What Larry wants, Larry gets: what next for acquisitive Oracle?

Several years ago, I sat next to then-Oracle UK managing director Ian Smith at an industry event. At the time, the software giant was pursuing an aggressive and increasingly contentious purchase of rival PeopleSoft, and for a while looked like losing.

Discussing this with Smith, he turned to me at the end of the conversation and said: “I’ll tell you this: what Larry wants, Larry gets.”

Sure enough, Oracle’s famously confident chief executive Larry Ellison got what he wanted. Since then, he has got a lot of what he wanted as the supplier went on an unprecedented spending spree that took in Siebel, BEA Systems, niche software firms too numerous to mention, and most recently, Sun Microsystems. In the process, Ellison has revolutionised the company he founded, from a database and business software specialist to one of the true giants of the IT sector.

Why? Because Ellison wants to take on the biggest of them all – IBM.

To reinforce the point that Smith made, just look to the waters of the Mediterranean off Valencia this week. In 2000, Ellison, a keen yacht racer, set his sights on winning the America’s Cup, sailing’s most prestigious prize. After several unsuccessful attempts – and a long and costly series of legal cases – Ellison’s BMW Oracle Racing team is facing off against holder Alinghi in one of the most technically ambitious, complex, and expensive racing yachts ever built, a 90-foot trimaran featuring a 220-foot wingsail – the largest ever fitted to a sailing boat.

What Larry wants, Larry gets.

So once he gets back to his Redwood Shores HQ in California, what will Larry want next for Oracle? If IBM is the target, there is an obvious gap in his current strategy. So much of IBM’s success today is founded on its Global Services operation – the IT services, outsourcing and consultancy group that leads so much of Big Blue’s sales efforts and high-level customer relationships.

Surely, if there is one thing Larry wants – and needs – it’s an Oracle Global Services. With Sun in place as the hardware arm to take on IBM’s server business, an IT services firm is surely the next target for Ellison’s acquisitive wallet. If he could have anyone, I’ll bet he would take Accenture – with EDS now in the hands of HP, Accenture stands out as the only truly global outsourcer that remains independent.

There may be other, less ambitious, targets – CSC, Capgemini, the big Indian firms – that cannot be ruled out, but none would give Ellison the immediate global reach and opportunity of Accenture. With a market capitalisation of $25bn, it would be one of the largest takeovers in IT history, and perhaps even for Ellison it remains an acquisition too far – although Oracle itself is currently worth some $118bn.

But as Ellison pursues the sailing trophy that has so far eluded him, you cannot question his ambition. Rule nothing out – what Larry wants, Larry gets.

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As a 9 year Accenture veteran I read your post with interest... You could have something here ;-)

Accenture has always had a strategy of OS/Application independence - 90% of revenues come from customisation rather than licence sales - but I am sure Larry could put an interesting offer on the table that would allow some re-thinking of Application independence.
Thanks for your interesting comment Conor. It has historically always been the case that consultancies/IT services firms maintain that application independence as you describe, but I think that IBM has set something of a precedent now with Global Services, which is generally seen as independent from IBM product lines. Similarly the HP/EDS deal continues that precedent. Oracle as a business application provider would be subtly different, but I think any such objections would soon be overcome.

It will be interesting to watch...
You placed the idea very well considering Oracle' hunger for companies

Oracle net cash is about USD 14 billion. Accenture market cap is about USD 29 billion.
CSC market cap about USD 8 billion
Capgemini market cap about USD 6.5 bllion

Accenture could be a tough buy because it is expensive and mostly held by institutions that could demand a decent premium. Apart from this a 'partner culture' integration could really give a backache to Oracle. (Will Oracle get into business consulting?.....)

CSC is an easy takeover target because of its presence in the Government/Public market and lot of opportunities are coming up. Oracle now got huge and high-end servers for governments

Capgemini could give a Oracle a good presence in services in the European market. (and then possibly gulp struggling SAP..... where are the EU guys. I know it is a remote possibility)