD Edwards product line features demand management tools previously acquired from Numetrix, both sets of tools were in need of major upgrades, Chorley admitted.
"We were not best in class on the demand side in the same way we are on the supply side," Chorley told Managing Automation. "The Demantra stuff is best in class."
Oracle had considered making the necessary investments to upgrade its existing demand-side tools. In the end, however, the company decided the Demantra acquisition would provide a quicker way to improve Oracle's demand management capabilities.
Oracle has a leg up on integrating the Demantra products with its existing enterprise applications. Prior to JD Edwards' purchase of Numetrix, the company had a reseller agreement with Demantra. Seventy-five percent of Demantra's customers have integrated the product with the JD Edwards suite, Chorley said.
Within the next few months, Oracle will build complete integrations between the Demantra products and the JD Edwards and E-Business Suite applications, Chorley said. Following completion of the acquisition, he said, Oracle will sell the Demantra products exclusively to new accounts, replacing the company's existing demand management tools. Oracle, however, will continue to support its existing tools under its lifetime support program, Chorley said.
Oracle does plan to go through with a new release of the current Demand Planning module for E-Business Suite, which will be part of the version 12 release planned for later this year, Chorley said.
Following completion of the integration of the Demantra tools with the JD Edwards and E-Business Suite applications, Oracle will enable Demantra's tools to interoperate with Oracle's recently acquired Siebel CRM suite. Specifically, Oracle will integrate Demantra's trade promotions planning and optimization tools with Siebel's marketing and trade management modules, Chorley said.
All of Demantra's 85 employees will be offered positions at Oracle, Chorley said, including founder and chief technology officer Bart Feldman, who will continue to run a development team dedicated to the Demantra products. Current Demantra sales, marketing, and consulting employees will be melded into the corresponding Oracle organizations, although they will continue to focus on the Demantra products, Chorley said.
Analysts today called the proposed acquisition good news for Oracle, Demantra, and the supply chain software industry. Despite its best-of-breed product, noted Lora Cecere, research director at AMR Research in Boston, Demantra had struggled to grow its business in recent years.
"They were struggling due to turnover in their sales force and because, generally, this has been a tough environment for best-of-breed vendors," Cecere explained in an interview.
In recent months, Demantra had begun to show some growth. The privately held company said license revenue grew 178% in the first quarter compared to the same period last year, but did not disclose precise figures. Total revenue for the first quarter also jumped 67%, the company said.
The acquisition by Oracle will provide additional resources for the ongoing development of the Demantra product line, a benefit for existing Demantra customers, Cecere said.
And Demantra will fill a gap in the Oracle product line. "Through all their acquisitions, Oracle never ended up with a good demand planning tool. This fills that which will be important for Oracle particularly in CPG and discrete manufacturing markets," Cecere pointed out.
The Oracle acquisition of Demantra also will put additional pressure on Oracle rival SAP to improve its demand management and sales & operations planning tools, she noted. SAP recently revealed plans to develop a new S&OP composite application built on its Enterprise Services Architecture.
"But," Cecere said, "SAP still has a long way to go."