The office supplies retailer say it sacrificed some sales to improve online profitability. It also redesigned its business-facing e-commerce site, StaplesAdvantage.com.
The move positions both Oracle and ATG to better compete against IBM.
Oracle Corp. said today it will buy Art Technology Group Inc. for about $1 billion in cash in a move that shores up holes in each company’s strategy of providing e-commerce technology platforms to multichannel retailers.
“For customers of ATG this should come as a welcome shock,” says Brian Walker, principal analyst specializing in e-commerce technology at Forrester Research Inc.
Oracle will bring ATG technology it has lacked, including systems for managing orders and relationships with customers across channels, while ATG will fill a hole for Oracle in offering a strong e-commerce platform to integrate with its back-end accounting, customer relationship and supply chain management systems, Walker and other analysts say.
“ATG has lacked enterprise order management and customer relationship management capabilities, and the resources of Oracle will boost investment in ATG’s core commerce capabilities,” Walker says. “Oracle has had a significant hole in terms of e-commerce capability needed by their enterprise resource planning, customer relationship management and supply chain clients. Together, these offerings will make a compelling pairing.”
ATG president and CEO Bob Burke says in a letter sent today to ATG’s clients: “Oracle and ATG together expect to provide a unified best-in-class customer relationship management , retailing, and cross-channel commerce solution to help businesses improve merchandising, enhance sales with automated recommendations, improve customer service with live-help, grow revenue, enhance brand value, and achieve better operating results.”
The deal also will go a long way toward helping Oracle better compete against IBM Corp., which has been expanding the capabilities of its WebSphere Commerce e-commerce technology platform by acquiring other companies including Sterling Commerce, which brings to WebSphere much of the same kind of back-end business management technology that Oracle brings to ATG. “This positions Oracle very well against IBM,” says Paula Rosenblum, managing partner of research and advisory firm Retail Systems Research LLC.
Combining ATG with Oracle will serve a growing demand among multichannel retailers to manage customer relationships across channels, says Bernardine Wu, CEO of e-commerce technology consultants FitForCommerce.
“The Oracle acquisition of ATG makes sense as customer relationship management is an integral part of growing a multichannel business, especially with mobile and social being new channels and not just features,” she says. “Cross-channel behaviors, such as buy-online-pickup/return-in-store, are both customer experience improvements and operational efficiency gains that most multichannel retailers have on their roadmaps. The need to understand and reach out to customers by leveraging personalized data and buying history and preferences is becoming a stock requirement.”
Oracle will need to work hard at integrating its technology with ATG’s, much as IBM is doing with Sterling Commerce, Walker says. “As with IBM, much work will need to be done to complete integration of these solutions into an enterprise commerce package, but there is a significant number of joint Oracle and ATG clients and technology integrations that may present a template for that,” he adds.
Walker also notes that Oracle has a history of being adverse to on-demand, software-as-a-service technology within its technology suite, which could possibly make ATG’s on-demand e-commerce offerings take a back seat the Oracle’s and ATG’s licensed, on-premise software. ATG’s on-demand technology is often more suitable for smaller companies than its licensed version. “It is too early to tell how the ATG offerings for smaller clients will evolve through this acquisition,” Walker says.
He adds, however, that many of Oracle’s large clients, including manufacturers, have small online retail operations that could benefit from ATG’s on-demand e-commerce technology. In addition, Oracle founder and CEO Larry Ellison has invested in NetSuite Inc., a provider of SaaS technology for e-commerce and other business operations for retailers and other companies.
The transaction is subject to stockholder and regulatory approval and other customary closing conditions and is expected to close by early 2011, the companies said today.