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The Enterprise System Spectator

Wednesday, May 16, 2007

Oracle bolsters its PLM-credibility by acquiring Agile

Oracle has made a big move into product lifecycle management (PLM), with its announcement today that it is acquiring Agile Software, one of the leading niche vendors in this space. It's an all cash deal, for $8.10 per share, or nearly $500 million.

Agile's software has been well-regarded as a solution for centralizing and managing product information. In a nutshell, Agile creates a central respository for all sorts of product information, such as specifications and drawings--information that in most organzations resides in a variety of paper and electronic files, scattered in various departments. Agile creates one system of record for all such information, making it easy to access and maintain by anyone with rights to see it or change it.

PLM systems are not easy to implement. There are many cultural obstacles to getting these various departments to standardize and normalize naming conventions and specification data. There are also countless debates about who "owns" what information. But organizations that implement successfully realize huge benefits, such as faster new product development, rapid engineering change, higher product quality, and reduced cost of service. Companies using Agile's products include Acer, Flextronics, GE Medical Systems, Harris, Heinz, Johnson & Johnson, Lockheed Martin, McDonald's, Micron, QUALCOMM, Shell, and ZF.

Agile's financial performance hasn't been as successful as its product concept. Agile rode high in the late 90's as part of the Internet boom, as Agile's products provided a platform for customers and suppliers to collaborate on product development over the Internet. Its stock price exceeded $100 per share briefly at the end of 2000, before starting a decline that saw it under $6 in late 2002--the result of the dot-com collapse. It's bounced around between $6 and $10 since then. It hasn't been helped by finding itself in trouble recently over its misstatement of employee stock options, forcing it to take a charge of nearly $70 million in accounting adjustments. It's combined losses since 2001 have exceeded $140 million.

Agile's failure as a niche vendor underlines the fact that PLM is an enterprise solution, and to be most successful it ought to be part of an intergrated enterprise suite of products. So, hopefully, its acquisition by Oracle will help it to become more successful in the future.

On the other hand, Agile really bolsters Oracle's credibility on the engineering side of the customer's house. I've evaluated Oracle's E-Business Suite in the past on behalf of an engineering-centric organization, and although Oracle was making progress in PLM, there was an awful lot of functionality that was only promised in future releases. It wasn't even close in terms of the functionality offered by Baan (now Infor's ERPln) The addition of Agile to Oracle's portfolio should solve that problem quickly.

For more details on the deal, see Oracle's press release as well as a special page on Agile's website.

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by Frank Scavo, 5/16/2007 11:45:00 AM | permalink | e-mail this!

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