PeopleSoft deal drove Oracle's renewed interest in retail apps

Evan Schuman, writing for eWeek, has an interesting post-mortem on Oracle's acquisition of Retek, a leading software vendor for the retail industry. According to recent interviews with parties on both sides of the deal, Oracle's interest in the retail sector was revived when it discovered that it had picked up about 400 new retail customers through its PeopleSoft acquisition.

Schuman writes,

This is all part of what some Retek insiders describe as a growing Oracle awareness of two market facts: Retail is really important; and retail-specific apps are really difficult to do well.

Ironically, Oracle had a reseller relationship with Retek that, according to Retek insiders, ended in 2002 because of Oracle's lack of understanding of the retail market.

...there was certainly a concern from some at Retek that Oracle at the time didn't appreciate the importance of the retail vertical, nor the difficulty in servicing it. In this context, servicing retail doesn't mean selling operating systems or business databases or payroll platforms. It means providing the kinds of retail-specific apps—such as POS, supply chain and merchandising—that Retek did all day.

With its acquisitions of Retek and PeopleSoft, Oracle has the opportunity to cross sell its products to the customer base of both acquisitions. Something like 80% of the Retek customer base runs Retek apps over Oracle technology. This should facilitate further penetration of these accounts for Oracle.

Furthermore, many of those 400 retail customers that Oracle picked up in the PeopleSoft acquisition are only running PeopleSoft HR and financial applications, along with applications from Retek competitor and former PeopleSoft partner, JDA. This represents an opportunity for Oracle to cross sell its E-Business Suite to those customers and take opportunities away from JDA.

The strategy is clear, but whether Oracle can capitalize on these opportunities will depend on how well it executes.

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