BEA and Oracle and "caveat emptor"
As someone who
wrote a little on the potential acquisition of BEA by Oracle, I've been in a quandary since the news of the acquisition broke: frankly, I felt that I needed to write something - but there was already so much other commentary out there (much of it saying the same thing), I didn't want to just add another voice to the global
egosystem. (The perils of writing in the age of the web, I suppose.)
So I asked our excellent partners
Freeform Dynamics if they could help us look behind the headlines - to understand what regular IT people out there think of the deal. As it happened, they'd already kicked off a quick research effort on that precise topic without me knowing. Great minds think alike.
Freeform conducted a quick poll of readers of
The Register (this is a big multinational IT news site, and its readers are typically IT managers, developers and ops people - people at the coal face of enterprise IT). They asked a couple of high level questions:
- Is the acquisition of BEA by Oracle positive or negative for the IT industry?
- Will the acquisition of BEA by Oracle be positive or negative for your business specifically?
They also asked respondents to provide "free form" answers to provide reasoning for the answers to the two main questions. The Freeform guys got just under 300 responses overall. So what did people think?
Well, there were no real surprises in the response to the second ("what does it mean for you") question. There appears to be a large degree of nervousness amongst respondents who are BEA customers (this is bound to be true whenever a company buys something you've already made an investment in). In this group, around 40% were "unsure" and a further 35% or so felt the impact would be "negative". For the Oracle customers, things look a lot rosier: around 40% felt the impact would be "positive", and a further 35% or so thought the outcome would be "neutral". Given Oracle's standing as a middleware provider (the technology is good enough if you're working within an Oracle environment, but not regarded as top-tier for cross-enterprise use in a heterogeneous environment) it's understandable that Oracle customers are keen to get their hands on some more beefy middleware alternatives.
What was much more interesting to me were the responses to the first question, because they can't be explained away by understandable acquisition jitters.
When asked "is the acquisition positive or negative for the IT industry?"
fewer than 30% of respondents felt the outcome would be positive (45% or so were negative, 10% or so were unsure, and 15% or so were neutral). Within the BEA customer base, two-thirds of respondents were negative - but given my
earlier points about why people buy BEA, I'm not too surprised by that. Tellingly, though,
even among respondents with no investment in BEA or Oracle, over 40% felt the outcome would be negative for the industry (around 35% were positive, just over 10% were neutral, and under 10% were unsure).
Looking at the respondents with Oracle investments and those with investments in both BEA and Oracle, both camps were decidedly ambivalent about the impact of the deal on the IT industry in general. In both cases, more respondents answered "negative" than "positive" on this question.
When we looked at the freeform responses supplementing the other questions, there was more food for thought.
The most common explanations for "negative" responses could be grouped into one common answer: "it'll lead to reduced choice in the market". Other popular comments can be summarised as concerns about the viability of existing investments (this was cited by both BEA and Oracle customers), and concerns about the potential loss of innovation within BEA's technology. Interestingly, the poll also threw up a significant number of respondents who were concerned about the degree of power that Oracle (after the BEA acquisition) would have over them as a customer.
There were, of course, freeform comments on the positive side (there were just fewer of them). The most popular positive responses could be best summarised as "a more mature solution will emerge". The second most popular category of positive response can best be summarised as "it'll enable the rescue of some good technology from a company that has lost its way".
Looking back over all this data (and a more comprehensive analysis will appear soon on The Register, courtesy of Freeform Dynamics), my message is this: whether you're the company buying BEA, or a company that has previously bought BEA technology, this shows the eternal truth of the phrase "caveat emptor".
If you've historically bought BEA technology because BEA was an independent middleware technology provider, the lesson is that just because your middleware supplier is independent today, doesn't mean it will be independent next year. If supplier independence at key points in your IT landscape is really important to your IT strategy, do a proper risk analysis and plan what you'll do if things change.
If you're an Oracle exec, the lesson is that many of the customers you're about to acquire might already be customers of yours - but they may well have bought BEA technology precisely to avoid getting too deeply attached to companies like yours. You're going to have to tread very carefully.
Labels: acquisition, BEA, Freeform Dynamics, Oracle, strategy planning
