Oracle’s announcement that it has acquired Primavera should not be seen as surprising – it’s a coming together of two market leaders. Oracle’s acquisition should be viewed as extremely positive. Primavera has long dominated the enterprise/capital project and program management space, from the planning and scheduling perspective, while Oracle is the leading project financials vendor. Primavera is a financially robust vendor with a solid management team; it has been a project management specialist for 25 years, however, rapid market consolidation had made it difficult for niche players like Primavera to break into enterprise sales; existing relationships with enterprise vendors kept Primavera relegated to field level projects. Oracle’s thin PPM offering made it difficult for the vendor to venture beyond the comptroller’s or cost account manager’s office; the combination of the two offerings will provide one of the most viable offerings in the PBS market.

This acquisition works for a number of reasons:

  • Oracle seeks to expand its vertical footprint into project industries.  Oracle’s acquisition signals its intent to prioritize project based businesses such as architecture, engineering and construction, government contracting aerospace and defense, professional services, oil and gas, and utilities.  Primavera brings this deep industry knowledge in functional requirements and business process needs and they have a long working history. These vendors have collaborated for years in the power, construction and public sector markets. A long track record of successful integrations will make further expansion into these markets a short term reality. 
  • Acquisition creates a barrier of entry into IT PPM. Oracle’s deep roots in the IT enterprise will make it difficult for other PPM vendors to crack into enterprise deals, even if they are present in production or operations management. Projects, portfolios and forecasting are aligned with financial planning more than they are aligned with operational efficiencies. Tight links into the financials systems will give Oracle a definite lead in the selection process.  Oracle’s has proven successful in cross-selling acquired solution into its install base.
  • Opportunities abound in the project based solutions market. Project Based Solutions makes up approximately 60 to 70% of the available project management market – and Primavera and Oracle are the current market leaders. The majority of the major vendors are targeting IT PPM and IT Project management, which is the smaller segment. The big money is in capital and infrastructure programs – they make up.  Even if technology plays a key role, it is still considered a capital investment. Primavera is the market leader in construction and capital projects; Oracle is a key vendor on the financials and enterprise side of this market.   An integrated solution will make it even tougher for other vendors to break into a lucrative market.
  • Oracle will leverage core assets across its acquired entities. Under the umbrella of Apps Unlimited, clients potentially can expect Oracle to build AIA integration points to Siebel, JD Edwards, Stellent, and Agile. The result – end to end proposal creation to project delivery to customer service to content management to product design.

Potential gotchas for the acquisition:

  • Collaboration has to be on the forefront of the product offering. Project management, especially in areas of technology, is becoming lighter. A Forrester survey from 2006 showed that more than half of the IT organizations surveyed considered Microsoft’s Sharepoint as their primary project management tool      because everything else was too heavy[i]. Many industry experts believe that    focusing on collaboration, communication and risk management, not critical      path scheduling and control, make for successful project management. Both Oracle and Primavera are known for their functional depth, which may be overkill for smaller or less complex projects. This integration needs to be able to be agile enough to enable organizations to perform just enough project management in order to deliver successfully, without bogging them down in unnecessary process.
  • Price points for SMB’s – Primavera has long had a reputation of being too expensive for small to midsized organizations, and with the plethora of open source and SaaS offerings, breaking into markets other than the typical enterprise customer has been a challenge. Oracle must explore more flexible ways of selling the EPM solution into the SMB market and at the divisional level of the enterprise.


Recommendations/Observations –

  1. Prospective PPM customers should look at this as a positive move. Primavera is a successful standalone player with a strong management team.  Primavera’s architecture is flexible, so if there are other ERP modules currently in place, integration will not be a problem.
  2. No major changes expected in the IT PPM market. Short term, there will not be any significant changes in the IT PPM market. Oracle and Primavera excel in PBS and will leverage this strength to take ownership of that market.
  3. Expect vendors across other PBS categories to take action.  PBS vendors like Agresso, Augeo, CA, Deltek, Epicor, IFS, Meridian, NetSuite-OpenAir, and Tenrox are in positions to continue their move into different markets such as product/program management, service delivery automation, asset mananagement, and PPM.

Posted by Margo Visitacion and R "Ray" Wang