How important is management? Important enough to Oracle (NASDAQ:ORCL) CEO Larry Ellison that he's willing to pay cash for it.
Not executive talent, mind you, but management, as in systems management software. After years of successful acquisitions, Oracle this week committed cash to manage its software stockpile through a deal for ClearApp, whose technology is purported to help customers manage complex infrastructures known as service-oriented architectures (SOA). Terms were not disclosed.
SOA is one of those techie terms that may as well mean "something that sounds easy but is really hard to do and, if done well, can save you a ton of moola." Dozens of companies deal in this technology, including all of the big software suppliers: SAP (NYSE:SAP), Microsoft (NASDAQ:MSFT), and IBM (NYSE:IBM).
The economics of service
They're interested because they all understand how much money stands to be made. SOAs are vehicles to value creation in the same way that mashups are. Think of what Mozilla is doing for the browser with Ubiquity. Or think of cloud computing. Everything that's being built for the cloud is a composite of multiple services. Zillow is an example.
A more sophisticated example is Salesforce.com's (NYSE:CRM) Force.com -- an on-demand platform of development tools designed to make it easier to build new services for the company's core customer-relationship-management system. We call these mashups, but they're similar to SOAs.
The trouble with mashups -- and therefore, SOAs -- is that no two software-driven services operate exactly alike. They have to be made to talk with each other and share data. Sometimes, code gets lost in translation. ClearApp scouts for these problems and then (ahem) clearly identifies them so that they can be addressed.
We don't know how much Oracle paid for ClearApp. My guess is not nearly enough, given its potential as a value creator in a market that's slouching toward services. Well done, sirs.
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